Car buying is stressful. For most people, car buying ranks among their least favorite activities, perhaps only behind going to the dentist. Stepping foot onto a car lot is enough to induce panic for some. To make matters worse, there’s a bounty of poor car buying advice online (i.e., “look up the vehicle’s invoice price”). I’ve been helping friends buy and sell cars for years and have witnessed just about every trick in the dealership book, of which there are many. Car buying is a skill just like any other and it must be practiced. If you’re out of practice, you might find yourself sitting in the finance manager’s office wondering, “Am I getting a good deal?”
The term “good deal” is relative. What represents a good deal on a certain make or model, might be a poor deal on another. Is the car new or used? Are you leasing or buying? Are you paying cash or financing a portion of the vehicle? Each of these variables change the deal, and knowing the market is the only true way to guarantee a good deal.
The best thing you can do is educate yourself. The second best thing you can do is hire a car broker when in doubt. Here are a few car buying hacks to get you pointed in the right direction.
1. Work with a sales manager.
Sales managers have the final say on the price of a vehicle, while general sales consultants do not. When you work with a sales manager, you’re negotiating with someone who has the power to say “yes,” which eliminates the middleman salesperson who must always seek approval from his or her manager. Their contact information can typically be found under the “About Us” section of a dealership’s website.
2. Shop at the end of the month.
If you can wait, the last few days of the month are the best time to buy a car. Dealerships are heavily incentivized by manufacturers to move a given number of units in a month. As the end of the month nears, salespeople are likely to be more flexible to hit their quota.
3. Expand your search.
Everyone likes to walk into the nearest dealer and sign on the dotted line. Don’t be like everyone. Expand your search beyond your neighborhood. I like to set Auto Trader and Cars.com for a 500-mile search radius. Flying or driving across state to get a car can save you thousands and should never be ruled out.
4. Negotiate via email.
Negotiating specifics via phone or in person is for amateurs. Gather your points and send them to the dealership via email. Business is often done via text message, so feel free to move to texting if necessary, but make sure you have everything in writing.
5. Keep your vehicle trade-in out of the deal.
Dealers love to ask questions about your existing car, but don’t take the bait. When you roll your trade-in into the new car deal, dealerships like to start distorting the numbers. Keep the sale of your old vehicle as a separate transaction whenever possible. You’ll come out ahead this way and the deal will be cleaner with less moving parts.
6. Always cross shop. Don’t purchase on the spot.
Regardless of what industry you’re in, getting multiple quotes is just good business, plain and simple. Cars are no different. Spend the extra time reaching out to other dealers for multiple quotes. Make sure you give all dealerships the same parameters when getting a quote—this way you can evenly compare everything.
7. Financing can make or break your deal.
With interest rates on the rise, understanding auto financing is more important than ever. Knowing your credit score is crucial. If your credit score is 700+, you qualify for “Tier 1” financing in the auto world. There generally isn’t a discount on financing for scores over 700. Dealerships pull “Auto FICO 8” or “Auto FICO 9” scores—these are different than your normal FICO score and are typically higher. They place extra emphasis on your past auto loan history. You can view your Auto FICO scores on MyFico.com.
If you’re purchasing a car, there’s a good chance your bank or credit union will offer a more competitive rate than the dealership.
8. Talk sale price, not monthly payment.
“What are you looking to spend every month?” is a question that dealerships will try to ask. Don’t answer it. If you tell the dealer you’re looking to spend $499 a month, you’ll leave spending every penny of that $499 a month. He who names his number first loses, so don’t paint yourself into this corner. Instead, focus on negotiating the final out-the-door sale price. This is still the most important number.
Following the points above will help ensure you’re getting a fair deal on your next car purchase. Remember that you are the only person cutting a check and be prepared to walk away at any moment. Car brokers are often underrated and can almost always get you a better deal than you can get yourself, for a nominal fee. There’s no shame in asking for car help, so reach out to your car friends or be willing to pay for someone’s service in order to score the best deal. You’ll be glad you did.