Tell a friend or neighbor that you’re in the market for a new or used car and you will likely be regaled with stories about how great of a deal they got on their last purchase, with advice about getting your own great deal. Fact is, it’s one of the goals of car dealerships to make every buyer think they got the world’s best car deal.
Read on, and we'll help you weed out the best car-buying tips from the urban legends. You’ll see that successful car buying comes down to knowledge, preparation, and knowing when to walk away from a bad deal.
1) Know Your Budget
Before you decide on your next car, it’s important to think about your monthly budget, and how owning a car will fit into it. You’ll want to total all of your current monthly expenses, including utilities, insurance, food, clothing, credit card payments, rent or mortgage payments, and other monthly obligations. Then add the monthly costs of having a car, including auto insurance, fuel, parking, and maintenance.
Only when you have a clear picture of your monthly finances can you think about how much car, truck, or SUV you can afford. Though car buying based on a monthly payment alone can cost you in the long run (as we’ll talk about in a moment), it is important not to overextend your monthly budget. Our car affordability calculator can help you determine how expensive of a car you should consider.
2) Find the Right Vehicle
Once you have an idea of your budget, you can look for vehicles that fit your needs and lifestyle. Consider how many people you have to carry, plus how much room you need for everyone’s stuff. Think about where you drive, the road conditions, and how much you travel. If you spend a lot of time on long road trips, you might favor a roomy vehicle with excellent gas mileage over a subcompact that’s easy to park in the city. SUVs and crossovers are hot right now, but they come with higher price tags than cars and are typically more expensive to fuel, maintain, and insure.
Don’t just look at where you are today – think about your car needs a few years in the future. Are kids on the way, will you need something that can carry aging parents, or is that two-seat sports car roomy enough? If you’re not sure what the future might bring, a short-term lease might be a better idea than buying a car. You can learn more in our article on buying versus leasing.
Our new car rankings and reviews consider the factors buyers tell us are crucial in their car buying decisions. They’re based on the consensus opinion of America’s premier automotive journalists, merged with quantitative data on predicted reliability and safety. Our used car rankings and reviews include information about the cost of ownership so you can get a car that will be affordable in the long run.
Consider what you like and don’t like about your current car. If you want more power, for example, you can trade fuel economy for a higher horsepower rating. The level of high-tech safety features has changed dramatically in the last few years, so you’ll want to learn what’s available before you choose your next car.
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3) Learn the Language
It’s easy to get lost in the language of car buying and auto loans. The auto industry comes with a vocabulary of its own, and its quickly changing as new technologies come to the fore. Making it even more challenging are automakers who use different names to talk about the same systems. Fortunately, our new car and used car reviews describe the various technologies available on each model and trim level.
4) Know the Car-Buying Process
Car-buying is one of the last arenas of free-wheeling price negotiation. While that can be intimidating to many buyers, you can level the playing field by learning about how to buy a car, how cars are priced, and how to negotiate a great deal. Online tools have given buyers more information than ever before. That knowledge can be turned into confidence when you’re discussing a car deal.
Understanding the car-buying process will also help you identify any tricks or tactics a salesperson is trying to use to get you into the deal they want you to agree to. You’ll know when to push back and when to walk away.
5) Buy a Car Before You Need a Car
A common question is “When should I buy a car?” The simplest answer is that you should buy a car before you need to buy a car. If you drive your current vehicle until something fails or it leaves you stranded, not only will you have a vehicle with limited trade-in value, but you'll also have to buy a car without the time to properly research your purchase and financing.
Exploring user forums for the model of vehicle you drive can show you when others are facing major component failures. If you’re nearing one of those mileage milestones and are considering getting a new car, you’ll probably want to buy sooner than later.
6) Don’t Buy Too Soon
You can also buy a new car too soon. Unless you have paid off your current car’s financing or can pay off your remaining balance with cash on hand, you should not buy a new car. While many dealers will offer to pay off your current loan, what's really happening is your existing loan balance is just added to the financing on your new car.
In essence, you'll be paying for two cars at the same time, though you'll only own one of them. You will also immediately be upside-down on your new loan, putting you in financial jeopardy if something were to happen to your new car.
A better idea is to wait to buy until your current loan is paid off and you save enough to put a substantial down payment on your next new or used car.
7) Know Your Credit Score
Before you start applying for financing, it’s a good tip to learn your credit score. There are a few advantages to doing so. First, it will give you time to correct any incorrect information on the credit reports behind the score. Second, it will allow you to shop for loans with a better idea of the rates you qualify for.
There are many online sources of free credit scores. Many credit cards offer to tell you your scores as a perk of having the car, while other sites will provide a score in exchange for some personal information. Be cautious of sites that require you to sign up for credit monitoring services or other products before you get to see your score.
8) Get a Preapproved Loan
One of the most important tips we can offer is to get a pre-approved auto loan before you get anywhere near an auto dealership. By applying to at least one local bank, credit union, online bank, or online lender, you can get an offer that a dealer will have to meet or beat to get your business. Without an offer in hand, the seller will have no incentive to cut you a deal.
U.S. News partner myAutoLoan can get you up to four offers with one simple online application.
Today’s dealerships make a significant amount of their profit by acting as intermediaries between lender and buyers. They mark up financing costs from outside lenders and offer it to buyers as part of an overall car-buying deal. In many states, they are not required to disclose the rate that the lender offered before their markup.
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9) Avoid Long Loans
As cars, trucks, and SUVs have become more expensive, the length of auto loans has grown longer. It's easy to find lenders who will give buyers loans lasting six or more years, but it's not a good idea to have one lasting that long. You'll typically pay a higher interest rate and a significantly higher amount of total interest over the life of the loan. The longer the loan, the more likely you will owe more on the car than it is worth. You'll also have a greater chance of having costly out-of-warranty repairs while you are still making monthly car payments.
If you are getting your financing at the dealership, it is important to remember their primary focus is selling you the car. Using tricks like getting you into car loans that are way too long is just a way to sell more cars.
Our article on the dangers of 72- and 84-month car loans explains why they are financially risky.
10) Shop at the Right Time
Some times to visit a dealership are better than others. Ignore the advice some will give you about going right before closing time – is just doesn't work. Instead, you want to shop just before the end of a month, quarter, or at year-end. Dealers and salespeople have goals and are likely to give you a better deal if they need just a few more sales to hit their next bonus.
Shopping on the weekend is fine if you’re just browsing or have a lot of time to purchase a car. Dealerships are usually at their busiest, and if you don’t look like a serious buyer they’ll probably leave you alone. If you do decide to buy, be prepared to wait a long time to negotiate a price, get a test drive, have your trade-in appraised, and get through the finance office.
Weekdays and evenings are much quieter at dealerships so you may be able to get in and out in less time.
11) It Is Business, Not Personal
Buying a new car can be an emotional roller-coaster. Remembering that car-buying is a business transaction is critical to getting a good deal and not getting stressed out. Your sole job is to get the car you want at a good price. The salesperson's job is to maximize the amount of profit they can get from the deal. Both approaches are OK as long as everyone involved acts professionally, ethically, and legally.
You’ll probably come into the showroom with an amount you want to pay. The professional salesperson is trained to move you incrementally from the amount you want to pay to the price they want to get out of the transaction. The deal you’ll likely end up with will be somewhere in the middle, which is how price negotiations are supposed to work. Don’t be disappointed when you have to pay a bit more than you expected to pay, but don’t feel you have to give in to everything the dealer asks for.
12) Don’t Become Emotionally Attached
It’s easy to fall in love with a car, but if you want to get a great deal it is essential to set your feelings aside and focus on the numbers. That’s more easily said than done, however. Just remember, unless the vehicle is in extreme demand, it is merely a commodity that can be purchased at any dealer, or, in the case of a used car, from a dealer or private-party seller.
In other words, the Honda CR-V you see at on one side of town is the same Honda CR-V you’ll find at a dealership on the other side of town. The way dealers trade stock between each other, you can get prices from more than one on the same exact car.
Many private sellers will think that their vehicles are more valuable than they actually are because they have emotional attachments to their ride. If they won’t consider a reasonable offer, leave your name and number. After a few more prospective buyers walk away due to the high price, your proposal may become more appealing to them.
13) Look for Deals
When a car is nearing the end of its product cycle or isn’t selling well, automakers offer special incentives to encourage sales. These offers usually include cash back, interest rates that are lower than you’ll find at outside lenders, or a combination of both. We track the best deals in the market on our new car deals page. Used car buyers can find special financing deals on certified pre-owned (CPO) cars on our used car deals page.
Taking advantage of a car deal can save buyers thousands of dollars off MSRP up front or thousands of dollars off interest payments during the term of their car loan. For customers thinking about leasing their next car, our lease deals page shows the best lease incentives available.
The U.S. News Best Price Program can also help you identify deals by connecting you with local dealers with pre-negotiated prices. On average, buyers who use the program save more than $3,000 off MSRP.
14) Look for Previous Model Years
It is common for automakers to make very few changes between major model redesigns. If you are looking at a vehicle that’s seen few changes since the last model year, you can potentially save considerable money by purchasing the previous year’s model. Our car finder can help you find those models in local dealer stock, or you can use the search tool on each automaker's website.
Automakers frequently offer great car deals on those last few cars on dealer lots, so be sure to explore our car deals page before you head for the dealership.
15) Consider Certified Pre-Owned Cars
New vehicles can be expensive, but used cars come with unknown histories and often no warranty coverage. There’s a third option, however, called a Certified Pre-Owned (CPO) car. They're relatively new, low-mileage vehicles that have been inspected and certified by dealers representing the automaker who built them. They come with warranty coverage and other extras you wouldn't get if you bought a non-certified used car.
They typically cost more than other used cars, but far less than a new model. If you’re willing to give up the latest and greatest features, buying a CPO vehicle can save you a tremendous amount of money. Take a look at our article on the pros and cons of certified pre-owned cars to learn more.
16) Do Your Due Diligence on a Used Car
Buyers who opt for a used car that is not certified have a couple of extra steps to take before they make an offer. First, you’ll want to get a vehicle history report from a site such as Carfax or AutoCheck. It will tell you about a vehicle’s accident history, title status, repair records, and more. If you see red flags on the vehicle history report, it should either put the brakes on buying that car or point out issues that require further investigation by a mechanic before you think about buying the car.
You will also want to get a thorough pre-purchase inspection by an independent mechanic. They should do a general examination, look for issues that are common to the vehicle, and explorer areas that are identified in the vehicle history report, such as the repair of crash damage. If the seller will not make the vehicle available for a pre-purchase inspection by a mechanic of your choosing, you should not buy the car.
Read our guide to buying a used car for more information.
17) Test Drive the Right Way
A test drive is an essential part of any new or used car purchase, though you’ll want to do it right to get the most benefit. A good test drive starts long before you leave the dealer’s lot. The first thing you want to do is make sure you can get comfortable in the vehicle and can see everything you need to see. If the car isn’t comfortable on the dealer’s lot, it probably won’t be any more comfortable three months after you buy it.
While most dealers have pre-planned test-drive routes, you'll want to find opportunities to drive the types of roads you travel daily. It is a good idea to drive the specific car you're looking to buy so you can identify quality issues, strange noises, or drivability problems. Not every new car comes out of the factory in perfect condition. Problems with used vehicles should be noted so your mechanic can investigate them during the pre-purchase inspection.
It is important to bring your kid’s car seats to ensure that they will fit where you need them to and are easy to install. If you're planning on carrying large items regularly, bring them along to make sure they fit. Examples include dog crates, musical instruments, and sports equipment.
18) Remember Sales are Usually Final
The reason you want to do so much due diligence is most vehicle sales are final. Once you sign the papers and leave the seller, the car is yours. Even if the vehicle’s condition has been misrepresented, you’ll likely still be stuck with the car. If it’s a new car or a CPO vehicle with a warranty, you’ll be able to get problems fixed through the dealer’s service department. If it’s a used car without a warranty, you’ll have to pay the repair bill out of your own pocket.
A few manufacturers and used car superstores have limited return policies, but most of them are loaded with fine print, which makes returning almost any car cost you money in the end.
19) Know Your Trade-In Value
Before you negotiate the trade-in value of your old car with a car dealer, you should have a good idea of what it is worth. Many online sources can give you a range of trade-in values based on the vehicle's equipment, mileage, condition, and age. Be realistic when you assess your vehicle's value; otherwise the estimate won’t be accurate.
Another way to get a reasonable estimate of your trade-in's value is to offer it to other dealers or used car superstores. There's nothing that says you have to sell it to the dealership you are buying your new car from, though doing so can reduce your sales tax liability.
Failing to know the value of your trade-in invites the salesperson to manipulate the amount to make it seem like you’re getting a great price on your new car.
20) Keep the Transactions Separate
When you start negotiating the price of your new or used car, the salesperson will likely try to merge the price of the vehicle, the value of any trade-in, the cost of financing, and any down payment into a confusing stew of numbers that produces a monthly payment. Car shoppers, on the other hand, want to keep each of those transactions as separate as possible, focusing solely on the price of the car.
Knowing the value of your trade and having a pre-approved financing offer in place helps to get those numbers out of the game. Don’t be at all surprised, though, when the salesperson keeps trying to pull them back into the equation. Politely try to keep the focus on the price of the car and be prepared to walk away if the salesperson refuses.
21) Don’t Negotiate on Payment
The biggest arrow in the salesperson’s quiver is their ability to keep the discussion centered on the monthly payment. While, as we discussed earlier, the monthly payment needs to fit your budget, negotiating solely on the payment is a sure way to spend way too much on a vehicle. Doing so simply allows a trained salesperson to manipulate all of the other numbers in the deal to maximize the total amount you will spend on the car. It’s a tried and true dealer trick that works well for their profitability.
In many cases, buyers who only look at the payment will find themselves with auto loans that are way too long, include unwanted extras, and have high interest rates.
22) Know What to Negotiate
There are things in an auto purchase that can be negotiated and those that can’t. Don’t waste your time trying to haggle over the car’s registration, taxes, or destination charge (the cost the manufacturer charges to ship the car to the dealer.) You can, however, negotiate the dealer’s documentation (doc) fee, advertising surcharges, additional dealer markup, or unwanted extras. If you make any price concessions, ask for something in return, such as floor mats or lifetime oil changes.
23) Don’t Overshare
Any skilled negotiator will tell you that the more they know about the person across the table, the more powerful their negotiating position. From the moment you step on the car lot, they will be looking for information, both verbal and non-verbal, to use in later discussions. They'll look at how you're dressed and even how clean or dirty your car is. If the car is spotless, they’ll know that you’re ready to trade it in that day, and are looking for the highest value.
One of the first questions they will ask is how much per month you are willing to spend. The more vague you are with your answers, the more power you will have later in the negotiations. Naturally, you shouldn’t be impolite, as it’s easier for them to stick someone who they think is a jerk with a lousy deal than it is to overcharge someone they like.
24) Shop Around
One of the best ways to get a good deal on a new or used car is to shop at several dealerships. Due to discounts, bonuses (called holdbacks in the business), different franchised new car outlets can pay different dealer costs for the cars they sell. It’s OK to let them know that you’re shopping around, though most dealers will assume you are anyway.
If one dealer has hit their sales goals and another hasn’t, the one that has not will have much more of an incentive to make you a deal, especially if it’s near the end of a sales period. Even if there is only one dealership of a specific brand in your area, you should expand the geographic territory for your car shopping to include at least one more.
Car shoppers looking for pre-owned vehicles from private sellers should look at several vehicles in the community. Often prices are set by local supply and demand, so getting price quotes on several used cars will give you a good survey of the market.
25) Let Your Keyboard Do the Walking
Fortunately, you no longer have to drive from dealership to dealership, spending hours in negotiating the prices of new or used cars. Instead, you can visit them virtually, through their websites or by emailing the internet manager at various outlets. Other than the test drive, used car appraisal, and final paperwork, there’s little reason to step foot on a car lot.
If a car seller offers you a price, be sure to print out the offer or email. It can help if they suddenly get amnesia when you show up at their door. When a dealer does not honor any deal they made with you online, you should consider it a red flag and leave the dealership. Unless the price they offer you at the dealership is very close to the internet offer, it's just not worth wasting time with a dealer that has already behaved in an unscrupulous manner.
26) Don’t Go for the Add-Ons
One of the final steps in buying a car at a dealership is a visit to the finance office to sign the final paperwork. It’s also where you’ll typically be offered a wide array of add-on products and services, ranging from extended warranties to nitrogen in the tires. Though there will likely be some pressure applied so the dealer can include the products with your financing, you'll want to take a step back and thoroughly evaluate the products before you buy. In general, you don’t want to finance add-ons anyway, as you’ll have to pay interest on the purchase for the life of your car loan.
Most of the products you’ll be offered at the dealership are available from other sources, including your lender or auto insurance company. It’s a good tip to check out the company behind the product by contacting the local consumer protection agency where they are based.
Read more about add-on products in our article on things never to buy at the car dealership.
27) Check the Paperwork
Signing the documents to purchase and register the car is one of the last obstacles between you and the open road. It’s not a process to rush through, however. Always check for accuracy and completeness. Don’t ever sign papers with errors or blank spaces, as they’re more difficult to correct once you sign your name to them. It’s important to make sure the numbers match the deal you agreed to – especially the price and loan terms.
28) Walking Away Is Sometimes Best
One of your best car-buying tools is your ability to walk away from a bad deal before you commit to years of overpaying on your vehicle or its financing. Many buyers fear the pressure from sellers, embarrassment, or loss of the time they’ve already invested in the deal. It’s important to remember, though, that a few hours of extra work is a cheap trade-off for years of financial pain.
Sometimes you won't even have a concrete reason to walk away. Sometimes it's just a sense of intuition. Whatever the reason, stay polite and leave your contact information behind. If you were close to an acceptable deal, the seller might just find that little bit extra to make the deal work.
29) Know What Is Important to the Dealer
In the age of consumer-based review sites, such as Yelp, and social media, dealers know that they have to act professionally, so they don't face consumer backlash across the internet. Talking up the dealer may score you a few points in the sales or service department, while letting others know about bad experiences may save them from the same struggles.
Automakers relentlessly survey customers on their buying and service experiences. The data from those surveys are used to set bonuses awarded to dealers and their personnel, so they have become critical for dealer management to pay attention to. Indicating your responses to those surveys is dependent on any issues getting promptly resolved is a good tip for getting a favorable resolution.
30) Refinance Your Loan
A few months after taking delivery of your new or used car, it’s a good tip to survey the loan market to see if you can get a cheaper auto loan by refinancing. Credit unions and community banks are the industry leaders in car loan refinancing, often taking a couple of percentage points off existing interest rates. U.S. News partner myAutoLoan requires just one simple online application to get you up to four car loan offers.
More Shopping Tools From U.S. News & World Report
When buying a car, you’re faced with hundreds of options in the choice of vehicle and financing. The expert journalists of U.S. News & World Report can help you pare down your choices to find the right vehicle at a reasonable price with an affordable car loan.
Our new car rankings are frequently updated as new models arrive in the market, so you'll always know how competitors stack up against one another based on the factors buyers tell us are essential to their buying decisions. Pre-owned vehicle shoppers can also see how the cost of ownership matches up to segment rivals in our used car rankings.
Our Best Price Program can also save you money. You can get a pre-negotiated price on your car at a local dealer. On average, buyers have saved more than $3,000 off MSRP using the 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.