This article was last updated on August 10
Year-end is deal time as dealerships rush to clear old inventory and shift their bottom lines from red to black. So many would argue that buying a car, particularly a current year model, is best done nearing year-end. In addition to timing your auto purchase, here are even more great tips to save money when shopping for your next new or used vehicle:
1. Buy from a big (giant) dealership. They have the inventory and they make their money with volume. Small dealerships depend on higher profit per car – which doesn’t help you. This is especially the case with new cars. Further, larger dealerships can afford to negotiate more because they figure that what they lose in the base sale price, they can make up in extras and future servicing.
2. Consider the inventory. Following on from the above point, if the car you want has been sitting on their lot for a while, the dealership and the sales staff will want to sell it. After all, they are paying fees (interest) to the manufacturer until the car gets sold. So when crusin’ the dealership drives, do a visual check and pick the dealership that has a large stock of the car(s) you want to buy.
3. Month end = deal time. The dealerships turn in their “numbers” at the end of the month. All their bonuses, kickbacks, etc., are based on their monthly sales numbers. Therefore, dealerships are willing to sell a few extra cars – at big discounts – at the end of the month, because of the potential volume bonuses. Based on this premise, the best time to buy a car would be after Thanksgiving or after Christmas.
4. Arrange your financing ahead of time. Currently, for those with decent credit, you can get a great deal on your auto loan online or from your bank or credit union. Whereas the finance manager at the dealership, who works on commission, may try to trap you in a higher-than-necessary interest rate. So avoid the dealership games and low-ball sales tactics by arranging your financing before you set foot in the dealership to buy. The only exception for this would be for new car deals where you get zero percent financing. Hard to beat that.
5. Buy on a rainy day. This simple idea, works more often than not. Since you are the only person in the dealership (nobody likes to go shopping when it is pouring rain), they will be eager to do a deal.
6. Don’t take too long to close the deal. There are too many variables to consider when negotiating the monthly payment: length of loan, sales price, interest rate, etc. Negotiate on one number only – the final sales price. You should be able to get anywhere from 10% to 15% off the sticker price – more if the model you are looking at, nobody else wants. Also, get the deal done quickly. The deal may not be worth it to the salesman if they are haggling with you for hours, especially if there are other customers waiting. So do your research, organize your financing and get the deal done when you hit your target price.
7. Try not to get frustrated and impatient – the saving will be worth the time spent. If you want the “best” price, it may take several hours. Dealerships are not in the business to lose money, so they will try every trick in the book to squeeze a profit from the deal. Unfortunately, even if you go to the dealership and say, “I want to buy that Acura MDX, base, Silver…I will give you $36,000″; a salesman will not be allowed to approve the deal. It will need to go through several “layers” of management until the deal can be finalized. But if you do your research and stick to your “guns”, you will get the deal, especially if you have used the Internet and various car buying apps to find out a realistic market price. Once you find the “invoice price” on the Internet, take off an additional 3%. We all know that dealerships get kickbacks, often called holdbacks. Holdbacks and other incentives make the true cost to the dealership lower than the invoice price.
8. Do not “engage” the salesman when asked about the price. Here is what is going to happen. In order to “throw you off your game”, the salesman will question your offer: “Where did you get that price”….”I can’t do that price, I will lose money”….”Nobody in town is going to sell you that car for that price”…”What is a thousand dollars more to get this beautiful car today”. These tactics are distractions to make you question (doubt) yourself. Remember, you did the research. Use an excuse if necessary, it takes the heat off of you. For example: “My wife will not let me spend more than $36,000 on this Acura MDX. If you can’t do the deal, she wants me to buy the Toyota Highlander”.
9. Avoid the dealership trade-in. It makes negotiating that much more difficult. Sell your used car to a private party (via Craigslist or ebay) or sell it to Carmax. You will get – more or less – the same amount for it. Dealerships make more money from used cars than new cars. Why? Because they low ball you on the trade-in price, put a couple hundred into making the car look new, then sell it for a $2,000 to $3,000 profit.
10. Remember, it’s just a car. If the dealership will not do the deal, just walk away. No harm, no foul. But, trust me, the big dealerships will do the deal on all but their most desirable vehicles. Don’t walk into a dealership expecting to get the limited edition Porsche at a discount. You will know the leverage you have over the dealership by the number of cars on the lot. If there are 50 Acura MDXs sitting on the lot, you have the power…they need to get rid of them.