Buying a car can be a stressful experience, no doubt about it. It’s one of the most significant expenses that most of us will ever have to contend with, and a big reason for the stress factor is the dealership itself.
Sure, automobiles aren’t quite the headache that home buying is, but they still require a considerable amount of know-how on your part. Thankfully, going up against the dealership is practically an art form these days. Below are some key strategies to help you get the best deal.
Make Sure You Do Your Homework
These days, there’s no excuse for not doing research before you even set foot in a car dealership. Approximately 90% of potential car buyers do research online before making their final decision. In fact, 48% of shoppers take up to three months to do research before ever showing up in person.
But what kind of research should you do? Make and model are just the beginning. You’ll want to know how the available financing options will work for you, your family, and your lifestyle. You’ll also want to find out about the available warrantees, and whether there are any known issues with the cars you’re pursuing (just ask Takata—the company responsible for the recall of 34 million cars due to faulty airbags). Don’t trust the dealership to tell you everything you need to know; make sure you come prepared to ask the right questions.
Watch for Interest Rate Markups
It probably won’t come as much of a surprise, but car dealers have a bad habit of marking up the interest rates they offer their customers. The available research says that the markups could be as much as 2.7%. What this means is that you’ll almost certainly be better off if you deal directly with a financial institution of your choice, such as a credit union. In most car buying situations, the dealership is little more than a glorified middle-man, and you know what they say about middle-men.
According to research from the Center for Responsible Lending, American car buyers are leaving a cumulative $25.8 billion on the table by cutting a deal with car dealers instead of third-party lenders.
Look Out for the Bait and Switch
Dealerships have all kinds of techniques up their sleeves to get customers onto their lots. One of the most common is the bait and switch. What is it? It’s the tendency to advertise too-good-to-be-true prices, to entice buyers to pay them a visit. But when they get to the lot, that rock-bottom price is nowhere to be found.
Again, we find that prior research (and a healthy dose of skepticism) is your best friend. Once you’ve narrowed down your car choices to a couple different makes and models, check in with Kelley Blue Book to make sure you have an accurate idea of what you should be paying.
Know When the Best Deals Happen
Finally, don’t forget to plan your visit according to the best times to buy a car. According to Lifehacker, the month of August tends to have the lowest transaction prices of the year for automotive sales, followed closely by July. Even the day of the week might make a difference: according to the same research, Sunday is the best day to snag a great buy.
All of these suggestions might seem overwhelming, but they have one thing in common: preparedness. A car is a purchase that will (hopefully) be with you for many years, so entering the experience armed with knowledge is absolutely essential.
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