Buying a new car can be an adventure, and that can be both a good thing and a bad thing. Many people find the process of choosing a new car and negotiating a fair price to be quite intimidating. The more information you can arm yourself with, the better prepared you will be.
1. Get Approved Before You Shop
It is helpful to visit the bank or credit union where you have your accounts and ask about getting pre-approved for a car loan. Knowing how much you can spend before you start shopping gives you negotiating power, and convinces the dealer that you are serious about purchasing a new car – if your credit score isn’t great, consider working on raising your credit score using a reputable credit repair company.
Getting pre-approved for a new or used car loan also allows you to focus strictly on the price of the vehicle and getting the best deal you can – you can even get per-approved online with bad credit for a loan and then find a car to buy at a local car dealer. Most car dealers, including luxury ones that offer pre-owned (or lightly) used cars will accept your Bad Credit auto Loan without asking questions.
2. Negotiate the Price First, Then the Payment
One common trap car buyers fall into is focusing too much on the monthly payments and not enough on the actual price of the car. Affordable car payments are important, but dealers sometimes will stretch out the term of the loan or resort to tricks and gimmicks to keep the monthly payment low. Those low monthly payments can mask a high purchase price for the car, and high interest can make the problem even worse. It is best to negotiate a fair price for the car before discussing financing or monthly payment options.
3. Know What the Dealer Paid
Knowing how much the dealer paid allows you to negotiate up from that price, rather than trying to negotiate down from the sticker price. A number of publications, both on the news stand, and online, provide insight into how much the dealer really paid for the cars on the lot. The invoice price can be misleading, since it does not include incentives and rebates often paid to the dealer. Finding the true dealer cost and using that as the starting point for negotiations can help you get the best price for the vehicle you want.
4. Negotiate Trade-In Separately
Many car buyers make the mistake of treating the trade-in as part of the price negotiation for the new or used car they are purchasing. You might be able to get a better price for your trade-in, and a lower price on the car you are buying, by treating them as two separate transactions.
Some dealers will offer above market value for your trade, only to gouge you on the price of the new car. It is often better to negotiate the best price on the new car, and only then start discussing your trade-in. You might be able to get more for your trade-in by selling your old car privately. You can then put the money you made on your old car toward paying down the loan on your new one.
Following these simple tips can help you get the best possible car for the money. Getting a quality car at a great price is not easy, but if you persevere you can get a wonderful car for a payment you can afford.
Check out this great video on financing a Car through a Dealer: