A couple weeks ago, Courtney and I went and bought a new car. She had been driving an old 1998 Chevy Malibu which needed more money put in to it than we wanted to spend and so we decided that we were going to make the leap to purchase a new car. She also wanted something bigger, more space, and room to grow with, so we settled on a SUV or crossover. As we started looking around, test driving, and checking prices, we determined an SUV might be too much and settled on a crossover. The crossover type vehicles offer the smaller size of a car, better gas mileage than a normal SUV, but also the extra space that an SUV provides, which are all things we wanted. We checked out the new Honda CRV’s and were sold. After testing driving one and deciding on the colors and features, we were ready to go.
But, we couldn’t jump directly into it and just drive off the lot with one, we spent time planning for the purchase, doing research, and finding out what the best price we could get was. Now, if you haven’t realized it, now is a great time to buy a new car – any type of car. With so many dealerships closing up, trying to shrink their stock, and merging together with other dealerships or bringing on more brands, they want to sell you a car and will do almost anything you want them to do to get a sale.
We didn’t have a lot of money saved up
We were not completely expecting to just go out and buy a new car when we moved into our townhouse (which we rent), bought a bunch of furniture, and other necessities, so we didn’t exactly have all the cash saved up that we wanted to right away. So, we set a plan and decided on when we would want to make the purchase – at the end of June. So for 2 months we cut down on other expenses, saved our pennies, and moved money around. If we were the more frugal types, we could have completely cut extra spending AND saved up for many more months. But, with the situation we were in, we most likely could not have waited through August before her car would just completely drop dead…which is not something anyone wants!
Now, after doing research, checking out different sites, and negotiating with the dealership, I’ve got a few tips to share and sites that you should check out if you are a first time car buyer or just looking for some extra ‘backup’ that you could take with you to the negotiation table when dealing with a sales associate.
To Trade In or Not To Trade In
That is the question! With Courtney’s car we knew we didn’t want to mess with trying to sell it to someone else, deal with transferring the title, etc. We just wanted to trade it in, get what we could, and knock our payments down a bit. To get an idea of what your current vehicle may be worth, check out the Kelley Blue Book website.
Once you have a price in mind from KBB, then head to your dealer or CarMax to see what trade in value you can get. At the same time you should be looking at comparable vehicles for sale in your area to see what prices they are fetching. When you get an idea from your dealer, CarMax, or similar car buying service you can decide if you want to trade it in or try to sell the car on your own. This could be a major money make for you depending on your vehicle, the condition, and the mileage. I know someone who was offered around $1000 for her car by CarMax (a 2002 model) and then sold it to someone from Craigslist’s for around $4000. That extra money will sure help make your new car payments!
American Automobile Association (AAA)
AAA is actually a membership based organization that provides services like car towing, road side assistance, travel information, and more, but they also have a great car buying resource. If you head to their website, http://www.aaa.com, they have Car Buying Tips and Car Buying Tools sections that are very helpful. Within these, you can do new and used car buying research and get online quotes. If you are a AAA member, then you can get exclusive AAA discount prices from 3 local dealers. This is a great advantage to have on your side. After I got 3 quotes, I printed them off and took them to our local dealership that we were going to buy from. This immediately let me say “Your price needs to be less then this or we’ll go someone else.” It worked and instantly dropped $2K off our price. Just don’t show all your cards at once!
TruCar.com
This is another great site to check out…especially if you love bar graphs like @CollegeTownMenu does! Basically, it lets you see what others really paid for their cars. Just start by putting in your zip code and then select the type of car you are looking at. You get to see what a “Great price” is, the actual dealer cost, the average paid price, the factory invoice, and the sticker price. This is a great tool for negotiating!
So there’s a few tips and sites to check out when you go to buy your next vehicle, new or used. Also be sure to shop around for financing if you need to get it. Check with your bank as well as the dealership. The dealership wanted us to finance the car through them so bad that they dropped the rate almost 4% from what they told us originally when I told them that we were going to go through our bank at a much lower rate.
Just remember – it’s all a game. They want to sell cars and you want to buy one. There are tons of dealerships in every city, so if you can’t get the price you’re looking for from one, just walk out the door. I’m sure they will stop you!
Good luck! Leave your car buying tips here if you have some to add!
that website has some good data. Really the hardest part of is actually knowing how to negotiate with the salesman i found some great tips at http://www.hoopdi.com They cover pretty much how to bypass all the car dealer tricks.
Great point Laura. Actually having some knowledge of negotiation tactics and tips is another plus to have besides just knowing what other prices are out there! Thanks for the comment!
Chris, great article. Not going to lie, I laughed when you called me out and my passion over info-graphics (I don’t give favor to bar, line or pie charts – all charts are treated equal). But yes, the TrueCar pic looks great! It’s basically a representation of what KBB/Edmunds already gives you. (FYI – your link is wrong.) I wish they had older models, not just brand new cars. A site I really liked was http://www.oodle.com/ which searches multiple car listing websites. I personally bought my car on Craigslist and saved close to $5,000 by doing so, haven’t looked back.
A note to all buyers: Although Chris did a great job writing about how to buy a car and saving money; consider buying USED. It will save you 35% depreciation the first year.