From a purely financial standpoint, it doesn’t make sense to buy a new car. Even with lower financing rates available, longer warranties, fewer repairs early on, etc., the value lost to depreciation in a vehicle’s first two years of life — as much as 40 percent for some models — makes buying “previously owned” an easy decision for me.
But I know some people just have to buy new. There’s nothing like that new car smell, right? There are also the latest safety, comfort and convenience features. Another major plus is not worrying about what the car went through before you laid eyes on it. I get it. I say get over it and save your money, but if you’re dead-set on buying new, there may be no better time.
Two key factors are in your favor right now. The 2014 models are in, yet many 2013s are still on the lot (and racking up finance charges for the dealer).http://www.forbes.com/sites/jimgorzelany/2012/12/13/best-year-end-new-car-deals-and-the-best-days-to-buy/
Plus it’s the holidays. Most potential car buyers have other priorities right now. Aside from the handful of well-to-dos looking to giftwrap a vehicle for that special someone, dealers are starved for customers.
Here are seven steps for turning a good car deal into a great one:
1)Play the game
. Dealers are out to get every penny from you they can. Be prepared to do the same to them. Once you’re set on the exact model and features you want, email several local dealers asking for exact quotes on that vehicle. This is your starting point.
2)Ask for an invoice. With a little online research on True Car http://www.truecar.com
, you can find the invoice price for your vehicle and the price the dealer “paid” for it before markup (they almost always pay less.). Aim for that price, or even below it. The worst they can do is reject your offer.
. Don’t stop at the invoice price. Research any available factory incentives like extended warranties, cash back, special financing rates, and military or recent graduate discounts. Remember, these come from the factory, so don’t let the dealer tell you it’s costing them anything.
4)Don’t tip your trade. Be sure to double-check the value of your current vehicle before agreeing to a trade-in. The reason for this is when a trade-in is rolled into your purchase, it’s easy to get distracted by the savings on your new ride without realizing you are losing value on the sale of your current vehicle. A great resource to check your math is Kelley Blue Book http://www.KBB.com
for a clear idea what your car is worth.
5)Know your options. Most credit unions and some banks can beat a dealer’s financing rate; https://www.cacu.com/auto-loan
This alone can save you tons of money over the course of your loan, so shop around. I did a ZIP code search for rates on a 48-month loan the other day. Two large, well-known banks were more than 1.5 percentage points apart! Also know that rate isn’t everything! Having an institution you trust and can work with you when times get tough is worth a little higher rate.
6)Be prepared to walk
. The last thing a salesperson wants to see is an interested buyer walk out the door. If you’re not getting the price you want, head in that direction. That’s often when the best, final price comes to light. If it doesn’t, or it’s still not to your liking, keep walking.
7)Just say no. If you say yes and settle on a price, double check that it’s “out the door,” including destination charges and documentation fees. From there, they’ll press you for paint protection, rustproofing and other nonsense. http://www.bankrate.com/finance/auto/car-loan-add-ons-are-they-worth-it.aspx
Refuse these, as well as any “Internet” or “advertising” fees. Often these services are unnecessary or could be purchased somewhere else for much cheaper.
Yes, it can be an exhausting process, but you have to be vigilant at every step. That’s car buying, folks. And nothing’s more exhilarating than driving off with a truly great deal.
Kat's Money Corner is posted on Dollars Sense every Tuesday. Kat Hnatyshyn, when not blogging or caring for her little one, is a manager with CommunityAmerica Credit Union. For more financial chatter, click http://twitter.com/savinmavens.