I was able to negotiate an out-the-door price for our most recent car purchase that was around $7,700 below the dealership’s out-the-door price. Below are my thoughts on how you can get the lowest price for your new car: 5 tips.
I would recommend you shop around, test drive all models that may meet your needs/budget, and check online reviews. Then, you should start searching for the best price.
Search online for all of the dealerships that carry the car you’re looking for that are within 1-2 hour drive. Contact those dealerships for their best out-the-door prices. You may want to set up a new email address for your car search so you don’t get spam emails later. Why talk with dealerships that are located up to 2 hours from you? Good question. I would answer your question with these questions: Would you be willing to drive 1.5 hours to save $1,000? Are you able to use an out-of-town dealership price to help you negotiate with a local dealership? Are you more likely to find the lowest price contacting 10 dealerships versus 2 dealership? For most people, the answer to each of these questions is “yes.”
I recommend always asking for the best out the door price. What are the typical taxes and fees? What I’ve seen over the years in California is that taxes and fees are about 10% of the purchase price. It’s important to know this because some dealerships try to charge more than 10%. You’ll want to know upfront what the dealership charges. One of the large dealerships I dealt with charged around 15% in taxes and fees. And, they charged a much higher price for the car and they gave a very low trade in value!
If you decide to buy GAP insurance or an extended warranty, dealership will add these fees to your out-the-door price. Gap is an insurance coverage is a supplement to automobile insurance policies or auto loans. A GAP policy covers the difference between the value of a car and what the borrower owes on the loan if the car is not repairable or stolen. I would recommend considering GAP insurance if you’re providing a small or zero down payment.
I recommend that you get a pre-approval for a car loan before you go to purchase your car. You’ll want to have a good idea of what interest rate you qualify for. You don’t want to receive a much higher interest rate from the dealership finance manager. Usually dealerships can match or beat your bank’s interest rate. Or, they can obtain the loan from your bank through their internal systems.
You should also inquire about extended warranties and/or GAP insurance with your bank or credit union. Extended warranty is self explanatory. GAP insurance protects the borrower if the car is totaled by paying the remaining difference between the actual cash value of a vehicle and the balance still owed on the financing.
Some banks offer these products at a cheaper price. If anything you’ll get an idea about pricing so you can negotiate with the dealership…remember everything is negotiable. You’ll want to go over the policies carefully with your bank’s representative to confirm they meet your needs.
It’s a good idea to visit the dealership on a weekday morning when the banks are open. You may run into financing issues at dealership, so you’ll want to call your bank for options. You’ll want to allow for the entire day to purchase the car. You don’t want to rush and overlook something. I would recommend leaving the kids with your parents or babysitter, less distractions.
It’s a good idea to bring your spouse or a family member/friend with you so you have emotional support. You can even decide who will play good and bad cop. If you don’t get the deal you want, then you’ll want to walk away.
When my wife and I were negotiating to buy our electric vehicle, we almost walked away. We we felt the price was too high for the extended warranty. But, in the end the finance manager came down on the price of the warranty, so we bought the car.
I hope you’ve found my article helpful. Below are some other articles I’ve written that may be helpful:
Buying a used car: 6 tips (Used car buying)
Get the highest price for your car: 6 tips (Car selling tips)
Save money on car maintenance and repairs: 3 tips (Car maintenance tips)
Buying an electric vehicle: 3 tips
I’m just a regular dad and I created this blog to share my dad hacks (tips) with families like you on a variety of topics like family activities, food, reviews and more.