By: Sean Millski
If you’ve been lucky enough to dodge the poor economy and still have enough money to even be considering buying a new or lightly used car, your among the fortunate. If you want to keep it that way you’d better become an educated consumer long before you ever set foot on a car lot.
Use these tips to help get you smartly behind the wheel of your new ride without the years and years of unmanageable debt that can come with it.
Lesson 1: Getting the Power.
There are many schools of thought on cash buying vs. utilizing your credit but we’re going to assume here that your financing;
NEVER get the car and the financing at the same place! If you do, you have squarely put all the power in the dealers hands. Think about it, if you need them for the car and the approval…what have you got in your corner? Nothing, that’s what. Instead, seek out financing from another source before you ever go to the dealership. You can obtain your own financing at your bank, credit union or one of many independent finance companies like Capitol One. If you secure the financing on your own, the dealership is only providing the car. That changes the game and makes that car no different than a vacuum cleaner or box of cereal….you can choose to buy it from whatever store has the best price. How many dealers sell fords or Hondas? A LOT, so the dealer is forced to earn your sale or risk losing it to his competitor across town. Side note: Capitol One for example has a blank check auto financing program online that takes about 1min to get an approval or denial. If approved, you get the terms and interest rate and they snail mail a blank check that you can use at any dealer within 45 days for up to the approved amount. If you don’t use it in the 45 days the check becomes void and you don’t have a loan with them to worry about. In short…your free to use your “power” wherever and whenever you choose.
Lesson 2: Using the power
Comparison shop. You compare Best buy, Wal-mart and Amazon if your looking for a big screen TV right? Why not with your car purchase!? Be sure to identify a car with incentives (Cash back, extra value trade-in’s, etc.) and check it’s price online with at least 2 or 3 different dealers. Once you’ve identified a car be sure to also check with your insurance company to see what your new insurance rate will be and figure that in to your monetary decision. Also look into or inquire about fuel efficient models that might be available. Check sites like KBBto find the value of any trade-in you might have. Knowledge is power.
Since you brought your own financing your in control of the deal….don’t get sucked into discussing how much a month your looking to pay, that’s a sucker move. Instead work on the overall price of the car. The monthly payments will work themselves out once you know the price of the car (you already know the term of the loan because you have it worked it before you got there). Be sure to let them know, that you know ,you can get this same car from their competitor for less or whatever price you got during your internet/phone search. Focus on the price of the car.
Be stern but try not to walk off the lot if your confident this is the best place…if you leave and come back they are going to know you couldn’t find a better deal and be firm on their price. If you have to leave though…do it, just go elsewhere.
If you’ve got the price as low as you think you can get it, (unfortunately if you’re not buying from a CarSense type place this part is all on your research, preparation and ‘Feel‘) then try to work some more value in by getting add-ons or upgrades. Seem hesitant and say something like “ If it had the better sound system or a portable DVD player I would be much more sure”. I’ve scored several times with that one. The dealer would rather lose a few hundred on the electronics than the whole car sale.
Last but not least, once you have everything worked out and your confident in the price your getting for the car, have them run you through their finance guy to see if he can get you a better interest rate or term. (If your financing isn’t in stone that is …That’s why I like programs like Capitol One’s) If they ask what rate you already have, tell them ¾ to a point lower and make their guy work to better the deal. If he does, take their financing and walk out confident that you got the best deal on not only the car but the financing too.
Car buying is serious business but as this video shows, no matter what you get on the car….get keyless entry.
Aaron Steinberg with Finance