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To say that no one enjoys paying full sticker price on a vehicle would be a gross understatement. The idea of walking into a dealership in 2016 and paying anywhere close to the advertised price of a new or used car is laughable considering the bevy of resources available to consumers in this day and age, but they somehow continue to reach record sales numbers and grow in revenue on an annual basis – nearly $900 billion in 2015. But consumers today are smarter and more well-versed in online research and comparison shopping than ever before, so if you’re considering buying a new or used vehicle, consider the following in your quest to save money and land the car of your dreams.
Choose a Low-Maintenance Vehicle
Buying new is sometimes a recipe for disaster. Early adopters of brand-new model-year vehicles can often be test cases for manufacturers, who later issue recalls and repairs on vehicles when wider adoption reveals mechanical or safety problems.
Automotive experts agree: if you’re content not having the latest and greatest and simply want a no-frills, hassle-free vehicle, you’re better off buying a like-new condition used vehicle. Some of the most reliable, easy to maintain cars in history have been produced in the last few years, with choices like the 2013 Ford F150 and the 2015 BMW i3 bringing tremendous value to their owners over the life of the vehicle. CarMD publishes an annual Vehicle Health Index report that discloses the average cost of repairs for the most efficient, low-maintenance vehicles in each automotive class – a huge benefit to car shoppers everywhere.
Buy at Auction
In the wake of the Great Recession and shifting qualifications for auto loans, many more people are looking at public and government vehicle auctions to secure a reliable vehicle without automotive loans or financing. These auctions are also a good way to bypass the dealership model and buy a car below cost. The selection tends to range from impounded vehicles, fleet and rental cars, and even retired police and law enforcement vehicles. Because of the lower prices, many opportunistic individuals frequent these auctions in an attempt to make a quick buck on a fast turnaround, but with patience and perseverance, you may come away with a great car at a ridiculously low price.
Use the Internet to Find the Right Dealer
Every major used and new car dealer has a website, but for the most part, the resources provided read more like glorified sales pitches repurposed from the manufacturer than effective information. Kelly Blue Book, eBay Motors, and Autotrader are all decent starting points that will help guide your research, but checking reviews elsewhere may yield surprising results. Car shows, test drives, and even YouTube can be valuable additions to your pre-sale research endeavors, but a new trend in online car buying is Internet-only car specials and promo offers. By leveraging their network of partner dealerships, many regional dealers can share listings on the same vehicles in order to find a buyer more quickly. They tend to go fast, but if you’ve got your eye on a certain make and model, it might be worth looking into.
If you’re considering trading in your old vehicle for a new one, many car dealerships offer online quotes that are fairly comparable from what you’d get in person at the lot. Make a list of the major dealers in your area, create a unique email address (they’ll send you endless promotional emails in exchange for the convenience of their online trade-in tools), and put the industry to work for you.
Repair Your Trade-In
Much like you wouldn’t sell a home without taking a big sweep through the house making upgrades and repairs. Any mechanical issues should be taken into careful consideration, but the aesthetic considerations your vehicle should also be a top priority. A new coat of paint, for instance, can protect against rust, scratches, and moisture, which may be a big selling point to a prospective buyer. Depending on the level of body work required, though, your trade-in value may not make up for the repairs you’ve invested in the vehicle. In these cases, it’s almost always better to hop on eBay Motors or find a private buyer to make the most of your hard work and investment in the car.
Use a Credit Union for Financing
Credit unions continue to be a sure-fire bet for Americans hoping to secure an auto loan without the comparatively exorbitant interest rates and requirements set up by larger financial institutions. In fact, auto loans have been a staple of business strategies at credit unions for over 100 years. They’re seen as low-risk, short-term liabilities that Americans tend to prioritize paying down over even larger, more substantial loans (yes, even mortgages). In the wake of the 2008 financial crisis, many Americans paid off their car loans far before they did their mortgages, leaving credit unions in much better shape than their overleveraged counterparts on Wall Street.
On average, used car buyers stand to save about $400 in interest payments by securing a 5-year loan with a credit union. New car buyers can save as much as $1,200 in interest payments with a similar loan structure when compared to a traditional loan. Unless you’re choosing a more expensive car and have a very high credit score, you probably won’t do better than the terms offered by most credit unions, so do your research and shop around your community before making a decision.
Know the Hidden Fees
Automotive dealers of every stripe know the same tricks. If they smell an opportunity to make a little extra money due to customer negligence or ignorance, they’ll certainly give it a shot.
Even if you come to a handshake agreement on price for a new or used car, you’ll still have to face off with the dealer’s business manager to work through some paperwork. This is where they’ll try to make up the cost of the car and whatever deal they’ve cut with you. Whether it’s a processing fee (between $100-$400 to complete the paperwork you’ve already got in front of you), the dealer prep fee (an extra charge for a fluid level check and car wash), or the so-called delivery fee (charging customers the fee originally paid to the manufacturer), car dealers will try every trick in the book to make up anything they take off the sticker price. Knowing the common service and dealership fees ahead of time, recognizing them as duplicates or double-dipping charges, and calling the dealership on their bluffs can save you hundreds of dollars on the cost of your vehicle. Just be ready to walk away if they get stubborn.