By Philip Reed
Congratulations, you are about to land a new race! We’ll assume you’ve done some research: you know how much you can afford to spend, what car you want to buy, and the true market value (what others are paying) for that car in your area.
And now you are ready to buy. Follow these steps to get a good deal and make the process of buying a car from the dealership as easy as possible. To make things easier, download our cheat sheet and take it with you.
Before going to the dealership
Arrange the financing in advance to make negotiation easier and help you get the best deal.
- Check your credit score. If you need to build your credit, consider waiting until your score allows you to obtain acceptable financing terms.
- If it looks good, apply to be pre-approved or pre-qualified for an auto loan.
- Pick the best interest rate and the shortest loan term you can manage.
- Consider calling the dealership to confirm the car is still for sale.
- If you call, pre-select the salesperson: is he listening and does he seem knowledgeable?
- Decide if you want extras like an extended warranty, paint protection, or additional anti-theft devices. Remember, these are very lucrative items for the reseller and you can always buy them later.
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Bring these items
Anticipate and prepare with the right documents and information. Take with you:
- True market prices from Edmunds.com, Kelley Blue Book or NADA, the National Automobile Dealers Association.
- Information on incentives, discounts or special financing offers.
- Proof of insurance and a deposit check (aim for 20% for a new car, 10% for a used car).
- If you are exchanging: car title deed or loan documents and additional keys.
- A snack and water in case the transaction takes a long time.
Arrival at the dealership
A salesperson will greet you and invite you to take a test drive. Then be prepared to be under increased pressure to start negotiations.
- Evaluate the car, but also the seller.
- Is the salesperson: Listening to your needs? Well informed? Relaxed but efficient?
- If asked, do not agree to a credit check before the test drive. Suppose you are already pre-approved for a loan.
- Avoid naming the monthly payment you want. Just say, “I’m a cash buyer. “
On the road test
The test drive will provide the sensory information you need to decide if this is the right car for you. Don’t rush this step and don’t let the salesperson distract you with a chatty sales pitch.
- Tell the salesperson you need to take a test drive for at least 15 minutes.
- Drive a route that includes sharp turns, hills, rough pavement, and a freeway.
- Turn off the radio and pay attention to acceleration, braking, visibility and seating comfort.
- Check the cargo space and legroom in the back.
- If you don’t like your salesperson, ask to see a sales manager or just leave.
- If you are still undecided about the car, don’t force yourself to buy it.
Negotiate the price
If you love the car and are comfortable with your salesperson, now is the time to close a deal in the sales office. Try to remain unmoved and be ready to go if you feel pressured or the price doesn’t match your research.
- Ask the seller to quote a price instead of the common answer, “Make me an offer!”
- Compare the dealer’s price to your Edmunds, Kelley Blue Book, or NADA numbers.
- Make a counter-offer of $ 1,000 below the actual market price.
- You can say, “My research shows the market price is …” Or, “I have received offers from other dealers that are lower.”
- If necessary, increase your bid in increments of $ 250 until you hit the actual market price.
- If the salesperson says, “I’ll take this to my boss,” tell them your time is limited.
- If there is too much back and forth, ask to speak directly to the sales manager.
Closing of the transaction
Before you say “yes”, there are a few questions you need to ask yourself to make sure you know what you’re getting into.
- Ask for an “out of service” price and cost breakdown.
- Question the costs (excluding sales tax, documentation costs and registration costs).
- Ask the dealer to remove any unwanted options installed by the dealer, such as alarms.
- Use your cell phone to take a photo of the transaction sheet to use in the next step.
At the finance office
You haven’t finished yet! You will now be handed over to the finance and insurance manager, who will present the guarantees and extras. Check that the terms you have made with the seller are in your contract.
- Say no to extras you probably don’t want, like fabric and paint protection.
- Divert the field of the extended warranty by saying, “I’ll probably trade in my car before it’s out of the included factory warranty.”
- If the CFO offers to beat your pre-approved loan rate, complete a credit application.
- To easily compare loan offers, keep your down payment and loan term the same.
- Make sure the figures of the sales contract correspond the agreed price.
- Examine the prices in all the boxes and question anything unexpected.
- If something is missing from the car or if it needs repair, send it to us in writing.
- If all goes well, sign and collect your keys!
Woohoo, you did it!
This item is reprinted with permission from Nerdwallet.
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Philip Reed is a writer at NerdWallet. Email: [email protected].