8 Tips for Buying Your Next Car for Less

New car fever can make you do crazy things. These eight tips can inoculate you against paying too much for your next vehicle.

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It’s a well-known fact that after a house, a vehicle is probably the biggest purchase you will ever make.

Unfortunately, while your house might gain value over time, your car eventually will turn into a nearly worthless hunk of metal, plastic and upholstery.

Rather than pour oodles of cash into your next purchase, use these eight tips to spend as little as possible on a vehicle that will safely serve you for years.

1. Buy used … usually

You knew this would be the first bit of advice, right?

Of course it is. How could it not be when Edmunds reports that the average new car loses 11 percent of its value as soon as it’s driven off the lot? That means your $20,000 car is suddenly worth less than $18,000.

So it almost always makes sense to buy used. Wait two or three years, and you can often get a much cheaper car that is almost as good as one fresh off the assembly line.

However, if you’re planning to get a car that’s only 1 year old, a new car may be cheaper in some cases after dealer and manufacturer incentives are factored in.

From our Solutions Center: Find the best rate on a car loan

2. Do your homework

Regardless of whether you’re buying new or used, do your homework first. Research the going price and available options for the cars you’re eyeing.

Of course, Kelley Blue Book and Edmunds are good places to start, but don’t stop there. Those sites approximate a car’s market value. But in the end, capitalism rules. Supply and demand dictate actual prices.

Cruise Craigslist and browse the online ads to get a feel for prices in your area. You want to have a good grasp of local prices before you set foot on a dealership lot and get talked into a “good deal” that really isn’t a deal at all.

Speaking of homework, make sure you’re doing an apples-to-apples comparison when shopping around.

I’ll go ahead, risk looking the fool and confess to this mistake: I recently bought a Toyota Sienna with an LE trim but had been comparing it with vehicles with an XLE trim when doing online research. It wasn’t until after I got the vehicle home that I realized my mistake.

Although I still got a good price, it wasn’t the totally awesome deal I thought I had negotiated.

3. Embrace high miles

It used to be that a car with 100,000 miles was living on borrowed time.

How times have changed. Today’s cars are built to last 200,000 miles or more. So why are you freaking out about buying a used car with 110,000 miles on it?

For many models, the price starts dropping through the floor once the mileage goes north of 100,000. By saying no to these high-mileage cars, you’re rejecting a lot of good deals.

Not every high-mileage car is a good buy, but if you find a reliable make and model, you can get good quality at a low price.

4. Time your purchase right

There are two facets to this piece of advice.

The first is to buy on the right day. As you might guess, the end of the month is often a good time to buy a car, particularly if salespeople are trying to meet their quotas or qualify for a monthly bonus.

However, the very best day to shop could be Dec. 31. The salesperson wants to make a deal before the end of the year. Plus, there may be fewer car shoppers, meaning more incentive for sales reps to close a deal.

Be aware of seasonal trends in your area, especially if you’re buying from a private party. Four-wheel-drive trucks may be in demand in the winter but cost less in the summer. Meanwhile, convertibles and some jeeps might be cheaper in the fall.

And you might want to avoid shopping in the spring if possible. When tax refunds start hitting bank accounts, there could be a lot more shoppers in the market, and that could drive prices up.

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Comments

  • mibtp

    I did all the right things when buying a used car with 120,000 recently, EXCEPT factor in that the mileage may not match up what it’s supposed to be. My BMW 330Ci Convertible was supposed to get an average of 20 miles a gallon. Instead, it got only 14! It was so bad I had to sell it after 4 months of ownership. Could not afford the gas guzzler. Taking it to mechanic, reading what other owners said about the vehicle, doing tons of research did not prepare me for this fact.

  • Jason

    My advise is to negotiate every part of the sale separately. First the price of the car you are buying, total out the door, not monthly payments. Then negotiate the trade if you have one. Finally talk about financing. Dealers trying roll the whole deal together because it makes it easier to hide things, especially if all you are talking about is the monthly payment.

    • Lorilu

      Exactly. I recall shopping for a car years ago, and the salesman kept asking me how much I’d like to pay per month. I kept telling him what I wanted to know was how much was he asking for the car? After going around in circles like this for a while, I got up and left, and bought a car elsewhere, where the dealer was willing to commit to a price, and I could bargain with him.

      • Jason

        I won’t waste my time with a dealer that plays games either. Two car purchases ago, I was looking at a 2 years old 2005 Toyota Prius at an independent dealer. This dealer only buys 2-3 year old cars coming off lease and does no-haggle pricing. The price on the window is the price. There was a Toyota dealership less than 2 miles up the road that had the exact same car on their used car lot. Same year, color, package, etc. The only difference was a 5K mile difference in mileage. As soon as the salesman walked up I told him directly, we are looking at this exact car down the street and they will sell it for $$$. How much will is your dealership’s out the door price for this car.” He said he would have to go ask his manager and I stopped him and said. “You get one chance. We aren’t going to play the game where you pretend to go back and forth with the manager and fight to get us a good price for hours.” The salesman said he understood and came back with with a price $4K more than the other dealership. I said, “no thanks, we will buy the other car” and turned to go. The salesman followed us to our car say “come inside, sit down, I’m sure we can work it out, that’s not the real price” etc, etc. As I got in our car I reminded him I said no games, give me your best price. We went down the road to the original dealer and drove off the lot with our car 20 minutes later. Still driving it today.

  • http://ecofrugality.blogspot.com/ Amy Livingston

    “However, if you’re planning to get a car that’s only 1 year old, a new car may be cheaper in some cases after dealer and manufacturer incentives are factored in.”

    Mmmm, well, not *just* if you’re getting a car that’s only 1 year old. When we shopped for our Fit, the only one we could find secondhand was 2 years old, and it was only $2,000 less than the new one. Given that we expect to keep the car 15 years, the cost per year of useful life was the same, plus the new one had more features, including some pretty useful safety features. Don’t just assume used is cheaper; check prices for both.

  • Edward Shaffer

    There is a legitimate reason for a salesperson to ask what you are hoping to pay monthly…probably more than one. Most people are not going to pay cash for the car, so the monthly payment is completely relevant. Many people have no idea what their payments will be based on a certain purchase price which means that you could spend much valuable time negotiating a deal on a particular vehicle only to find out that it is not in your budget.
    Many factors influence each purchase and rarely are any two the same – find a reputable dealer with well trained consultants to assist you through the process…price is only one component of a very complicated transaction…don’t get fixated on that element and cost yourself an opportunity at a good deal.
    Also, I totally agree with Ms. Livingston – purchasing a recent model pre-owned car is rarely the smartest decision…especially if you plan to keep the vehicle for any length of time – your savings will be minimal versus buying new, and the new car financing rates should mitigate any significant difference in payment.
    Please feel free to contact me via twitter @eddyshaf or by email – [email protected]

    • http://www.moneytalksnews.com Stacy Johnson

      No offense, Edward, but you’re talking like a car salesperson, which I assume is what you are.

      Of course the monthly payment is relevant, but it’s based on the price, which is by far the most important component of this or any transaction. Steering shoppers to payments over price has been a sales technique used by car “consultants” since the 1950s. And its use is far more often used to favor of the dealer, not the buyer.

      It is also not generally true that the savings of used vs new is “minimal”. With rare exceptions, a two year old car is 20 to 30 percent less than new. That’s not minimal.

      One last thing: I’ll leave your comment up, but as it is clearly stated above, this website is not a place to advertise yourself or your services. If you put your email in comment again, the comment will be deleted.

      • http://www.parkplace.com/ Edward Shaffer

        I love how people use “no offense” as a lead in when they obviously intend to offend :-) And if you took 5 seconds to search out my twitter or email, you would not have to “assume” that I am a Sales Consultant at a dealership.

        It is “advice” like yours that pits consumers against dealers, creating unnecessary animosity and suspicion. I completely agree that unscrupulous practices in the past have given dealers a bad reputation, but in today’s transparent marketplace, those dealers are fast learning that those “tactics” are no longer effective.

        Let’s just agree to disagree on the monthly payment issue and help to educate the public about the rule of thumb when financing a vehicle…$20 per $1,000 when financed for 60 months with good to average credit. In other words, for every $1,000 of purchase price, you can reasonably expect your payment to increase by roughly $20. So a car with a purchase price of $20,000 you can predict that the payment will be pretty close to the $400 range, a $30,000 car would be $600 per month and so on.

        I will continue to debate the recent model year used car purchase with you. Of course if you can find a private individual to purchase from then you should be able to realize a 20% – 30% savings over new. However, when purchasing a dealer reconditioned vehicle you can reasonably expect the dealer to have costs associate with reconditioning as well as a certain markup for profit (gasp!) which quickly eats into those percentages, closing the gap when compared to a new car purchase.
        As to the point of including my contact information…please feel free to remove my twitter handle and email – if people really want to get in touch with me, they can simply search my name online or check out my Disquss profile. I apologize if I failed to see where that restriction was “clearly stated above”…still not seeing it :-)
        Edward

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