Buying a new car can be a stressful and expensive endeavour, especially if you're not sure what you really want.
Buying a new car can be a stressful and expensive endeavour, especially if you're not sure what you really want. Car dealers have a reputation for getting themselves the best deal, which can often leave us out of pocket. But by doing a bit of homework first, you can help yourself get a better car and a better deal.
Research prices
Details about the price that manufacturers set for their cars – known as the sticker price – is widely available, and this is the price you should start negotiating from.
Dealers pay an invoice price to the car maker, and it's their job to try to get as far from that figure and as close to the sticker price as possible. It's in your financial interest to try to reverse that model.
Shop around
It's unlikely that you'll get the best deal from the first car yard you step into, so take note of what someone offers you and then move on to the next dealer.
You may be offered deals that are only available for the day or be told that there is only one of these cars left in stock. You'll be surprised how often you hear this – in sales, creating a sense of urgency is a great way to secure a deal, but often it's a bluff. Plus, if you start shopping early in the morning, you'll have plenty of time to go back later in the day.
Start from home
Car yards have highly skilled salespeople who work to turn a ‘maybe’ into a ‘yes’, with their persuasion not always in your best interest.
Before you visit a dealership, send out a few e-mails or make a few phone calls to get a ballpark figure for the model you're looking at. Not only will it give you an idea of where you can get the best deal, it also gives you a foot in the door with your negotiations.
Ignore hard sales
Car dealers will often try to convince you to make a purchase right then and there, which clearly isn't the best idea for you.
Whether they know they're fleecing you, that you can get a better deal down the road or they're desperate to bump up their sales quota for the month, if you get the feeling that someone's being too aggressive with their sales technique, you should follow your gut and walk away.
Take it to your mechanic
While new cars come with warranties that protect against any faulty parts, second hand vehicles aren't always so generous with their policies.
As well as taking the car for a test drive, ask if you can take it to your mechanic to run a few tests. Even if you're handy under the bonnet, your mechanic can test the electronics to reveal a few secrets that are hidden from plain view. If the seller refuses or wants you to only go to their mechanic, there may be something they're trying to cover up.
Use sales quotas to your advantage
Sales jobs are often heavily incentivised – with workers getting a commission on everything they sell, targets they have to meet and bigger rewards the more they sell. Going to see a dealer at the end of the month or end of the financial quarter may result in a bigger discount as they'll be eager to bump up their sales.
Having the full sum available upfront can also help your negotiating power. Many salespeople are only given their commission when they receive the full payment for a car, meaning they're often much happier to accept a slightly reduced income today than risking that you'll finish your monthly payments in a year and that they'll still be there to receive their share when it happens.
Having the required capital to walk into a dealership can be hard for all of us to muster up, but by taking a small car loan you can use your negotiating power to make a saving that more than covers the interest you'll have to pay.
