How to Save Money on a New Car

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By Limowreck
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Save Money on a New Car

Want to save money on a new car? You don't have to buy a used car to get a great deal. Here's how to negotiate a great deal with a new car dealer.

Difficulty: Moderately Easy

Instructions

Step 1

UNDERSTAND PRICING

Saving money on a new car starts by understanding the many prices you will see at the dealership.

MSRP ~ The Manufacturer's Suggested Retail Price is not the lowest price a dealer can offer. Instead, it's a guide to what the manufacturer considers a fair mark-up. An MSRP is issued for the entire car and each option available. The MSRP is the MOST you should have to pay for a new car, not the least.

INVOICE PRICE ~ Many dealers allow you to believe that invoice price is what they paid for the vehicle. It's not. Invoice price does not include rebates and discounts the dealer was given. The price difference depends on the car you wish to purchase. The price difference for a luxury car will generally be substantially higher than that of an economy car. For a BMW or a Lexus, the invoice price can be thousands more than the dealer actually was charged. For a Honda, the price difference will be lower.
Step 2

SKIP SOME OPTIONS

You may want a car with all the bells and whistles, but getting those perks from the dealer can cost you. Limit options to those that are mechanical in nature. For instance, air conditioning and power windows will be less expensive purchased as options from the dealer than later modification by a third party. Stereos and exhaust options, however, are often cheaper purchased elsewhere.
Step 3

NEGOTIATE PRICE, NOT MONTHLY PAYMENTS

Many salesman will try to shift focus away from the total vehicle cost to monthly payments. This is because stretching out payments and other tricks allows them to provide a monthly payment that looks like a real steal. However, when the monthly price is converted to an overall vehicle price, you are often paying more than MSRP for the car you are purchasing.

Insist on negotiating price, not payments.
Step 4

TRADE IN

If you're planning to sell your used car privately once you have secured a new car, don't. Trade-in value will almost always be higher than private party value. Also, if you are ready to buy a new car from the dealer, you can negotiate the price of your used car UP.
Step 5

Save Money on a New Car

DOWN PAYMENT

Many of us cannot afford to pay cash in full for our new car. However, a substantial down-payment can save you THOUSANDS in financing and interest.
Step 6

BE READY TO BUY

When a salesman knows you are ready to buy, they are eager to make a deal you can live with. Show up with a price in mind. Tell the dealer that you are ready to buy NOW if they can offer you the price you want. You may not get a price as low as you had hoped, but being ready to buy will get you a better price than "just browsing". A sure sale is a great motivator for a car dealer.

Comments

psychonurse said

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on 9/9/2008 I always HATE dealing with car salesmen. Now, I'll feel better armed. Thanks for the tips!

on 8/24/2008 HOW CAN I SAVE MONEY FOR A CAR FOR MY FAMILY A HAV GOT MY OUN FAMILY RIGTH NEW AND I WAS JUST WODERING HOW CAN I SAVE MONEY FOR A CAR FOR MY FAMILY JUST INCASH MY KIDS GET SICK AND I CNT TAKE BECOCOZ I HAVE KOWN CAR TO TAKE THER THATS FRO BILLIE JOE POPATA..............