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How to Get the Best Deal on a New Car

Last fall I helped a friend buy a new car. Here are some of the things we did to ensure that she didn’t get the runaround or wind up with a lemon.

Run a Credit Check on Yourself

The first thing I had my friend do was pull up her credit reports from all of the major credit reporting bureaus. Most car salespeople take for granted that shoppers do not know what their credit reports say. They will try to tell the shopper that, because of a few dings on her credit report, she’ll have to agree to a higher interest rate or monthly payment or price point. If you know exactly what’s on your credit report, you won’t get taken for that ride (pardon the pun).

Fix/Correct Mistakes

We spent a few days going through her credit reports with a fine toothed comb. We sent off dispute reports for every mistake we found. Never trust that your credit report is perfect—most credit reports have mistakes in them. Those mistakes lower your score and credit worthiness and could force you to spend thousands more dollars than you want to on that new car.

Research Is So Important

My friend lives on the outskirts of Memphis. She needed a car that could handle a variety of road conditions and wanted to be able to take the occasional road trip without having to worry about paying through the nose for gas. We spent some time poring through Consumer Reports and reviews before we settled on the Ford Hybrid.

Visiting Dealerships

About a week before we were ready to buy, we started paying visits to the different car dealerships in Memphis. At most of them we’d spend some time with an actual salesperson. This was an important step in the process for a couple of reasons:

·  It helped build relationships at the dealerships so that when we were ready to buy we wouldn’t be going in blind.

·  It allowed us to gauge each dealership’s level of professionalism and comfort. We actually walked right off a couple of different lots because the sales people were so pushy—it felt like walking into a locust cloud.

Get Everything in Writing

At every dealership we visited (and didn’t get chased out of by pushy salespeople) we got a quote in writing. These quotes spelled out the price of the car, the amount of the monthly payments, the interest rates for the loans—all of the important information. This is important because it keeps the salesperson from jacking up the price during a return visit. It also gives you leverage with other dealerships.

Remember: dealerships want your business. Most will match rates and prices if you can prove that another dealership offered you a better deal.

Go With a Corporate Dealership

We went with a Ford dealership national brand for the final purchase. We did this because nationwide dealerships can have more power to obtain better pricing from manufacturers for the consumer. They’re also more likely to be straightforward because every well tended sale builds the reputation of the larger organization. They matched the price my friend was able to pay and offered her a reasonable payment plan—something very few other dealerships would give her.

It took some time to go through all of these steps. All in all, it took a couple of months to go from decision to purchase. Still, in taking her time my friend got the best car for the best deal. It was worth the wait for her, it will be worth the wait for you.

 

Comments

  1. There is some great advice here, particularly in checking your credit report to make sure there are no mistakes. It would be better, though, to buy a used car that you can afford without payments. You’ll save $4000-$8000 per year on depreciation and you’ll save another $1000 per more on interest payments. That extra money could go right into a college savings account so that you can have tuition sitting there, ready to go when your kids are ready for college in 15-20 years. This would mean your kids might get out of college without loans, which could affect their whole financial future. Many people have the opportunity to become wealthy – it’s just about the decisions we make.

  2. This post delivers some very good advice. I have purchased many vehicles (in the Memphis area) and I never thought about getting the quote in writing. That is a great idea. I cannot count the times I have been quoted numerous prices from the same dealership. Thanks for sharing.

  3. Great tips here! Also, if you plan ahead/save and are able to pay in cash you can most likely can negotiate a better price at the dealership. No hassling with loans. That’s what we are planning to do with our next car purchase.

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