Recently my wife and I bought a new car. I hate buying a new car because I always feel like the deck is stacked against me. As much as I try to be prepared, I feel like the car salesman has more information than I do and subsequently the better hand in negotiation. But, there were a few things that I had going for me this time. Here is how a little preparation and one simple question he me save money buying a new car.
A Little Preparation Goes A Long Way
Besides doing your homework and trying to figure out exactly what the dealership purchase the vehicle for at wholesale, there are a few things that you can do in order to save you money on buying a new car. One of the biggest ways to get the most bang for your buck is to sell your car yourself. Don’t trade it in to the car dealership. This is almost a guaranteed way that you will not get the most money that you possibly can for your trade in.
Another thing you need to do before you step foot on the car lot is to secure your financing from your own bank. Apply for a loan from your bank and know how much you have been approved for and at what rate. That gives you great bargaining power and a number on the wall that the dealership has to beat. You will save time and money by already having a check or authorization from your bank before you head to the dealership. The car dealer I bought my new car from tried to wear us down by keeping us waiting for hours. In the end, they hoped that we would just settle for their financing offer to get out of there quickly. They even told me, “If you have to call your bank to try and beat our rate, it will be at least another hour unless you have a preapproved purchase authorization.” The smug look on his face dropped when I held up my preapproved loan paperwork with a killer interest rate.
A Simple Question Saved Hundreds
The dealership quickly matched the interest rate of my bank’s car loan thanks to my wife and my excellent credit score. But, simply matching it is not good enough. They were flabbergasted when I told them no and that I would use my bank. They had researched my credit report and saw that I have never financed a car through my bank because the dealership typically handily beats their quote. They asked me why I would use them this time for the first time. I love my bank, but I also love saving money. I simply asked the car dealership to do better. I asked them to beat my bank’s rate. After a few minutes in the back room pretending to sweat about it, they readily agree and beat my bank’s rate by almost half a point. You may be wondering why I didn’t call my bank to try and get them to beat the new car dealership rate. That’s a great idea, and I tried that last time. But, alas, my bank has a policy not to get in a rate war. Their one rate they offer based on credit score, loan amount, and other factors is all they will do.
While I often feel like I get beat up on the final sticker price and how much money the dealership actually paid the manufacturer, I know that I did everything I possibly could to win the battle for a good trade in price and low car loan rate.
What about you? Are you like me and always feel taken advantage of when buying a new car?