Money Saving Tips for Buying a Car

Buying a car begins with a major decision. Think about whether you want to finance part of the cost of the new or used vehicle or to pay the total price in cash. The kinds of incentives a dealer offers could be tied to specific types of financing. For example, a dealer might offer 0 percent interest financing for 5 years if you use its own finance company, such as Nissan Motor Acceptance Corporation or Ford Motor Credit. When you've got excellent credit, may persuade you to save some cash and finance at least part of the purchase.

Negotiate

You don't want to negotiate a certain amount off the dealer's published full price. You want to negotiate up from the dealer's actual cost. Some dealers advertise in print or broadcast markets that they will show you their invoice. Other dealers might be willing to share it if you ask. You want to go up from this baseline to ensure you're getting a good deal. Sometimes belonging to a bank or credit union automatically entitles you to a special offer (such as $500 over invoice). Ask your financial institution before shopping for a car with which dealers they have special financing agreements.

Used Cars

Consider buying a used car instead of a new car. A car with low mileage can give you almost the same amount of mileage and save lots on retail price markups. Road and Travel Magazine's Kyle Busch notes, "A 2- to 4-year-old used vehicle can be purchased at a savings of 25 to 50 percent as compared to its cost when new." As a final option, you can trade an old vehicle in against a used car purchase to slice another thousand or two off the total sales price.

Beware of Obvious Extras

Before sitting down and reading paperwork for a specific vehicle, compare the types of cars in the showroom and in the dealer parking lot. On the vehicle summary posted on the windshield or window, find any obvious upgrades the dealer added after the factory, such as custom tinting, leather interiors or pin-striping. If you don't need these upgrades, you can save a lot of money. Ask your salesperson to sell you a model without these upgrades even if it must be ordered in the color you want from the factory. Pay the base price plus any features you must have.

Beware Hidden Fees

When shopping for a car, read all parts of the sale contract before you sign. That is something to ask to look at even before a salesperson tries to get you to sign other forms. Look for hidden fees, such as a dealer's administrative costs. If the dealer really wants to make a sale, like if you're smart and you shop at the end of the month, the salesperson can get permission from a sales manager to remove fees that aren't required by state or federal laws.