10 Ways Smart People Save Money When Buying a New Car
Written by
Andrea Norris
Edited by
Molly Sullivan
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In September 2024, the average price of a new car was $48,397, slightly lower than the 2023 average yet $11,000 higher than the 2019 average. Even with higher prices, savvy car consumers can score great deals.
Here are 10 strategies smart buyers use to get the best deals when purchasing a new car.
Know Your Auto Budget
Smart car buyers start with a set budget that includes not only the car’s price but also additional costs like insurance, fuel and maintenance.
A low monthly payment is pointless if high insurance rates, expensive maintenance or poor gas mileage make the car too pricey overall. Seek makes and models with lower insurance rates and relatively better fuel economy before narrowing down your car options. Also, some finance experts recommend budgeting $50 to $100 monthly — or $600 to $1,200 annually — for car maintenance and repairs.
Do Your Research
Savvy buyers don’t rely solely on a salesperson for information about models, features or pricing.
Before visiting a dealership, identify the makes and models that suit your budget and have your desired features and prices. By researching prices, features, safety ratings and owner reviews beforehand, you can be better prepared to identify fair deals. Don’t hesitate to walk away if the price isn’t right.
Time Your Purchase for Maximum Savings
Smart car buyers know that timing matters to get the best car deal.
You can get the best deals at certain times of the year when car dealerships clear out inventory to make room for new models: the end of the month, holiday weekends or year-end sales. According to Kelley Blue Book, about 60% of a dealership’s inventory includes vehicles that must be sold by the end of the year.
Also, watch for rebate offers or special financing deals that can reduce the cost of your new car substantially.
Shop For an Auto Loan Before Buying a Car
Savvy car buyers arrange financing before negotiating with dealerships. By securing a loan through a bank or credit union in advance, you can know your loan terms and monthly payments upfront — this helps you avoid any surprises.
With a preapproved loan, you gain negotiating power and you’re not stuck with the dealership’s poorer financing offer.
Avoid Getting Stuck in an Upside-Down Auto Loan
Smart buyers don’t borrow more than the car’s value.
An “upside-down” loan can be risky, especially if the car needs to be sold or traded. To avoid this, put down a significant amount and opt for shorter loan terms, ideally three to four years. This way, you can pay down the principal faster and save on interest. If possible, also steer clear of high-interest loans.
Compare Prices Across Multiple Dealerships
Savvy buyers recognize that prices and fees for the same vehicle can vary by dealership.
You can negotiate better terms or identify the best overall deal by getting quotes from multiple dealerships. Also, consider broadening your search to nearby cities to secure the best price on the same model.
Determine Your Current Car’s Trade-In Value
Before trading in your current car, it’s ideal to research its trade-in value.
Knowing a car’s value can help you avoid settling for lowball offers from dealerships. If an offer is too low, consider selling the car privately to maximize resale value. To determine your car’s approximate trade-in estimates, check out websites like Kelley Blue Book or Edmunds.
Negotiate the Best Deal
Savvy buyers aren’t shy about asking for a better deal.
You should always negotiate the car’s price. But don’t stop there — ask for extras like free oil changes, floor mats or extended warranties. You may get added value without extra cost even if the car’s price stays unchanged.
Understand GAP Insurance
Smart car buyers know when Guaranteed Asset Protection (GAP) insurance is necessary and take steps to avoid it.
GAP insurance will cover all or a portion of your auto loan balance if your car is stolen or totaled and you owe more than the car’s worth. But getting a GAP insurance plan isn’t a hard requirement, especially if you’ve made a large down payment or have a low-interest loan. If you need one, getting it through an auto insurer can often be much cheaper than going through a dealership.
Skip Dealer Add-Ons and Fees
Dealerships often attempt to add unnecessary extra services like rust-proofing or fabric protection, significantly increasing the final price. So review itemized charges for your car carefully and decline any add-ons you don’t need. You can always get them later for less if desired.
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