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6 Tips to Buying a New, Affordable Car

February 18th, 2014

shutterstock_156366038If there’s even a remote possibility that you’ll be buying a new car within the next year, now is the time to start car shopping. Second only to a home, buying a new car is one of the most expensive purchases people make in their life. Having said that, there are ways to reduce the price of your new car if you put in the work early. Begin your research casually with free online car comparison tools like ours, then move forward toward your big purchase with cat-like tread. Here are 6 more tips to get the best price on a new car:

1. Decide how much money you want to spend.
A general rule of thumb in budgeting is that you should spend approximately 20% of your household income on car costs. This budget encompasses all ownership costs including maintenance and repair, insurance, loan payments and fuel. You don’t need to get out out your visor and adding machine to make these calculations thanks to free online tools like Bankrate’s home budget calculator. Useful resources like these will help you break down all of your costs and get a pretty good idea of what you can spend on a new car.

2. Research the cost of ownership.
Now that you have a good idea of what you can spend on a new car, begin researching the costs of ownership for cars you are interested in that fall within your budget. There are several free online tools to help you determine cost of ownership, such as Edmunds’ True Cost to Own calculator. Tools like these determine not just the price of the car, but also the estimated price of all associated costs within a specific time frame such as depreciation, insurance, financing, taxes and fees, fuel prices, maintenance and repairs, and federal tax credits.

3. Start researching loan rates early.
A car dealership is just about the worst place for you to make financial decisions. Get rates from different banks and lenders for each car you are considering and compare them. Some banks or credit unions offer free national comparison services that make it easy for you to look at rates from bigger lenders, but don’t forget to check with your neighborhood mom and pop company, as well. Sometimes they offer the best rates, especially if you have an established relationship with them.

4. Factor in every rebate, incentive and discount offered.
Car manufacturers often offer cash-back and rebates for military personnel and recent college graduates, which can be researched on their websites. Make notes about these deals and arrive at the auto dealership fully informed to get the best deal on a new car possible. Deeper research on the internet through blogs and consumer car review websites such as this one are also a good resource to find out about manufacturer incentives and promotions. The more you know before approaching a dealership, the more likely your chances of getting the best deal will be.

5. Use strategic negotiation tactics.
The order in which you present your research knowledge and questions to your car dealer can have an enormous impact on the final price you wind up paying for your new car. Once you have chosen the exact car you want (year, make, model, options, etc.) return to the manufacturer’s website and get the price page for the base model of the car. Print it out and take it to the dealer, beginning your negotiations a few hundred dollars above this price. Only after this round of negotiations should you begin to inquire about incentives, offers, and cash-back discounts.

6. Don’t forget to factor your trade-in.
Unloading your old car on the dealership in exchange for a discount is a great way to save some money and level the playing field with the car dealership. Research the value of your old car on a few different free used car price comparison sites such as Kelley Blue Book. These services are often free and are very useful to someone looking to present their old car as a valuable asset when purchasing a new car. Tip: Don’t tell the dealer you are trading in your old car until the very last minute! Car dealers will use this information to inflate the price they offer you. Instead, use your assets to your advantage and reveal the information strategically.

Have another tip about how to get the best price when shopping for a new car? Share it with other car shoppers in the comments!