Tips for Buying New Cars

Back before the internet , buying a  new car would involve walking in and out on car dealers and falling prey to several of their perfected and time tested sales tricks and scams.  Now with the internet you can get competitive pricing from several new car dealers and also shop in the comfort of your armchair.  Before I give you some tips , I would like to highlight where the dealer makes most money off you.

1) Offer you far less than market price for your trade-in.
2) The new car purchase price itself.
3) Marking up the interest rate they give you for new car financing.
4) Selling you new car extended warranties that you wont need
5) Hidden Fees like Dealer Prep and additional fees.

By doing your research on each of the points above , you will be prepared. Below is the common sense approach to tackle each of these :

1.) Trade-In :- There is only one rule - Do not do a trade in. No matter how much they offer for your trade in , the dealer always wins.  This is because they jack up the car buying price to MSRP,  add on extras & fees. Just don't give them an opportunity to scam you here and avoid a trade in. You will be better off selling it off to a private party. See our used car Selling Tips to sell your car for a fair market value.

2.) New Car purchase price :  You need to do online research and have a few competitive quotes before deciding on who to purchase from.  Don't just walk in to a random dealer and try to negotiate. May be the best price is offered by a dealer an hour drive away, who would save you, thousands on a new car deal. First and foremost , do a full research online and get a few competitive quotes. Here are some tools for negotiating & competitive pricing research :

Competitive Pricing Tools
Carwoo  
Cars.com  
Edmunds  

3.) Marking up the interest rate they give you for new car financing. - Again there is only one simple rule here : NEVER get financing at the dealer. Always have your financing ready. Talk to your Bank where you have your savings at. Also you can talk to local CREDIT Union Banks as well. You can also try several online low interest auto finance providers. Always get pre-approved for the loan amount that you are seeking. Be ready to put 10 to 20% down to keep interest rates low. When you walk into the dealer , tell them that you are paying by 'CASH'. This is the only term they understand. Because you are pre-approved , they may keep their tricks to a minimum and you get a bargaining edge. They know that , if anything else , you may walk away to another dealer.

4.) Selling you new car extended warranties that you wont need :- One more time , the rule is pretty simple here. Do not buy an extended warranty at the dealer. Bypass them and go directly to the warranty provider online , purchase and save. Most new cars , come with a set factory warranty. You probably do not need an extended warranty during that time. The extended warranty is basically like an insurance.policy. If you feel the need to buy one , that would probably be after the expiry of your factory warranty.  Go online and do your research and buy warranty from a solid warranty provider. Do not fall for the cheap online/postal  Car Warranty scams. Research your warranty provider. Find out information about them from BBB and search online for complaints against them.  Ask to see the contract before you purchase online. Read the fine print and exclusions. Find out what is covered and what is not covered. Here are a few reliable online warranty providers  :

Auto Warranty Providers
   
   
   

 

Other Tips/Factors :-

1.) Any manufacturer offered promotional APR schemes. Like for example 0% APR For 2 Year - Often times car makers throw such low interest schemes to boost sale.  You can get in the 0% loan and perhaps after the end of the promotional duration , you are able to pay off the car this enjoying no interest.

2.) Any manufacturer incentive and rebates / cash back and promotional schemes.

3.) Do not provide your drivers license or social security number , unless you are sitting down to write up a contract to buy the car. (Buyers Order).  If you have your own financing , do not provide SSN at any cost.  Some times they might ask you for a drivers license before a test drive, do not let them make a copy of that.  They might run un-authorized credit checks if you do so. This will lower your credit score.  By law , unless you authorize with your signature , they are not supposed to run a CREDIT check. You basically wont be needing their finance , so don't provide a  SSN.

4)  Best times to buy a new car :- Around the end of December or just in the middle of summer.