5 Ways to Get the Best Deal in a Down Market
Since automotive sales are tanking, now's the time to put off that new car purchase, right? Wrong. While it may seem silly to part with your hard-earned money right now, economic doldrums mean that now is one of the best times in years to get an incredible deal on a new car. The deals won't just happen by themselves, though. Here are five rules for getting the best deal on a new car right now.
1. Be an Attractive Buyer
No, you don't have to hit the salon before heading to the dealership, but you'll be in a better negotiating position if you can show the dealer you're a strong, serious buyer who can either afford to pay cash for the car or will qualify for financing. If you'll be financing the purchase, clean up your credit score (you get get tips on how to do this by checking out articles on financing a car) and have cash to put down. Make yourself even more attractive by going into the dealership with financing. Not only does that give you time to shop for the best deal, it's one less thing for you and the dealer to negotiate.
2. Pick Your Target
While sales are down overall, some individual models, and even some brands, are still going strong. To get the best deal, you have to target your shopping. Look for good cars that aren't selling well. If you want something small and fuel efficient, you won't get a great deal on popular cars like the MINI Cooper or Honda Fit. You'll do better looking at the Toyota Yaris and Nissan Versa -- two good cars that are overshadowed by their competitors. Also, don't be afraid to buck current trends: most shoppers are staying away from SUVs and trucks now, which means that you can finally get an incredible deal on the Escalade you've wanted for so long.
3. Research Car Manufacturer Incentives
After you've selected a car, you have more research to do before heading to the dealer. Check for the best national and local car deals offered by the car's manufacturer. Car manufacturers frequently offer cash back or low APR financing (especially on models they really need to move), and these deals can vary from month-to-month. It's a lot easier to negotiate with a dealer on a Toyota Corolla if Toyota, not the dealer, is offering cash back. The less money that comes from the dealer's bottom line means better odds for you to get a good deal. Remember that no matter what incentives are available, you still may be able to negotiate for more. Play your cards right and you may turn a $2,000 incentive into $4,000.
4. Pick the Best Deal for You
Most car makers offer either/or incentives: either a low finance rate or cash back. A lot of buyers may overlook any offer that doesn't directly reduce the price of the car. Don't fall into that trap. You can usually save money over the entire life of the car by running numbers on financing offers offered by dealers and carmakers. While paying 0 percent financing on a car loan may not be as exciting as getting $3,000 cash back, over the long term, the lower financing rate may save you more money. Before you set your heart on a low interest rate, make sure you can qualify for it. Read up on new car financing to make sure you can get a financing deal you can live with.
5. Don't Let Your Trade-In Ruin Your Deal
The last thing you want to keep you from getting a great deal on your new car is your old car. Before you head into the dealership, take a realistic look at the car you need to trade in. That means being honest with yourself about its condition and how much you owe on it. Owing more than your trade is worth can quickly eat up any price drops or incentives you've negotiated on the new car (on the flip side, those incentives may be what makes it possible for you to get out from under your trade). Remember that you can always negotiate the price of your trade. It's always a good idea to bring in an online estimate of your car's value. You can also go one better by taking your car to Carmax -- for free, they'll give you an offer to buy your car that you can use to negotiate with another dealer. No matter how much research you do, the type of car you're trading in determines how much wiggle room you have to negotiate. If you're trading in a Prius for an F-150, you're probably in good shape. If it's the other way around, you'll probably have to take what the dealer offers you.
Extra Tip: Be Polite
Just because auto sales are down doesn't mean you're going to be able to push dealers around. Walking in to a dealership and demanding $5,000 under invoice is going to get you exactly one thing: laughed at. Though many dealers are more desperate for sales than in the recent past, they still need to make money on all the cars they do sell. Be respectful of the fact that car dealers have a job to do, and you may be rewarded with a better deal.