A guest post from FiveHive community member Raymond
Buying a car is fraught with pitfalls that can make the experience very expensive. But there are a number of moves you can make to save money on your next automotive purchase. You do want your wallet to be fat and happy, don’t you?
1. Finance Before You Buy
Just because the dealership offers to finance your car through their own in-house financing institutions doesn’t mean you have to go that route. Instead, you can get a low-interest auto loan from your local bank or credit union. The upside to getting your financing beforehand is that most banks and credit unions will have lower interest rates and better terms than dealer financing offers. Having your own financing in place will put you in a better position when negotiating car prices.
2. Shop Around
Don’t just stop at one dealership. Instead, shop around at several dealerships within the area or try your hand at visiting different dealerships in neighboring cities or states. Internet shopping helps tremendously with this process, as you can find the best prices at a wide array of dealerships without leaving the comfort of your own home. In many cases, you can even initiate and complete the buying process online. With online shopping, the only time you’ll actually visit the dealership in person is when you’ve come to pick up your new car.
3. Have the Car Inspected
Having your car checked out before finalizing the sale is important, especially if you’re buying used. Have a trained certified mechanic that you trust take a look at the car’s mechanical and physical state. In the vast majority of cases, mechanics can spot defects and potential problems that ordinary car shoppers might miss. Inspections can save you plenty of money on future maintenance and repairs. Many dealerships offer certified pre-owned vehicles that have already been inspected by the dealership’s factory trained service technicians, based on stringent factory-issued criteria. These vehicles usually represent a safer and less expensive bet than other ordinary used cars.
4. Pay a Bigger Down Payment
Many dealerships advertise a low or “zero” down payment, but in the end, it just means a much higher monthly payment later on. Putting down a large down payment will help reduce your monthly payments by lowering the amount of principal owed on the purchase. Putting up 30% or more upfront might seem expensive now, but it will be cheaper down the road, thanks to the lowered payments.
5. Use Your Old Car as a Trade-in
If your old car is well-maintained and in overall good shape, you can trade it in and use that car’s appraised value towards your new car. Your car’s trade value will reduce the overall amount financed on your vehicle. It’s best to find out the Kelley Blue Book value of your vehicle and the amount you might be able to get for it in a private sale beforehand. If the trade-in value is lower than the actual value of the vehicle, it might be best to put it up for sale yourself.