Buying a Car: What to Know Before You Go



Buying a Car

Now is a decent time to buy a new car. The struggles facing the automotive industry are unprecedented and so are the deals available to buyers. Car dealers got to sell cars in order to stay in business, which makes this a strong buyers’ market. Rebates, financing, and trade-in values are the best they have been in a long time.

But that does not mean it’s a easy time to buy a car, and it does not mean dealers are going to lie down and give the cars away. A savvy buyer must always be ready, and the preparation should start before you ever set foot in a showroom.

Check the Manufacturer’s Website for Rebates:

Many buyers will qualify for multiple rebates, some of which may not even be made public. You might belong to organizations or receive coupons in the mail that entitle you to additional rebates. Be aware of all rebates for which you qualify and make sure you receive them. Dealers are known for not giving buyers every rebate available to them, instead keeping one or two as additional profit.

Know the Invoice Price:

Once you have settled on what car is right for you, look up the invoice price for that car in our Buyer’s Guide. Invoice price is what the dealer pays the manufacturer for the car; the manufacturer’s suggested retail price (MSRP, or “sticker price”) includes hundreds—usually thousands—of dollars of profit for the dealer. With the exception of all-new or very popular models, you should be able to get a new car for closer to invoice than MSRP. Knowing the invoice worth of your car well tell the dealer that you mean business and expect an honest deal. Don’t walk into the dealership without this info.

Research the Dealers:

Buying from a cooperative and fair dealer will save you money and headaches. There are a number of websites that allow people to post reviews of dealerships, but their coverage is spotty and incomplete. If you can’t find online reviews of the dealer you are considering, just talk to people. Your friends and neighbors purchase cars and should be honest with you about whether they were happy with their car or dealer.

Check Your Credit History:

Most people who shop for cars will need a loan. How much that loan costs will depend on your credit history, and knowing your credit history will give you a better idea what to expect from lenders. The Fair and Accurate Credit Transaction Act of 2003 (FACTA) allows every consumer to get a free copy of his or her credit report once a year from each of the three major credit-reporting agencies (TransUnion, Experian, and Equifax). Get a copy of your credit report, and check it for accuracy. Pay the extra few dollars to get your credit score as well, as it is one of the major factors that banks use to determine your creditworthiness.

Get Your Own Financing:

The biggest profit center for a car dealership is its finance department. Dealers contract with banks to get the best rates available but might not actually give you those rates. They might get you a car loan for 4.9 percent APR but draw up your finance contract at 5.9 percent. That one-percent markup is strictly profit for the dealer. You can often get a better interest rate from your local bank or credit union, or you can present the rates you were offered elsewhere to your salesman and challenge him to match or beat them. That being said, promotional rates from manufacturers—sometimes as low as zero percent—can be tough to beat.

Time Your Purchase:

Dealers run on a month-to-month basis. At the end of the month, many will accept lower offers to reach their goals and qualify for manufacturer bonuses. If you’re not picky about having the latest and greatest, the end of a model year is a great time to get good deals on remaining inventory. And December—particularly the last week before the new year—is a slow time for car sales, so if you can hack some time out of your holiday-shopping schedule, it’s a wise time to buy.

Also, most dealerships are busier on weekends. The weekdays are generally slow, especially in the morning. If you come into the dealership on a midweek morning when business is slow, the salespeople are more likely to make a good deal as well. They need sales and they want to look busy, which keeps them motivated to give you a better deal and earn your business.

Do Not Buy a Car on Your First Visit:

Use the first visit to look at and test-drive the car(s) you are interested in. Gather your information and then leave, and be adamant that you will not be buying a car today. This will communicate to the dealer that you are not going to be bullied. Watch what you say to the salespeople—especially if they ask you how much you are prepared to pay monthly—because whatever you say will be used as a starting point from which the dealer will go up when negotiations eventually start.

Get Internet Quotes from Several Dealers: offers free online pricing quotes from your local dealers. Get quotes from multiple dealers before you ever visit any of them. If dealers know they are being pitted against other stores, it will be easier for you to get their best offer right off the bat, and waltzing into a dealership with a first offer already in hand gives you an advantage in negotiations.

Make an Appointment with the Sales Manager:

Once your research is finished and you’re ready to head to the dealership to purchase a new car, call ahead and make an appointment. By calling a sales manager to make your appointment, you communicate that you are serious about this transaction and know what you’re doing. You will still be paired with a salesman when you arrive, But your chances improve of getting a straight shooter who knows you won’t be easy fodder.

There is no guarantee you will get a great deal on a new-car purchase, nor is there a set price to negotiate toward with any car; pricing always varies with content, age, supply, and demand. But following these rules will start you in the right direction to get the great deal possible on your new car.