Your vehicle is a financial investment, and for most people, a significant one. You may need a car for daily travel, but that doesn’t mean you should pay more than you have to. Finding ways to get the most cost-efficient deal possible can help you save money for other necessities, ensure you get the right car for your needs, protect you from long-term costs, and may even help you get more money when you resell your vehicle years from now.
So what are the best ways to save money on a car?
How to Get a Better Deal
You can start by following these strategies to get a better deal:
- Pay in cash. First, try to pay for your car in cash. If you have to finance your vehicle through a dealership or an outside financial institution, you’ll pay high interest rates, and might be more tempted to buy a car you can’t truly afford. Paying in cash keeps your car squarely in your budget range, and could save you hundreds, if not thousands of dollars in interest.
- Get to know the dealerships in your area. Take a tour of the local dealerships in your area. You should get to know them based on their reputation, their inventory, and the types of sales and deals they offer. Chances are, some of them will be able to offer better deals, on average, than others.
- Buy used. Vehicles are notorious for their high rate of depreciation. If you buy a new car, for example, its value is going to drop as soon as you drive it off the lot. You can prevent this drop by only purchasing used vehicles.
- Understand the dynamics of dealer inventory. Learn how car inventory can affect the value of different vehicles. If a dealership has 25 cars of one model, but can’t keep another model in stock, you’ll have a much easier time negotiating a good deal on the more plentiful model. Pay close attention to what each dealership has on hand.
- Do your homework. Before you start talking to salespeople, negotiating deals, or even going for test drives, make sure to do your homework. Understand what some of the best models on the market are, learn the most recent negotiating tactics, and get a feel for the trade-in value of your current vehicle (if applicable). The more information you have, the better you’ll be able to negotiate.
- Factor in the cost of ownership. Think about the true cost of ownership with any vehicle you’re considering. The “true cost to own” will tell you how much you can expect to pay in repairs and depreciation, not to mention your loan, taxes, fees, and fuel costs. Just because a car seems like a good deal doesn’t mean it is.
- Wait until the end of the year. At the end of the year, most dealerships have excess inventory; they need to make room for new models, and will want to push the old models off the lot as soon as possible to do it. That means you can get better deals on relatively new models.
- Only get the basics. It’s tempting to outfit your car with as many upgrades as you can afford, including nicer seats or better sound equipment. However, these upgrades often come with high premiums. For the most part, you’ll likely be satisfied with the basic model; and if you really want to upgrade your car, you can probably do it later for less money.
- Negotiate via email. If and when you enter price negotiations, try to do it over email. You’ll have more time to put your thoughts together, and it will be harder for your salesperson to read the emotions on your face. Think of it as an automatic poker face that allows you to take a stronger position (and avoid the pressure to buy immediately).
- Always read the paperwork. Before signing any documents or finalizing the sale, make sure you read over the paperwork (and pay attention to the details). You shouldn’t have to pay for anything you didn’t ask for—and you certainly shouldn’t follow through on an unexpected price increase without first understanding it.
Finding the Right Model
It may seem obvious, but some models are inherently more valuable than others—and for more reasons than just price. Consumers rank cars differently based on their practicality, lasting quality, resale value, reliability, fuel efficiency, and a host of other factors. Before you even start shopping for a car, you should understand the relative value of several different models of vehicles, and how they fit your life. Once you have those values in mind, you’ll be able to make a much more intelligent decision—and one better-suited to your life.