Tips On Buying A New Car
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Shopping for a new car is a bit easier than buying a used car, but there are a few strategies you can use to ensure that you don't get taken for a ride. Although most... |
Shopping for a new car is a bit easier than buying a used car, but there are a few strategies you can use to ensure that you don’t get taken for a ride. Although most dealers are not going to try and rip you off, they have a few strategies of their own to try and get the most money out of you that they possibly can. Know that you are not going to get a car for what the dealer paid, they have to make some money off of you or they will not be in business very long. Taking the time to do a little research and learn the basics will make you into a savvy buyer who gets the most for their money.
Two of the most important things you’ll need to know about are the MSRP, or Manufacturer’s Suggested Retail Price and invoice cost of a vehicle. On top of that, there are almost always extras or luxury items that will add significantly to the end price of a new car. Generally, the MSRP will be somewhere around 4% more than invoice, but it varies from one car to another. Example: A new car that has a $20,000 invoice might have an MSRP of about $21,000, giving the dealer a $1000 profit on the base price with no options. There is another profit for the dealer though, called a holdback. A holdback is a percentage of MSRP that the manufacturer gives the dealer to help guarantee that the dealer will make a profit even if he sells the car at invoice. A lot of people are fooled into thinking that the dealer lost big time when in fact he made a hefty profit just because of the dealer holdback.
Sometimes it will be difficult to get a dealer to haggle about price, however it is usually easier to get the larger dealerships to give you a break than a smaller, less profitable one. Larger dealers have a larger inventory and larger turnover, allowing for a smaller profit margin. They make more money because they sell more cars. What this means is, as they get more inventory they need to move more cars so you are likely to get a better deal at a large dealership. Also, the longer a car sits on the lot, the more it costs the dealer, so if you can try to go for the models that are about to be last years model rather than the models that are just coming in. They’ve been there longer and the dealer needs to get rid of them quickly. Another good strategy is to buy at the optimal times. As for the year, around autumn is one of the best times, that’s when the new models are arriving. The end of a month is also better as dealers will want to increase their figures for monthly reports, so you might get a better deal then.
When it comes to extras and add-ons, be careful. Don’t buy into such things as undercoating the vehicle or scotchguarding the interior. You might want these things but be aware that the dealer is going to charge you an outrageous amount for these services. If you cannot do them yourself, wait until you have bought the car and have someone less expensive do it for you. Many dealers will try to get you to buy an extended warranty that supposedly compliments and goes beyond the standard manufacturer’s warranty. Read everything carefully before agreeing to an extended warranty. A lot of times the dealer’s warranty does nothing that the manufacturer’s does not do, but the dealer wants you to think so. Compare the two before you sign on the dotted line, this alone can save you a great deal.
Lastly, don’t mention or talk about a trade-in until you have sealed the deal on the new car. By doing this, you will get the best deal possible for your trade-in, as the dealer is going to try and give you next to nothing for it if you include it from the start of the deal. A lot of people make this mistake, and the dealers will use it to their advantage when negotiating. It will also help a lot if you have researched your trade-in vehicle and know approximately what its value is.
Recommended Reading
- Used Car Warranty Tips
- Sports Car Buying Tips
- Negotiating The Price
- Buying Used Car Tips Everyone Should Know About
- Five Tips For Buying A Sports Car
