How to Get the Best Deal On a New or Used Car

How to Get the Best Deal On a New or Used Car

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Do your anxiety levels spike when you think about negotiating with a car salesperson?

If so, you’re human.

We’ve all done the speech rehearsals in the mirror beforehand. “I don’t want the add-ons. I don’t want the add-ons.”

But you know it’s going to take some effort to stand your ground because some car salespeople can be pushy. It’s part of their job description.

Just know what you’re getting into, and you’ll be fine.

Here are a few tips to help you get the best deal on a new or used car.

1. Research sales prices

The car buying process is intentionally confusing.

There’s the MSRP (Manufacturer’s Suggested Retail Price), the invoice price, and then there’s what you actually might pay.

You always hear about deals that are a set amount off of the MSRP. But in reality, most people don’t actually pay MSRP, so it’s more a fictional discount.

The invoice price is supposedly what the dealer pays, but that’s often not the case either. Again, this isn’t a number you should pay much attention to.

The invoice price is what the dealer would pay if there were no other discounts. They may have their own incentives or fleet discounts from the manufacturer that could add up to a substantial amount.

Either way, you’ll never know what they’re actually paying for the vehicle. So if you’re the invoice price, you might not be getting the best deal.

If you can find the price people are actually paying in your area for the same make and model, that’s the sweet spot.

This is where you’ll find the best negotiations begin. You can find true values on sites like TrueCar.

2. Choose from stock

Dealers have a much greater incentive to give you a great deal on a car that’s taking up room in their lot.

These are the cars they’ve already purchased and need to unload. And while you can order a car from the dealership, you’ll never get the best deal this way.

If they’re willing to offer you the same deal on a color they don’t have in stock, you were probably about to overpay for that stock vehicle.

3. Negotiate your trade-in first

You may have heard this advice before, but it bears repeating.

If you’re trading in a car, negotiate the trade-in value first. This value has nothing to do with the price you pay for your vehicle.

But the salesperson may try to frame it as a package deal, which would make it seem like you’re saving more than you are.

In fact, the only way you’re going to know whether you’re getting a good deal on a new car is if you end up paying your target price.

Don’t let the salesperson make it seem like they “gave you more” for your trade-in to balance things out. It actually doesn’t work that way.

4. Don’t discuss monthly payments

The first question any finance manager will ask is how much you’d like to pay per month.

But that’s a quick and easy way to overspend for the vehicle overall. Thousands of dollars can seem small when you break them up into 60 payments.

So, it’s best to redirect the conversation to discuss the total amount.

5. Shop around for rates

Car dealers don’t always have access to the best rates.

Sometimes they do, but you should know what’s out there before you step foot into a dealership. Shop around with a few lenders to find the best rate outside of the dealership.

Then, you’ll know if the dealer financing is right for you. Just a few measly percentage points can add up to a lot of money over the term of your loan.

For example, if you finance a $30,000 car for a rate of 4.5%, you’d pay about $3,500 in interest over 60 months.

At a 5.5% interest rate, you’d end up paying nearly $4,400 in interest for the same car. That’s $900 more for the same exact car.

Think about interest when you calculate the overall cost, and you’ll make a wiser choice.

It’s not always fun to negotiate at the used car dealership, but if you know what you’re doing, you can save a lot.

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