How to Buy a Car and Save

Posted by My Dallas Mommy on Sunday, October 11th, 2015 at 12:00 PM
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I told my son a few years ago that we would buy him a truck if he got a baseball scholarship.  He did!  YAY! But that put us in the car market. BOO! For me, car buying can be like pulling teeth…. dealing with salespeople, spending time on the buying process, figuring out financing, and finding the right car.

Here are some tips and tricks on how to buy a car and save!

Find the Value of Your Current Car ~ Sell Yourself or Trade-In

car 1Learn the trade-in value and private resale price of your current car through Kelley Blue Book or search eBay’s completed auctions to get an idea of the car’s value.  We had a 2004 Z71 Tahoe.  Blue Book valued our car from $6,500-$7,000.  But the car wasn’t in the best of shape, with a torn leather seat and just wear and tear from a teenager.

I took it to a couple of dealerships and asked trade-in value.  The gave me a range from $4,800-$5,600.  Obviously I was going to get more money selling it myself.  Trading it in was more convenient so I gave myself three weeks.  If I didn’t sell it I would trade it in.

We wrote “for sale” on the back of the car with a phone number and price and we put it on Craigslist.  That is where we got the calls.  I had 5 calls and two offers.  One low-balled me, but it was still more than what I would get trading it in.

We did sell it for $6,000 cash.  I priced it fair and below value to a really nice family.  It really was a great car so we were happy it went to a good family.

Here are the documents you will need:

  • Bill of sale or vehicle purchase agreement (much better if this document is notarized)
  • Original vehicle title properly endorsed to transfer the title to the buyer
  • Texas motor vehicle transfer notification

Here is a link to the documents you need to sell your car to another person.

Know Your Budget and Have a Finance Plan

First I used a rate calculator to determine the price of a truck we could afford for our son. The most we were willing to pay for a truck was $24,000.  We narrowed down our searching further when we asked Nick to choose 3 truck models he liked.  We did all of our research first online from buying directly from owners to dealerships and car auctions.

I then called my Credit Union and asked for a loan pre-approval letter.  Having your own financing can keep dealers in line and their rates competitive.  (This is one way the dealership increases the price of the car so they make more money). Through this process I learned my credit scores and what rate I could get almost anywhere.  Knowing your credit scores allows you to get  the best rates on a car loan and to thwart any dealers who might lie about a credit score to increase financing rates.

Groopdealz

Finally, if you can try to put at least 20% down on the car and finance for no more than 48 months.  This keeps you from getting “upside down” in your loan.  We knew the money we got from the Tahoe was going to be used for the truck, although I have to admit, I did want to keep a bit of the cash for a “rainy day” fund.

 

Know When to Shop

Screen Shot 2015-10-09 at 11.00.52 AMDecember is one of the best times to buy a car, when dealerships promise year-end discounts to rid lots of last year’s inventory. Dealerships are also clearing out old models to make way for new ones July through October, according to CarBuyingTips.com.

But for the biggest savings, buy a car in August, when the highest discounts are offered on the current year’s models and the dealers increase incentives. TrueCar reports that the best day of the week to buy a car is Sunday, when there is lower consumer demand and higher incentive for dealerships to close out the week with strong sales. (However, a lot of the dealerships are closed on Sunday here in Texas).

Shop Around & Determine a Fair Price and Compare Quotes

This was the most cumbersome part.  Shopping and looking at trucks.  We went to several dealerships and looked at trucks on Craigslist.  But, this helped us compare “apples to apples”, with the engine, interior and the “extras”.  After looking at the car, we would go to Kelley Blue Book to learn the fair market price.   I also had a friend who could get me “auction prices”, which proved INVALUABLE in determining the breaking point for the dealership. So after researching which car will provide the best value for your money, also look into what price that model typically sells for.

We narrowed our search to 2 trucks both priced very competitively online.  I set appointments up online and we went to look at the trucks.  My son loved both of them so we had options.

Note:  Many dealerships have an online sales department that doesn’t work on commission.  Start here! This is a great way to score another $500 to $1000 off the original ‘low internet special price’ quoted by the internet manager of the dealer by mentioning they are going to take [another dealer’s] lower quote.

Next, get a price the dealer is willing to sell the car for and DON’T get hooked into the “what kind of payment do you need” plan.  Both dealerships asked me what I wanted to pay monthly.  I told both that didn’t concern me, that I wanted the price of the car.

The next step is to compare quotes. TrueCar’s site shows what others paid for the same vehicle locally and nationwide, as well as factory invoice price and the MSRP (Manufacturer’s Suggested Retail Price). Consumers can also see price trends and available incentives and rebates.

When getting a quote, make sure it includes dealership fees and any other “hidden fees” and doesn’t take the value of your current car into account. Trade-ins only complicate the matter with extra line items and places to hide how much they are really paying for the new car.

Important: If a dealer won’t accept a price in a fair market range, a buyer should always be willing to walk away and buy elsewhere.

Know How to Negotiate & Start Online

car2To say my son was embarrassed by me when negotiating was an understatement. BUT I was there to buy a car and get the best price possible. This was not a time for me to “be nice.”  I was pleasant, but stern.

I know a dealership has to make money or they wouldn’t be in business.  But, I didn’t want them “raking me over the coals” either.  So I came prepared with a financing pre-approval letter, $6,000 in cash and the Kelley Blue Book price and the “auction price” of the truck we wanted to buy.

They had the truck priced at $24,000.  I knew the auction price as $21,500 (the price they could sell the truck at the auction to get it off the lot.)  I offered them $21,500 knowing they wouldn’t take it.  They came back at $23,000.  I then offered $22,500 stating that was my final offer.  I had done the research, I found the car, we test-drove it, I brought the financing and I brought cash.  In 20 minutes, they were going to make $1,000.  I also told them we had another truck just down the street that Nick liked and was priced lower.

The salesperson said, “can you give me $750 more.”  I said, “no.”  He said, how about $500 for a body treatment plan for the life of the vehicle.  I said, “you’re joking, right?”

With that said, I knew he needed another $500 in order for this sale to go through and Nick wanted the truck.  The salesperson then asked if we could finance through the dealership.  I agreed as long as they matched the 2.2% I was quoted. This was another way for the dealership to make a bit of money from the sale.  So I got the truck for $22,500 with the roadside package.  PHEW!

Beware of the  “add-on” trick:

Don’t let add-ons in the dealership’s F&I (Finance and Insurance) office eat your savings. Basically, you should be paying for a car, plus tax, plus registrations fees, maybe a couple of dollars in tire and battery environmental fees, but nothing else.

Skip the rustproofing, fabric protection, and extended warranties.  You can get them cheaper later on if you want them.

Other negotiating options:

You can eliminate the negotiation process entirely. After comparing car costs at TrueCar Certified Dealers online, shoppers can take a “Guaranteed Savings Certificate” to the dealership, locking in a price.

Look into Rebates:

Be aware of rebates and incentives and remember that they come from the manufacturer, not the dealer. The dealership is still making the full MSRP on rebates, so make sure the dealers are willing to negotiate discounts on their end as well.

Daily Boutique Deals

One Response to “How to Buy a Car and Save”

  1. Kimmie I. says:

    Thinking about getting a new car. Thanks for the information!