The prospect of a new car is exciting, but the prospect of getting taken for a ride because you don’t know your stuff? Not so much. Do yourself a favor and read up in advance, so you can stay in the driver’s seat throughout the process.
Here are a few tips that can help you save money when buying a car whether you’re shopping at your local dealership or online:
1. Calculate how much you can realistically spend on a car.
Just because you can get approved for a fancy schmancy new car doesn’t mean you should get that car. The first step of the car buying process should be budgeting. Our car buying calculators make it easy to experiment and compare different options. When calculating your budget for a car, also keep in mind up-front costs including your down payment (more on that later), registration fees and sales tax. Many of these fees still apply even if you’re buying a car online.
2. Secure your financing before you start shopping.
Whether you’re shopping online or at a physical dealership, it’s important to have your financing in order before you start the car-buying process. A lot of people default to financing options provided by the car dealer, but you may be able to find an even better deal if you shop around a little first. That way, even if you end up choosing a financing option through your auto dealer, you can ask them to match the lower rate. Pro tip: Lock in that great rate with a fast and free auto loan preapproval from Summit.
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3. Be empowered to negotiate with sellers.
Arrive at the car lot (or online equivalent) armed with information on everything from promotional offers to pricing of different features. Many places will offer cash-back promotions, student discounts or other incentives. Similarly, know what other competitors are charging for the types of cars you’re interested in as well as any must-have extras (like heated seats to help make Wisconsin winter just a bit more tolerable). Even if you’re shopping online, you can bring price comparisons for other similar cars in the area. Bring proof of the better offer, then let the paperwork do the talking! Look at you go, savvy shopper.
4. Put down as much money as you can afford.
Cars lose value quickly, which means it’s best to pay off your auto loan as quickly as possible – before the resale value becomes less than what you owe on your loan. One way to do this is by making a bigger down payment. Ideally, your down payment would be around 20 percent of the total investment. Beware: If you have good credit, you may not be required to make any down payment at all, but it’s a BIG risk. Our advice? If you’re in the market for a new car, or even if it’s coming down the road (pun intended), start setting money aside for the down payment with an automatic savings deposit every month.
5. Keep the auto loan term as short as possible.
Again, you want to get the car paid off as quickly as possible. Period. A shorter loan term means you’ll pay a little more each month, but you’ll get the car paid off faster and pay less interest in the long-run. Less interest = more money in your pocket. That’s why it’s so important to budget in the beginning of the process – to figure out what kind of monthly payment on your new vehicle will be manageable for your budget and needs.
With these auto-buying tips, you can drive off into the sunset knowing you got a great car and a great deal. Ready to shop? We can help you get started with a fast and free preapproval.
