6. Review Dealer Financing Options.
Ideally, you’ve already gotten preapproved through your regular bank or another lender. However, you may have more financing options available to you once you arrive at the dealership. Many dealers offer in-house financing. Depending on your credit score, you may even have access to better interest rates.
One potential perk of dealer financing is the potential for 0 percent interest.5 Dealers use this offer to entice buyers to choose new cars versus used ones. And while buying a more expensive car just to get a better interest rate may not be worth it, it’s certainly a nice perk for a vehicle you were planning to buy anyway.
7. Negotiate With the Dealer.
Once you’ve chosen the perfect vehicle, negotiate before signing a contract. The first thing to consider is the trade-in value of your current car, assuming you have one and can trade it. While selling a car to a dealer often gives you a lower profit than reselling your car on your own, you might be able to negotiate a higher value for a trade-in, especially if you’re buying a new car.
Compare prices across local dealers. If one dealer has the same car for a lower price, you might be able to get another dealer to match that price. Keep in mind that you may be able to negotiate the purchase price, but costs like taxes and fees might be set in stone.
Finally, be willing to walk away if the dealer can’t meet your budget, especially if there’s another dealer who will.
8. Resist Tactics by Car Salespeople.
One of the most frustrating parts of buying a new car is dealing with the tactics that car salespeople often employ. Falling for these tactics can cost you more money, so it’s important to know what to expect and how to resist these ploys. Here are a few common sales strategies you might run into, and how to deal with them.
- Bait-and-switch advertising: With this tactic, salespeople show you an offer that’s different from the one that brought you into the dealership. For example, they might show you a more expensive version of the same car. If this happens, stand firm and ask to see the deal they offered in their advertising.
- Creating scarcity: Salespeople create scarcity by telling you a deal is ending soon or that the car may not be available tomorrow. While it’s tempting to fall for this sales pitch, remember you’re likely to find the same car or deal elsewhere.
- Recommending expensive add-ons: Salespeople usually work on commission, meaning it’s in their best interest to get you to spend more money. Often, that means recommending expensive add-ons you don’t really need like upgraded floor mats, window tinting, and pricey entertainment systems. If upselling happens, simply tell them you aren’t interested and stick to the features you’ve determined you want previously.
- Focusing on the monthly payment: When you’re financing a car, dealers are likely to focus on the monthly payment as a way of distracting you from the overall price of the vehicle. But increasing your monthly payment can add thousands of dollars in the long run. Set your budget and stick to it.
9. Close the Deal.
You’ve chosen a car and agreed on a purchase price with the dealer. Now, it’s time to sign the paperwork. Often, you can sign the paperwork at the dealership and leave the same day with the vehicle, assuming you have your state’s minimum insurance coverage (more on that below). In other cases, you may need to come back, or even have the car and paperwork delivered to your home, which is becoming more common with services like Carvana.6
While you’re signing the paperwork, pay attention to the extended warranty information. It’s helpful to know what the dealer or manufacturer covers, as well as how long the warranty applies.
10. Insure Your New Vehicle.
The final step of buying a new car is purchasing the necessary insurance coverage. While you can buy a car without insurance, you’ll need it once you drive the car off the lot in every state except Virginia and New Hampshire. In most states, you’ll need to have at least liability insurance to operate your vehicle legally. But if you’re financing the vehicle, your lender will usually require that you have comprehensive and collision coverage, as well.
Even if you buy your car in cash or your lender doesn’t require comprehensive and collision coverage, they’re a good idea to purchase anyway with a new car. These coverages limit your financial losses in case of an at-fault accident or another incident that causes physical damage to your vehicle. Unfortunately, even the most careful driver can end up with vehicle damage, so it’s better to be safe than sorry.