Car salesmen are no dummies. They love nothing better than to see a “smart” buyer come wandering onto a lot, married to the idea of buying a specific model that they’ve researched. They get this person in the back room and quote them some “wonderful” monthly payment price, but stretch it out over plenty of years, enough to effectively make the trade-in worthless. The customer walks out happy, without realizing that their wallet has just been lifted out of their pocket.
If you really want to maximize your next auto purchase especially if you’re looking to buy a late model used car, here are ten steps to follow to make that purchase a reality.
1. Research and identify several models of interest. Don’t just fall in love with one make/model. Find several that you like in advance of stepping on the lot. That way, you won’t be pigeonholed by one particular model when you’re on the lot.
2. Research the correct value of your trade-in. Know what your car is worth. There are ample places to research it online, but be aware that the “sell” price and the “trade” price are two different beasts. You can probably get more by selling the car yourself, but it requires some additional legwork. Either way, don’t go on the lot expecting to trade without having any idea what your car is worth.
3. Plan out your financing. Figure out what you can afford to spend before you go to the dealership. Plan it all out in as much detail as possible. I strongly recommend paying for cars in cash (you can literally save thousands on a $10,000 auto purchase), but the reality is that most people won’t do that because, well, it’s hard to have enough willpower to make it happen. A solid down payment in addition to any trade in is a good idea as well.
4. Be aware of any dealer-specific offers. In areas where dealers are competing, one dealer might have some special offers in order to attract customers. Know what these are before you go on the lot. My favorite one was when a local dealer had a “$500 off” coupon in the paper. A friend of mine went in and negotiated the car price before anything else and when the deal was basically finished, he whipped out the coupon. The dealer sadly agreed to it; it turned out that the coupons were seen as an “advertising expense.” He wound up with a new car below factory invoice.
5. Take a test drive. No matter what, take a test drive of the car and make sure you like driving it. I was very much interested in buying a specific model a few years ago, but I absolutely hated it on the test drive. If you don’t like the driving experience, keep looking.
6. If it’s used and you’re enjoying the test drive, have it checked by an independent mechanic. It’s usually worthwhile to identify a trusted source near the dealership so you can have it looked at during the test drive. They can usually check it over and do a CarFax report in a very quick amount of time. If it’s a lemon, you’ll know it before you go back to the lot.
7. Don’t pay for extras you don’t truly want. Pass on everything you don’t explicitly want in your car purchase. If they try to slip something into the bill of sale, cross it off and refuse to pay for it. You should never pay for something you don’t want.
8. Negotiate the price of the car you’re buying before doing anything else. The dealer is never going to give you their bottom offer right off the bat, even if it’s lower than their sticker price. If you’ve done your research, you should know what the dealer paid for the car; start your negotiations off there.
9. Negotiate the overall price next. This includes the deduction of the value of your trade-in. This way, you have a real total number to work with when determining payments.
10. A shorter term is almost always cheaper in the long run than a longer term, even if the payments are higher. If you know what you can spend each month, get the shortest term you can within that range, even if it’s tempting to go the “cheaper” route with a longer term and lower monthly payments. Why? Add up the payments and see which one costs significantly more.