Car prices vary between dealerships, so it pays to learn how to negotiate the best price. We’ve got 4 strategies for you, from focusing on the long-term benefits of a cheaper car choice to negotiating trades and down payments. In addition, it’s important to know what other costs you should expect along with your car purchase: sales tax, fees, and warranties.
Regardless of whether you are searching for a used Mercedes Essex or a new luxury saloon in London, following these tips will help save you money.
1. Avoid the Back End
Dealerships have a whole range of add-ons and extras that can raise the price of your car. There’s a whole market out there just waiting to upsell you into a more expensive vehicle, so don’t get caught off guard by it all.
Here are some common extras that can tack on thousands to your purchase price and may not be worth it:
- GAP insurance: You’ll typically find this on a leased vehicle, but it can be added to a used-car purchase as well. It covers the difference if your car is damaged in a wreck or stolen and isn’t worth as much as you still owe.
- Extended warranty: A warranty covering certain parts of your car for an extended period will run you several thousand dollars.
- Extended service contract: This covers additional parts of your car for an extended time with less cost per visit than maintenance plans. They can be cheaper than full warranties, depending on the length of protection you want and how many miles are covered.
2. Financing or Pay in Cash
Some dealerships will try to throw you into a loan right away, whereas others will only give you financing if you ask for it. If you can pay cash, do it. You’ll save yourself a significant amount of money by paying in cash, as interest payments on financing are high.
If you need to finance your vehicle, pick out a lender before you look at cars so you know exactly what your monthly payment will be and how you’ll get the best deal. It also helps to shop around and compare loan terms from different lenders.
3. Negotiate Trade-Ins and Down Payments
When negotiating the price of your car, don’t forget about your trade-in if it’s still drivable. You’ll be able to get a better deal on the car you want if you have some equity in your current car.
Typically, you can add the value of your trade-in to your down payment or use it toward the final price. You can also sell the vehicle yourself if you don’t want to go with a dealership trade-in. Just be sure to check its current market value first so that the dealership doesn’t lowball you.
4. Negotiate the Price
Determining the best price for a car is a complicated task. It’s not just about comparing costs between dealerships – there are interest rates, down payments, and fees to consider, for example. So, you want to know your options with each dealership before you make an offer, so you know what kind of deal you can get. Be sure to ask questions that help you understand where the dealer stands on everything – interest rates, down payments, and fees.
No matter what your situation is, you can find a car in your budget that meets your needs, so don’t be afraid to shop around and ask questions.