Buying a Car? Pay Your Price, Not the Dealer’s
Shop near and far, compile competing offers — and always be willing to walk away
By Lucy Lazarony
Looking for ways to save money on your next car purchase? It is easy to see why. According to Cox Automotive, the average price of a new car in 2024 is $48,155, an increase of 15.5% since March 2021.
That is a lot of money to spend but there are things you can do to lower the price of the car you have your eye on. Here are 10 smart car buying tips from the experts.
1. Do plenty of research. Finding the right car for your family’s needs takes some time and some research.
“First, think about the kind of car that will best fit your needs both now and in the future — small SUV, pickup truck or sedan? —then research the various models in each class to decide which could be best for you,” says Matt Degen, senior editor for Kelley Blue Book, the vehicle valuation firm.
Don’t just stick to just one brand or model. Research several.
“Research various makes and models. Take test drives to make sure a car is a good fit for you,” advises Tom McParland who runs Automatch Consulting.
2. Set a budget. Take some time to peruse your finances and determine how much you can afford to spend on a car.
“It’s also crucial to set a budget at the beginning of your shopping process. This should factor in not just the cost of the vehicle and monthly payments, but associated expenditures that will go with it, such as insurance and fuel. Check the Kelley Blue Book fair purchase price, (and) know how much you should pay for the vehicle, right down to your ZIP code, as well as the five-year cost to own figure for the bigger picture on expenditures over the years,” Degen says.
Use loan calculators to help determine how much a monthly payment would be.
“Know your budget,” McParland says. “The best way not to get ripped off is to have an honest understanding of what you can really afford. Use loan calculators to work backwards from a target monthly payment to a total cost. Focus on vehicles that are at or below that total, and don’t forget to buffer for your local sales tax and DMV fees.”
3. Make dealers compete for your business. Shop several dealerships, not just one or two.
“The only way to know if you are getting a good deal on a new car purchase is by making dealers compete,” says Mike Rumple, founder of Yourcarbuyingadvocate.com in Warren, Ohio. “This means you need to reach out to multiple dealers on the same vehicles with the same MSRPs (manufacturer’s suggested retail prices) and get proposals or buyer’s orders to compare deals.
“If you go to only one dealership you’ll never know if you’ve gotten a good deal or not. This is the only way to ensure you are getting the best possible deal.”
4. Negotiate by phone or email. There’s no need to negotiate with a car dealer in person if you don’t want to.
“Conduct all of your negotiations via phone and email,” McParland advises. “Do not negotiate in person. Request itemized out-the-door prices on cars you are interested in. If the dealer doesn’t provide them, move on.”
5. Shop around for financing. Obtaining a lower interest rate can save you significant money over the years.
“Remember that you shouldn’t just shop for the best deal on a car; you should shop for the best deal on financing, too,” Degen says. “See what financing terms and interest rates your bank or credit union offers and be sure to search for current deals from automakers. Getting pre-approved for a loan from your bank also gives you more power to negotiate at the dealership.”
6. Get good value for your trade-in. Now is a good time to trade in or sell your used car.
“Although the market is starting to ‘normalize’ relative to the car-buying frenzy of the past few years, used car values are still elevated, so your trade-in vehicle may still be worth more than you expected. Shop your vehicle around, including using appraisal tools like one from Edmunds,” says Joseph Yoon, consumer insights analyst at Edmunds.
7. Make supply your best friend. Save money by choosing a car with a big inventory.
“Sometimes, it’s as simple as that concept you learned back in Econ 101: supply and demand. The larger the supply of vehicles, the better your deal might be. Starting your search online should give you a good idea of the brands carrying greater inventory. Dealers with higher volumes of inventory for a specific model might be more willing to incentivize or negotiate on a better deal,” Yoon says.
8. Shop beyond your local area. The car you are looking for with a great price may be in a different city or state.
“Whether you want a particular car with specific features or you’re just not finding a great deal for the vehicle you want in your area, expand your search,” Degen says. “Now, more than ever, it is easier to buy a car from a dealer in a different city or even different state.
“Yes, you’ll have to arrange for the vehicle to be transported to you, but if you zero in on the exact car you want at a price you like, this route can be worth it.”
9. Shop certified pre-owned cars. One way to pay less on your next car purchase is to search a dealer’s inventory of certified pre-owned cars.
“Certified pre-owned models are used cars that are backed by a factory warranty and have been combed over by mechanics to make sure everything is in working order,” Degen says.
“Buying a CPO car that is just two or three years old will still get you the latest tech and safety features but can save you many thousands of dollars versus buying new. This method lets you avoid the initial and significant depreciation that comes with a new car.”
10. Consider leasing an electric vehicle. If you have ever thought about an electric car, now is a good time to shop.
“Demand for new electric vehicles has plateaued, and automakers are eager to help dealers make deals with shoppers via massive discounts and other incentives,” Yoon said.
When leasing, he added, buyers can take advantage of the full $7,500 electric vehicle (EV) IRS tax credit without worrying about rules regarding your household income or where the vehicle was made. But as always with EV consideration, make sure it’s a fit for your lifestyle with respect to charging and range,” Yoon says.
Lucy Lazarony is a freelance journalist living in South Florida who writes about personal finances, the arts and nonprofits. Her writing Is featured on Next Avenue, Bankrate.com, MoneyRates.com, MSN.com and the National Endowment for Financial Education. This article was previously published online at www.nextavenue.org. Reprinted with permission.