I cannot tell you how many times I have searched for “how to buy a car” on Google and Pinterest over the past few months, but it’s been a lot. Buying a car is a big deal! For most of us, this is a complicated decision and a huge expense and who wants to have to go through this whole process all over again because you made a bad decision the first time? My husband and I FINALLY bought a new-to-us minivan a few weeks ago and I’ve been detailing the process to help you streamline your decision making and find the perfect vehicle at the best possible price. Be sure start with the first article in this series: How to Buy a Car: Choosing the Right Vehicle.
Now that you have a good idea of what you’re looking for, it’s time to find it for the right price.
Buy used, buy used, buy used! Got that one yet? If not, let me hit you with some harsh facts:
When you leave the car lot with your beautiful, sweet ride with its new-car smell and freshly-waxed sheen, that sucker depreciates by 10%. TEN percent! That is one VERY expensive mile, my friend!
Over the first year, the average new vehicle will depreciate an ADDITIONAL 10%. That’s 20% in the very first 365 days. Girl, bye. No way we’re taking that kind of hit. Over the following few years, the car continues to depreciate rapidly, though the rate slows until most cars have lost 60% of their value by the time they are five years old. Ouch. (Resource: Carfax.com).
We can side step this painful drop in value by purchasing used vehicles. Aim for a couple to five years old and you can avoid the worst of those depreciation years. We purchased a vehicle that is about two years old. We could have gone with something a little older, but, as I mentioned in the first post of this series, we plan to drive this vehicle for several years and low mileage was also a priority for us. That landed us in the 2015 pool of Honda Odysseys with less than 30,000 miles. This is a good place in your buying process to discuss whether low mileage or less depreciation is more important to you. If it’s the mileage, buy at least 2 years old so you can still get the low mileage you need. If it’s less depreciation, aim for a car that’s about 5 years old and search for the lowest mileage possible among those vehicles.
Search, and Search, and then Search Some More
The chances that the vehicle of your choice at the age and mileage you want is going to fall into your lap at the perfect price is slim to none. You are going to have to look for it. I admit, this part is kind of a pain. I did it all online because the time and money it would cost to drive to different cities and look around wasn’t worth the potential savings of a few hundred bucks to us. I searched through Carfax, Cargurus, Autotrader, Craigslist, and all of our local car dealerships. I compared and made notes and saved vehicles and entered my email on enough websites to ensure a lifetime of car-sale-spam. Unfortunately, I recommend that you do the same. There’s just no way around this part of the hunt. You can always “unsubscribe” from the car dealer emails later. Once the vehicle you were “following” sells, it will likely die off anyway.
This step is vital because it gives you a good idea about normal prices and great prices on your vehicle as well as a feel for which sellers might be willing to work with you. When you email and call, you can ask about possible negotiations and they’ll tell you whether or not they have wiggle room. If it’s a hard “no,” don’t write them off because they may be willing to reconsider later, but it’s probably not going to be a drastic discount. If they say they can talk about negotiations, they’re likely ready to strike a deal.
Consider Private Sellers
It’s no secret that private sellers usually offer lower prices on their vehicles than dealerships. There’s no third party that has to be paid in this transaction and cutting out the middle man saves you both money. However, there are also no additional warranties, guarantees, or dealer services and the vehicles are usually much more loved (read: older). In our case, I searched high and low on Craigslist and could not find a vehicle even close to our age and mileage parameters. If you do choose to go this route, check the VIN on Carfax and have the vehicle thoroughly examined by at least a semi-trusted mechanic (I need one of these, by the way. I feel like I’m being ripped off 100% of the time when I take my car to the shop) before you make the purchase. Feel free to negotiate because the worst they can do is tell you no, and at that point, your negotiations either continue or end. No harm, no foul.
Negotiating Car Price
1. Be NICE
Nobody wants to help a mean person. It’s just the way things are. Use your sweet voice, be respectful, and realize that these people are just doing their jobs. Try not to take their words personally (I failed at this tip when one salesman suggested I “look at cars a little cheaper” and I bristled) and remember this is just business. When you get your request or a lower price, express your gratefulness. Make sure everyone you have dealt with knows that you are thankful for their service. Don’t lose your religion over a car negotiation.
2. Use Leverage
We found a similar vehicle about an hour and a half away for a few thousand dollars less than the one we wanted locally. We mentioned that other vehicle when we asked our dealership for a lower price. The salesman lowered the price a little on the van we wanted, but pointed out the differences in warranties between the two vehicles. Remember the above tip and be nice. We ultimately went with the slightly more expensive vehicle because the warranties, extra amenities, and convenient location made up for the lower price of the other vehicle. If we had made a scene, we would have really had to eat humble pie at this point and we all know that crap tastes awful. Don’t be afraid to tell a dealership that you will be purchasing a cheaper vehicle if they cannot match the price, but do so in a matter-of-fact, respectful manner because you may soon be sitting in front of this person buying your car. I recommend that you have the less hot-headed spouse handle this part of the negotiations. In our case, my husband did most of it because I take things personally and he doesn’t. If someone refuses to lower the price for me, I automatically assume it’s because she doesn’t like me or because he must be a dope who doesn’t want to sell a car that day. My husband is far more objective and realizes practical things like the fact that the salesman is just doing his job and that is all. We all have our strengths.
3. Be Reasonable
Don’t call and ask for $5,000 off of a $20,000 vehicle. No one is going to reduce the price in the amount of their entire profit margin. I know you want a deal (girl, I KNOW!), but you have to be reasonable. I would have loved for the nice man to give me my minivan for free because I was sweet and my baby was cute and I would have told all my friends about his kindness, but he didn’t. In doing all of the research you have done up until this point, you should have a stinkin’ good idea of the value of your chosen vehicle. If you don’t, check Kelly Blue Book and find out. The dealer/individual selling the car knows this information, too. If the price is way below normal, be suspicious. Look for reasonable prices. From there, you can ask for hundreds to a thousand or two off. If the car is already listed below KBB price, you probably won’t get much. Remember that there will be additional costs and fees in the amount of $700-1,000 when you actually purchase the vehicle (ask for the precise amount when you call about it). While the dealerships cannot waive those fees, they can and may give you a discount on the vehicle in that amount. If they do, that’s probably not a bad deal, especially if the car is listed at or under KBB price. You can always ask for a lower price, but they may decline. At that point, you have a decision to make.
4. Consider Upgrades Instead of Cash Discounts
A friend tipped me off to this one before we negotiated for our vehicle and it was a great suggestion. Is there something you plan to buy for the vehicle afterward? Ask them to include it now as part of your negotiations. A friend of a friend asked for DVD players in the headrests and got them. We asked for new rubber floor mats valued at about $185 and got those. If you cannot get the price drop you are hoping for (or even if you can), try asking for upgrades. Again, the worst they can do is say no.
5. Always be Willing to Walk
This one was perhaps our strongest playing card. If the price is just too much, thank the salesperson and leave. We did this several times over the phone or in person and had several different responses. One of the situations was a new car we had test-driven for comparison, but weren’t interested in buying. After 6 minutes of telling them we really weren’t looking for a new car, but would like to know when they get a similar used van, they had dropped the price of the new one by $4,000. It was still out of our price range, but they were clearly prepared to negotiate. Another car dealership we called said they could not negotiate at all and that was the end of it.
Our local dealership would not negotiate at first, but had our name and number and called us 3 days later with a better offer. Two days after that, they were willing to drop the price further if we chose to decrease the warranties. The night we bought the van, they agreed to give us the floor mats I requested. During each of those waiting periods, that van could have sold. We knew that and we were choosing to take the gamble to get a better price. If it had, our search would have continued. The car you’re watching is not the only one out there. You may have to wait, but another opportunity will come. It’s disappointing when you don’t get what you want, but ultimately, it’s worth the wait. Be willing to walk away from a bad deal.
Pay with Cash
Paying for your vehicle up front with cash will save a ton of money in interest over the long-haul. Unfortunately, car payments seem to be away of life among most of us, but I challenge you to change that. You do not have to be bound to your car payments forever. If you have one now, work to pay it off as soon as possible. See the post on 7 Tips to Pay Off Debt to get started. This blog was our decision to be open about our finances for the benefit of those around us. As a result, we get a lot of questions about our expenses and money management and we try to be honest without over-sharing. My husband has had so many people ask him if and how we paid cash for our vehicle. I promise you, it’s possible. If we can do it, you can do it. If you’re currently debt-free, go ahead and start budgeting your savings for the next vehicle. Time passes quickly when it comes to things like that and that’s an expense you cannot afford to let sneak up on you.
Buying a car is expensive, scary, and time-consuming, but these tips will help you streamline your process, manage your time efficiently, and get the best possible price. I want you find a reliable vehicle that meets your needs and won’t break the bank. Do you have any other tips for car buying? As always, I’d love to hear your suggestions below.
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