There are a number of pitfalls a buyer can trip into when purchasing a vehicle. Many of these mistakes can be avoided by simply arming yourself with knowledge. We are not suggesting that every dealer out there is attempting to rip you off, nor are you trying to pull one over on them. Their job is to up-sell and move product to customers. A sound understanding of the processes they are working from and the options you have available can potentially save you thousands.
Many consumers and dealers will focus on the monthly payments. A common method is to suggest such additions as electronics or leather seats for “only another $40 a month”. That $40 a month does not look like much in that context, but it can add thousands to the total of the vehicle. Stay focused on the total price of the vehicle as opposed to the monthly payments.
No car buyer should walk onto a dealer’s lot without researching financing options ahead of time. Many places will provide in-house financing that is generally backed by another financial institution. They make the loan out and get reimbursed. Their interest rates may not be the best available specifically for you. Head over to your bank and find out what kind of loan you can get with your specific credit rating. Armed with that knowledge, you will be able to choose a means of financing that is best for you, not the dealer.
Quite a few consumers dread the negotiating process that comes along with buying a car. Though there are dealerships that offer a fair sticker price to help remove this obstacle, there are others continuing with the traditional method. If you walk onto the lot with no preparation you will only have the sticker price to work from. Instead, familiarize yourself with the vehicle’s other financial information.
Look up information such as the manufacturer’s suggested retail price (MSRP) and the invoice price. The invoice price will be how much the dealer actually paid for each vehicle. Direct-to-dealer incentives, dealer holdbacks (a percentage refunded to the dealer on the invoice price), and consumer rebates can all affect what you have to work with.
The end goal of using that information should be to get yourself a great deal while still allowing the dealer a decent profit on the sale of the vehicle. Operating with the understanding that the dealer needs to profit to stay afloat will allow you to negotiate without the dealer digging their heels in.