Looking for a new ride? These tips will arm you with the knowledge you need to get the best car lot deals on new or used vehicles. We’ll also show you everything that can be negotiated with a car purchase to save even more.
What Can Be Negotiated When Buying a Car?
While not every aspect of a new or used car purchase can be negotiated, many things can. Here are some areas that typically have some wiggle room.
Price
While prices are usually based on the Manufacturer’s Suggested Retail Price (MSRP), demand in your local market and dealer markups can influence and/or increase the price of a vehicle. It never hurts to try negotiating a lower price.
Interest Rate
Dealers don’t always offer the lowest rate first. Even if you’re getting financing from an outside lender, you can use that price to see if you can get a lower interest rate from the dealer.
Fees
Dealers tend to tack on several fees, which may include document fees, freight fees, advertising fees, inspection fees, preparation fees, and more. You may be able to negotiate with the dealer to waive some of these fees.
Warranties and Insurance
A dealer may imply that some types of insurance are mandatory, but they usually are not unless you are leasing. Therefore, you probably should wait before buying any additional warranties. Research your options and decide whether you actually need them.
Trade-in Value
Before going to the dealer, try to determine the value of your current vehicle if you plan to trade it in to know whether the dealer is making a fair offer. At the same time, be honest with yourself about the condition of your vehicle and its imperfections. Even some minor damage can significantly reduce the value of your vehicle.
12 Ways to Get the Best Car Lot Deals
Buying a car can be a significant financial decision, and getting the best deal possible is essential. Whether you’re in the market for a new or used vehicle, these 12 tips will help you navigate the car lot and secure a great deal.
1. Do Your Research on the Vehicle You Want
Before visiting a car lot, research the make and model you’re interested in. Know the average price range, features, and potential issues. This knowledge will empower you during negotiations.
2. Research Dealerships and Work With a Variety
Not all dealerships are equal, and may even offer different prices for the same make and year of a given vehicle. Also, different dealerships may have different negotiation styles, flexibility, and sales tactics. Therefore, be sure to read the reviews of each car dealership you are considering purchasing from.
Don’t work with just one dealership. Visit several and make them compete for your business. Competing offers will give you more negotiating power. You can save by shopping around.
3. Set a Budget
Determine your budget in advance, including down payment and monthly payments. Stick to this budget to avoid overspending.
4. Get Preapproved for Financing
Arranging financing beforehand can give you a competitive edge. Shop around for the best interest rates and terms from banks, credit unions, or online lenders.
Coming in with financing also gives you the advantage of negotiating with the dealership to see if they will offer you better interest rates.
5. Timing Matters
Dealerships often have monthly, quarterly, and yearly sales targets. Visit toward the end of these periods when salespeople may be more willing to negotiate to meet their targets.
6. Consider Certified Pre-Owned (CPO) Cars
CPO cars offer many of the benefits of a new car at a lower price. They come with warranties and have undergone rigorous inspections.
7. Don’t Rush the Test Drive
Take your time during the test drive. Pay attention to how the car handles, its comfort, and whether it meets your needs.
8. Inspect the Vehicle
For used cars, have an independent mechanic inspect it for hidden issues. For new cars, thoroughly examine the vehicle and ensure it’s in perfect condition.
9. Check Vehicle History Reports
If buying used, request a vehicle history report to check for accidents, title issues, or other red flags.
10. Research Incentives
If you are open to considering several makes and models, do some research and see if the manufacturers are offering any kind of incentives. For example, 0% APR for the first year or cash-back incentives that offer a rebate on your purchase.
Also look for special discounts, like those for military members or students. Researching all manufacturer and dealer incentives that you might qualify for can help you get the lowest price possible for the features that matter most to you.
11. Beware of Add-Ons & Read the Fine Print
Dealerships may try to upsell you with extended warranties, fabric protection, or other add-ons. Carefully consider whether these extras are worth the cost.
Before signing any contract, carefully read and understand the terms, including the interest rate, loan duration, and any fees. Ensure everything matches what you agreed upon.
12. Prioritize Price Over Payment
One trick dealers use is to bait you with a low monthly payment, which can trick you into paying more than you really should.
Typically, lower monthly payments often mean you are paying a long-term loan, which costs you more in interest overall. It also means the equity in your vehicle depreciates as you are paying it off, resulting in a lower trade-in value should you choose to purchase another new car at that time.
Prioritize a lower purchase price over a lower monthly payment.
Final Thoughts
Getting the best car lot deal requires preparation, patience, and a willingness to negotiate.
By following these tips and staying informed, you can drive away with the car you want at a price that fits your budget.