Having a new car can be a lot of fun, but many car buyers find the process of buying or leasing to be anything but enjoyable. For some, visiting a car dealer ranks right up there with getting a root canal, without the benefit of anesthesia.
Fortunately, there are several strategies you can use to survive the dealership. Most of them center around understanding the car-buying process and being prepared before you get near a salesperson. Consumers today have more information about vehicles and pricing than they ever have, and they can use that knowledge to get the right vehicle at a great price.
Whether you're leasing or buying a new car or used car, making mistakes when car shopping can put you in the wrong vehicle, have you paying too much, or getting inappropriate financing for your situation. Those errors can cost you for years, so it is critical you do everything possible to get the right car and best car deal from the start.
A growing number of dealerships have embraced customer-friendly no-haggle sales methods and streamlined processes that show they respect consumers’ time. Many more, though, follow time-tested sales strategies to extract the most profit out of each sale by wearing down customers’ defenses. Knowing what you might face and how to respond is key to surviving the auto dealership.
1) Know the Car You Want
Before you think about heading to the car dealer, it's crucial you have a rough idea about the car you want, what you can afford, and the features you need. You don't have to have it narrowed down to one model or trim level, but pruning the field to only those models that fit your needs and budget can save you a tremendous amount of time.
A good place to start is our new car rankings and reviews. We look at reviews from the top automotive journalists in the country and use their consensus opinion, blended with quantitative information about predicted reliability and safety, to score nearly every vehicle available in the market today. Our used car rankings and reviews add information about cost of ownership into the rating criteria.
It is essential to not only look at your vehicle needs today but also in the future. Major life events like weddings, the arrival of kids, or even the purchase of a new puppy can change what you need to consider when thinking about your next car.
2) Know When to Go
Heading for the dealership at the right time is a great strategy to avoid stress. You want to think about how much traffic there will be and how willing the salespeople will be to give you a great deal.
Looking for a Deal?
If you’re looking for the best deal, you want to shop a few days before the end of a month, quarter, or year. Both salespeople and dealerships have goals that they want to hit so they can get bonuses. If they haven’t already hit goal, they will be more likely to cut you a good deal so they can chalk up another sale. If they have already made their sales targets, the opposite will be true, as they'll have little incentive to score another deal that month.
As we’ll discuss in a moment, it is important to have a financing offer in place before you start shopping. If you don’t, and you shop on a weekend, you’ll likely be limited to the financing deals the dealership is willing to offer you, as most banks and credit unions are closed.
The old idea of shopping just before a dealer closes for the evening to get a great deal is an urban legend. If they really want to make a sale, they’ll stay all night. If they think you’re going to play hardball, they’ll invite you to come back another night and walk you to the door. They won’t give up their profit just so they can go home.
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Looking for Attention?
Auto dealers are typically super-busy on weekends, especially if the weather is nice. If you're just looking to browse, it's a good time to get lost in the crowd. Though they typically have most of their staff working on the weekend, it can take a long time to buy a car on Friday night, Saturday, or Sunday. There can be time-robbing bottlenecks with test drives, finance offices, and delivery specialists.
If the dealership is slammed with customers, you probably won't get much one-on-one time with dealer personnel to learn about your car. As cars get more complicated, learning about them is an essential part of the delivery process. You may have to wait a considerable amount of time to even get a test drive.
Weekdays and evenings are a good time if you want a lower-key dealership experience. The showrooms are quieter then, and you'll have a better chance for personal attention.
3) Don’t Go Without Preapproved Financing
Perhaps the most important of the car buying tips you will find in this article is to have a pre-approved financing deal in place before you ever think of stepping foot on a car dealer’s lot. If you don’t have a pre-approved car loan from an independent bank, credit union, or other lender, you’ll be at the mercy of the dealer to find you financing. While they may be able to find you a great deal, they’ll have no incentive to do so unless you bring a competing offer.
You can get four offers with just one online application through U.S. News partner myAutoLoan. Getting a pre-approved loan deal does not obligate you to get your financing from that lender. In fact, looking at offers from several lenders is a great idea.
Many consumers get their financing at the dealer, but that’s not always a good financial decision. Few dealers loan money themselves. Instead, they act as intermediaries between outside lenders and new or used car buyers. They make a significant portion of their revenue by marking up the interest rates from third-party lenders. In most states, they don’t have to disclose how much they are adding to the interest rate offered by the financial institution behind the loan.
As we’ll talk about in a moment, most salespeople will try to combine the price of the vehicle, the financing, and the value of the trade into one confusing jumble of numbers. Having a pre-approved car loan in your pocket allows you to take that component out of their game.
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The Importance of Knowing Your Credit Score
Most lenders will use your credit score as a significant factor in deciding whether to loan you money, how much to give you, the interest rate, and the length of the financing. Understanding your score and the information in the credit reports behind it will help ensure you get the auto loan you deserve. If you start looking at your score a few months before you start the car buying process, you can take the time to correct any errors and work on improving weak areas of your finances.
4) Dress for Success
In a perfect world, the clothes you’re wearing when you walk into a car dealership shouldn’t affect the deal you get on a car or how you are treated. The unfortunate truth is that you will be sized up the moment you arrive, either consciously or unconsciously, by the dealership’s salespeople. In some cases, they may decide that you’re not even worth dealing with, while in others they may decide you can afford an offer they make. Price discrimination is perfectly legal in car dealerships, as long as it is not driven by your status in a protected class – such as sex, marital status, or race.
In short, don’t dress like a slob in a ripped-up T-shirt, and don’t dress like you’re headed for an event at the country club. If you walk in the showroom in your favorite Louboutin heels or a suit that costs more than the salesperson’s monthly salary, it is going to be harder to convince them that you can’t afford an extra $50 per month on your car payment. Remember, every bit of information – verbal or nonverbal – you give a trained sales professional is information that strengthens their negotiating power.
5) Remember It Is a Business Transaction
A new or used car is one of the most expensive purchases we make. It's easy to get emotionally invested in our dream car, but it is critical you check those emotions at the dealership's door. Buying a car is a business transaction, nothing more, nothing less. Your goal is to get the lowest price possible, while the dealership’s task is to maximize the profit they make on the sale. Both stances are OK, as long as both you and the dealer act professionally, ethically, and within the bounds of the law.
Where emotions come into play is that car-buying is one of the last places where free-wheeling price negotiation is still found. You likely will have an amount in mind you want to pay, while the dealer knows how much they want to make. In all likelihood, the final deal will fall somewhere in the middle – that’s how negotiations work. If you go in thinking they’re going to jump at your first offer, you’ll likely be disappointed.
Going into the negotiation full of bluster, with the thought you will intimidate them into submission, will likely backfire. A trained car salesperson won’t fall for it, and it makes it much easier for them to stick you with a lousy deal if they think you’re a jerk.
6) There’s Strength in Numbers
Another great car-buying tip is to take a trusted and frugal friend with you to the dealership. You don’t want the friend who is always encouraging you to spend money on the latest fashion, you want the one that splits the dinner check to the penny. Give them the mission of making sure you don’t exceed your budget, buy extras you don’t need, and the authority to drag you away from a bad deal.
Going into a dealership solo might be OK if you’re brimming with confidence and knowledge. For most of us, though, having a wingman is a better idea. Dealers are very good at switching salespeople and managers around, with each telling you what a great deal you’re getting. Having someone along who can help you decipher the numbers for yourself can help you avoid expensive buying and financing errors.
7) Test Drive With a Plan
You can learn a lot from a test drive, but only if you do it right. That starts with getting comfortable and learning the vehicle’s controls before you leave the parking lot. Look around and make sure you can see what you need to see through the windows, in the mirrors, and on the dash. If you don't have enough visibility or the seats aren't comfortable on the dealer's lot, your view probably won’t be any better or the seats more comfortable a few months down the road.
It is vital to drive the specific car you are considering, not just a representative model. You want to make sure it has all of the features you are expecting and doesn't have any quality issues.
The dealer will likely have a preplanned route designed to show off the car while minimizing the risk of an accident. If that route doesn’t include the type of roads you typically drive on, ask to go to a different area. It’s not always possible, but you need to ask.
When you test drive a car, you'll want to use most of your senses. Look for quality issues, listen for unexplained noises or rattles, make note of smells that might indicate mold or electrical problems, and feel how smooth or rough the vehicle's suspension is. You'll also want to use your sense of intuition to note if something doesn't seem right.
Read our article on test-driving a used car for more tips on this essential car buying task.
8) Know the Value of Your Trade
Buyers or lessees who are trading in their old vehicles need to have a rough idea of what their car is worth. There are a multitude of online tools that can help you find the price range you should expect from your old car. You simply enter the year, make, model, features, mileage, and condition, and the tools give you a range of values.
If you want a more specific number, you can visit another dealer or a used car superstore, such as CarMax, and ask for an offer to buy your car. There are several benefits in doing so. First, having an offer in hand gives the dealer you’re buying a car from a benchmark to meet or beat. Second, if you get a great offer (one that exceeds what you saw online), you can take the money and apply it to your down payment. Doing so has the great side-benefit of taking your trade-in value out of the mish-mash of numbers the salesperson will likely be using to confuse you.
In some states, you’re all but forced to trade your car in at the dealership you are buying from. Otherwise, you have to pay sales tax on the full purchase price of the new car, rather than on the purchase price minus the trade-in value.
9) Unbundle the Transaction
One of the tricks a car salesperson will use is to mix the purchase price of the vehicle, the value of your trade-in, the cost of financing, and your down payment into a confusing stew of numbers that generates a monthly payment. Their goal is to negotiate with a focus on the monthly payment, and nothing else.
You, on the other hand, want to keep the conversation directed at the price of the vehicle, because buying on the monthly payment alone is a sure-fire way to pay too much for a car. The more you can separate each of the components of the transaction, the better for your wallet. You’ll want to be talking about the out-the-door price, with all fees included. Some of a dealer’s fees can be negotiated, while others, such as registration and destination charges, are fixed.
We’ve touched on them a couple of times already, but a couple of the strategies you can use to keep the attention on the price of the vehicle are to bring your own financing and take the trade-in out of the transaction. Tell them that you have your own financing deal and haven’t decided whether to sell your car yourself or trade it in.
You can learn more by reading our article on negotiating the best car price.
10) Don’t Focus on the Payment
We keep hammering on the idea that a car buyer should never focus on the monthly payment. Instead, you want to look at the total cost of the vehicle, including the price of your financing for the entire length of your car loan. Focusing on the monthly payment is the single most costly car-buying error that consumers make. It allows buyers to believe they can afford cars, trucks, sports cars, and SUVs that they should not buy.
The reason is simple. A trained salesperson can manipulate the monthly payment to make it appear that you’re getting a great deal even when you are not. One of the first questions they will ask is “how much are you looking to spend per month?” That allows them to craft a deal that consumes your entire car-buying or leasing budget while still maximizing the dealership’s profit. They merely move the numbers around in the different boxes to get you to a target monthly payment.
Often this means getting you into a car loan that lasts far longer than is prudent to finance a car. While lenders are more than happy to offer six-, seven-, or even eight-year car loans, you don't want to be paying for your car that long. Doing so puts you at financial risk if the vehicle is stolen or declared a total loss while the loan balance is higher than the vehicle's value. It can also put you in a situation where the car's warranty is expired, and you have to pay for expensive repairs and your loan payment at the same time.
Of course, the monthly payment in the final deal still has to fit your monthly budget. You need to think not only about your current obligations (such as rent, food, utilities, and student loans), but also about the additional costs of owning a car, such as auto insurance, fuel, and parking.
To find the total cost of a car deal, multiply the monthly payment by the number of months in the loan term, then add the value of your trade-in and any down payment you’re making. Let’s look at an example: You have a five-year car loan with $300 monthly payments, a trade-in worth $5,000, and a $4,000 down payment. Multiply $300 by 60 months, then add $5,000 and $4,000. The total cost of the vehicle in this example is $27,000.
11) Minimize Your Time at the Dealer
The time you spend at a car dealership can be stressful. You can minimize the time you need in the showroom by working through much of the car buying process online. Really, except for the test drive, appraisal of your trade-in, and the final paperwork, there's no reason you have to be at the dealership at all.
You can start a conversation with a dealer’s internet sales manager on their website, make an appointment for a test drive and appraisal, and negotiate your purchase or lease from the comfort of your home. In fact, you can work with multiple dealers at the same time to ensure you get the best price possible. The U.S. News Best Price Program is a free online service that connects buyers and lease customers with local dealers offering pre-negotiated prices.
Be sure to save all of your communications and print out the price quotes you receive from the dealership. If they fail to honor the deal you agreed to online when you visit the dealership in person, it is a strong cue to walk away, as they’ve shown they can’t be trusted.
12) Avoid Expensive Add-Ons
The dealership’s finance and insurance (F&I) office is where you go in most dealerships to sign the final paperwork. It’s important to know, though, that the finance officer will try to sell you several expensive add-ons. You, with the help of your frugal friend, should decline most, if not all, of these offers. The types of things that will be presented range from extended warranties to nitrogen in your tires.
Most of the items and services that dealerships offer are available from other sources. Before you consider buying them, you should talk to your lender and insurance company to see if they offer similar products at better prices. Another tip is to Google the company name on the contract to see what other consumers are saying about their products and customer service.
Dealers will try to get you to make a decision whether to buy the items on the spot so the cost can be rolled into your financing. It's rarely a good idea to finance an expensive add-on. First, you'll have to pay interest on the item for the entire term of your auto loan. Second, it will raise your loan-to-value (LTV). A high LTV makes it harder to get the best loan terms and allows you to more easily owe more on your loan than the car is worth (called being upside-down or underwater on your loan.)
You can learn more about expensive car-buying add-ons in our story on things never to buy at the car dealership.
13) Don’t Rush the Paperwork
As much as you might want to get out of the dealership, rushing through the purchase and loan documents isn’t a great thing to do. You need to read each and every document to ensure that they reflect the deal you agreed to, are complete, and don’t include anything you don’t want or understand.
If you find blank spots or incorrect information in the document, do not sign them until they are corrected or completed. Once your signature is on the bottom line, it potentially becomes much more difficult to get them fixed.
Avoid the Spot Financing Trick
Never leave a dealership until you are confident that the financing offer you received is formally approved by the lender – even if it means waiting a few days to get your new ride. Doing so exposes you to something called spot financing or the Yo-yo financing scam. Here’s the way it works: Several days after you take the car home you’ll get a call from the dealer saying there’s a problem with your financing and you have to return to sign new paperwork. When you do return, you find that the new offer is much more expensive than the one you initially agreed to. Most customers don't see a way out of these dealer tricks and just sign the new documents.
What you should do instead if you’re a victim of Yo-yo Financing is to immediately look for another source of financing from a local credit union, bank, or an online source such as myAutoLoan. Have that pre-approval in hand when you return to the dealer. If you cannot find another lender with affordable financing, your best bet is just to give the car back to the dealership.
14) Be Prepared to Walk Away
The most powerful tool you have in any car purchase or lease is the ability to walk away. It is a power that surprisingly few take advantage of, for fear of embarrassment or not wanting to give up the time they’ve invested in the process. It’s critically important to get over those doubts and be mentally prepared to get up and leave if you don't feel you're getting the right deal.
Sometimes you'll have a concrete reason to leave, while in others it's a sixth sense that something with the deal is off. When you go, be sure to leave a phone number or email behind. You might just get a message that the dealer is willing to accept your offer.
Keep in mind that unless you're buying or leasing a vehicle that is in high demand, a car is a commodity. The Honda Accord that you'll find at the dealership down the street is the same Honda Accord as you'll see at one across town. In fact, with the way that dealers trade vehicles among themselves, you may get offers from several of them on the exact same car.
More Shopping Tools From U.S. News & World Report
In the world of car buying, confidence goes a long way in ensuring you get the right car at a price that fits your budget. Confidence in car buying comes from knowledge of how the car buying process works, how to negotiate the best price, and how to avoid costly extras.
Our new car rankings and reviews are based on the factors consumers tell us are most important to their buying decisions. We’ll help you find the perfect vehicle to meet your needs and fit your budget. Our pre-owned car ranking and reviews include information about cost of ownership, to help you find a ride that won’t break the bank through years of driving.
Each month, we find the best new car buying and leasing incentives auto manufacturers have to offer. Our new car deals page shows affordable cash back and special financing deals. Lease customers can find offers with low monthly payments and little due at signing on our lease deals page. We’ll connect you with local dealers offering guaranteed savings with the U.S. News Best Price Program. In addition to savings off sticker price, getting the best interest rate on your car loan can save you thousands. Compare rates from up to four lenders with myAutoloan to get the best deal.
The journalists of U.S. News & World Report have developed a library of articles to help you through your next car buying or leasing adventure. They cover topics ranging from the differences between buying and leasing to how to buy a car with bad credit. Our car affordability calculator figures the monthly payment for different auto loan lengths, amounts, and interest rates. It's always best to run the numbers yourself, so you understand the deal and make sure that no surprising extras have found their way into the transaction.