How to Save Big on Your New Car Purchase

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Shopping for a new car can be a little intimidating. The prices seem to be a Big Secret, and the odds all seemed to be stacked in favor of the dealer. Good news! It is possible to get a good deal on that new vehicle. Here are a few tips to help give you the edge.

1. Shop around. Once you’ve decided on the make and model you want, go and visit several dealerships and find out what kind of deal each will give you. Don’t make a decision until you’ve gotten prices from several, and let the salespeople know you’re shopping around. Prices are a lot more negotiable than you probably realize, and each dealership really wants to be the one you buy from.

2. Get it in writing. When you get prices, get it in writing. It will be a big help as a negotiating tool. Dealers like to advertise that they’ll “meet or beat” your best deal, and most of them really mean it. Why wouldn’t they? If Dealership A can make a decent profit at selling a specific model, so can Dealership B.

3. Be Internet savvy. Before you even set foot on a car lot, do a little research. You can narrow down the make and model you’re shopping for, get an idea of the suggested retail price, and find out which models have rebates or manufacturer’s incentives on them.

4. Buy last year’s model. If you don’t feel you have to have the latest model, by all means take a look at last year’s. You could realize some significant savings there. A good time to shop is shortly before the new models are released, as the dealership will be trying to make room on the lot of the incoming cars. Remember, too, that the dealer has purchased and has undoubtedly financed the cars on his lot, and is paying interest on all those vehicles, so he has an incentive to sell. (Some auto manufacturers provide dealers with an interest-assistance stipend on their new vehicles, but this normally only lasts for the first 30 to 90 days that a vehicle is on the lot. Older unsold cars cost the dealer more money.)

5. Shop near — but not ON — the last day of the month. Popular wisdom has it that the best time of the month to shop is on the last day of the month, because dealership sales departments have “quotas” to meet, and will be highly motivated to sell to you. Well, the truth is, there is an increased incentive to sell at month-end, but it tends to be more of a bonus arrangement than a quota, and it can take various forms. Certainly sales managers frequently participate in tiered commission structures that pay them at a higher percentage once they reach a certain plateau. Salespeople may be striving for monthly bonuses on an individual basis. The dealership as a whole may also receive incentives from the manufacturer once its monthly or quarterly sales reach a certain point.

Why not buy on the last day of the month? Because by that point the sales manager probably already knows whether or not he’s going to meet his objective. If he has surpassed his goal, he’d rather have your sale in the following month. If there’s no chance of meeting it — well, he’d rather have your sale in the following month then, too.

6. Buy from the sales manager? Not! A popular myth is that it’s always better to buy your new vehicle from the sales manager, because the salespeople are working on commission. Well, guess what — the manager is working on commission, too. In his case, it’s based on the profitability of the entire department. And you know, he didn’t get to be sales manager because he didn’t know how to work a deal to the benefit of the dealership.

7. Watch those add-ons! When it’s time to sign those papers, watch out for extras. You should always check out your own sources of financing, in addition to those offered by the dealership. (The dealership frequently gets a commission on that, too.) If you do finance through the dealership, make sure you know what’s in the final contract. A common practice among dealership finance people is to include credit life, accident and health insurance on the finance contract, and then tell you that it’s “included” in your monthly payment. This is true. It’s also true that your payment will be lower without having it included. The same is true of service maintenance agreements, and aftermarket items such as rustproofing, fabric finishes, or anti-theft devices or services. You may wish to purchase some of these items — just make sure you’re not purchasing them if you don’t want to.

8. Buy on a rainy day. Snow is even better. Why? Because most people go car shopping when the weather is fine. A car dealership is a pretty dreary place when the weather is bad, and you can sometimes find a salesperson desperate to make a sale.

9. Watch for rebates. Read the papers, check the internet, know what’s going on. Rebates and other forms of customer incentives can represent big savings on the purchase of your new car. Try to follow the industry news, too, if you’re in the market for a new car. Manufacturers often offer significant incentives to dealers to sell particular models. Why is this important to you? Because it contributes to the dealer’s profit on the sale of that vehicle you’re purchasing — which means the dealer doesn’t need to make quite so much profit out of your pocket.

10. Shop price, not service. Of course you want a dependable dealership to provide maintenance, warranty service, and the occasional repair. But guess what? You don’t have to service it where you purchase it. If you’ve found a dealership where you like the service, but they just can’t give you the deal you want on the car you want to buy — so what? Buy the car somewhere else and bring it in to them for service. You can get your vehicle serviced at any dealership that carries the same line (Chevrolet, Pontiac, Ford, Chrysler, etc.) And that warranty on your new vehicle is a manufacturer’s warranty, remember — they don’t care if you’re dealership-loyal. Will the servicing dealership be offended that you’re bringing your purchased-elsewhere vehicle in to them? Of course not — they get paid for servicing it; why wouldn’t they want your business? And who knows — maybe they’ll try a little harder to make you a good deal the next time you’re in the market for a new car!