Do you dread buying a car? Does it ever seem overwhelming to try to find the best deal? Believe it or not, finding a great deal isn't has tough as you think.
A few months ago, my husband and I made a big move from a tiny tropical island, where we had spent the past two years, back to the good ol' US of A. We sold our island car and tucked the money away to invest in a car once we moved back to America.
We were fortunate to be able to find a great deal, and I wouldn't be very grateful if I didn't pay it forward to the rest of my followers as to how we obtained it. You see, the dealer that sold us our car made exactly $100 on the sale. He showed me the paperwork. We were able to buy the car for only $100 more than the dealer bought it at auction. And there was nothing wrong with the car! I just happened to find a dealer who had watched the vehicle sit on his lot for several months, and needed to get rid of it to bring in new product.
While this may seem like a great deal, it was only one of many that I was considering. As I did my research, I realized that there were quite a few amazing deals out there for those that are willing to take the time to dig. It wasn't like I had only one bargain. There was a big list! And, that's what made negotiations so easy. I knew if I missed this deal, I had 10 more!
So, how did we do it? It wasn't rocket science. It was just research!
1) Decide on your target!
First, I researched exactly what car we wanted to buy. We planned to run the car into the ground, so we needed something that could rack up high mileage and not bat an engine gasket. We also needed something that could hold our three crazy dogs and future family. However, we didn't want to pay through the nose in gas. So, that meant a lighter SUV on a car chassis. We wanted the car to be safe, reliable, and hold its value well at resale.
After much research, we settled on the Honda CR-V. It had great safety and customer satisfaction ratings, we both liked the body style, and it met all of our other criteria.
I would stress that you really should decide on your car before shopping for it. The main reason I was able to do the in-depth research was because we didn't look at a lot of different types of cars. It took enough time to just sift through our chosen make and model. If you don't know the car before you buy it, dealers can talk you into a car where you are unfamiliar with its true value. This is how they make their money... they play on your ignorance on the amount that you should pay before walking onto the lot.
2) If economical ROI is important to you, buy used.
The minute you drive your new car off the lot, it loses about 9% of its value. I don't know about you, but I will buy the fragrance instead of paying for the real new-car smell! That's a lot of money to lose within the first few minutes! During the first year, you lose a total of 19% in depreciation. The following year, you lose another 12%. After this, your car depreciation holds steady at 9% per year. Therefore, it makes sense from a financial standpoint to look for well-maintained cars that are over two years old. Since a lot of people less concerned with economy like to keep trading up, there is always a nice market of quality used cars.
3) Search for deals and make a list.
I searched the internet and made a list of all the deals I could find. My list wasn't pretty, but it was functional. And, it went with me as we went shopping. Each car I considered got a full analysis on Kelly Blue Book: www.kbb.com. There are actually several other sites you can use as well, but just make sure you check the actual value of the car before going to see it. I recorded both the dealer pricing and private party, as I was looking into both types of car sales. Here's my actual list.
All prices were under KBB dealership pricing, but I further ranked the deals from based on their proximity to private party (PP) pricing. For privacy, I have blacked out the actual prices and phone numbers.
This list helped me see the big picture and realize that I had a lot of options. Many times, we buy cars too quickly because we feel like this is the deal of the millennium. Knowing I had other options made me much less concerned if someone else bought the car. Being able to walk away is one of the best positions to be in during a negotiation. In fact, I even pulled my list out during my final negotiation, which is what prompted the salesman to show me the paperwork detailing what he paid for the car for at auction.
I found my car deals everywhere. I goggled which websites had the best deals. I searched used car national databases and local options like Craigslist. Basically, with a bit of research online, you can find plenty of databases showing off their merchandise and form a very extensive list of some great prices in your area.
4) Only visit cars with deals worth your time.
I didn't even go look at a car unless it was under the dealer pricing on Kelly Blue Book. There were just too many options under this once I did the due diligence. Usually, while people are willing to negotiate some, they won't drop a lot in price. Going to people who are already low helps weed out those places that will waste your time.
I was also willing to travel to several nearby cities too look at the cars with the best deals, so I made sure I did all the research upfront so we could see everything we needed to see in one trip. However, I wasn't about to darken the door of a dealership unless they lured me in with a below KBB price.
Interestingly, I found many dealerships offered their rock-bottom pricing with no negotiations as their policy. They had learned that savvy customers were looking for deals and had access to car-value sites; so they just dropped to their best price and stayed there. It was a smart strategy. It got me to visit them. I ended up still going with a dealership that allowed me to negotiate them down a bit more, but I wouldn't be opposed to buying from these set-priced lots as well.
5) Do not get emotionally involved.
There are certainly things to invest emotions in... like people. Cars, not so much. If getting the best deal is your ultimate objective, it must become a numbers ratio first. You can't buy the car just because it's the right color or you think it's cute. I'm not saying that you shouldn't buy what you like, but realize that what you like comes in a variety of options and opportunities. Don't fall in love with just one car. If you do, and the dealer picks up on that, you probably won't get the best deal. You have to be willing to walk away, and they have to know this.
6) Don't rush your decision.
The car we finally bought was not purchased on the same day we looked at it. We looked at it, took notes, and checked out a few other deals before finally deciding it was the best deal for us. Remember, new options are coming online all the time. If you lose one deal, another isn't far behind it. Give yourself the time to make well-thought-out decisions.
Don't get me wrong, if you come across a complete gem at an amazing price, than by all means snap it up. But, if you have multiple deals like we did, don't just buy the car that is in front of you. We had one salesman basically corner us and try his best to get us to make him an offer before we left. He also didn't allow a mechanic to check out the car, which made me more wary. Don't fall for those high-pressure tactics. If it doesn't feel right, trust your gut and walk away.
7) Buy at the right time.
We bought our car on December 30. We did this on purpose. During the end of the year, people are not thinking about car shopping. They have been spending money on Christmas presents and have been busy with family. This is a lean time for car dealerships. We had also experienced rather inclement weather during December. This meant that not a lot of people were getting out and shopping. When cars aren't selling, the dealerships are much more ready to negotiate. After all, they still need to make their quotas even if customers are snowed in.
Additionally, the end of the month usually means that salespeople qualify for bonuses. They are very happy to get one final sale in on their quota. Many deals also happen at the end of the year because dealerships want to clear out their inventory for the new year's models. The end of the year, the end of the month, or the end of the summer are all great times to go car shopping.
8) Check it out thoroughly.
After all, you are buying a used car. Have an independent mechanic do a full work up on the vehicle to make sure you don't have any big problems lurking under the hood before you buy. Most car dealers will allow this. Some places will offer the company mechanic to certify it. I personally don't feel comfortable with a biased mechanic checking out the car. If they don't allow you to have the car inspected by an objective third-party mechanic, walk away.
You can also pull CARFAX reports to see if the car has been in a previous accident. While these reports don't always catch everything, they do show you most of the reported accidents. You can also see if the previous owners provided the car with proper maintenance and repairs. Doing your homework helps to make sure you don't get stuck with a lemon.
9) Find out what financing is best.
We were fortunate to have enough money saved to buy our car without needing to finance. We planned out what we would need, and bought a car that was well within our budget. However, we still asked the dealers which option was best for them.
Cash is not always king. Some dealers get bonuses from the financing companies when you finance your car. If this is the case, offer to help them out a bit by signing up for the financing package in return for a slightly better deal. You can always pay it off right away after you've set up the financing option. The dealership we utilized preferred that we not finance, and we were happy to oblige. If you build up enough savings so that you can utilize either option, find out what is best for the dealer.
10) This is a big purchase, get the points!
We were able to buy our car on a credit card. We did this even though we had the cash to pay. Why? For the points! We are well on our way to getting a free airline ticket because we put the purchase on our credit card and then immediately paid it off. If you have to make a big purchase, it just makes sense to get rewarded for it.
If you don't already have a great credit card rewards program, look into getting one. There are so many ways you can save and be rewarded just for paying your necessary expenses. However, make sure you treat it like cash and only pay for what you can pay off at the end of the month.
Buying a car can be stressful. Yet, it doesn't have to be. After all, you get to joy ride in different cars, meet fun people, and end up with a great purchase! If you do your homework, you can just relax and enjoy the ride. Oh, and don't forget to buy the new car fragrance spray for the journey home!