Purchasing a new car is one of life’s more exciting experiences, but it can be overwhelming and expensive if you don’t follow some simple car-buying rules. Fortunately, there are loads of resources available to help you find the perfect car at an affordable price.
Remember, at its core, buying an automobile is a business transaction, and it is one of the last purchasing experiences that still requires consumers to haggle. The more emotion you keep out of it, the better the final result. Knowing the buying process and how to navigate it is your best path to a smooth buying experience. As in any negotiation, both sides will have some give and take, so knowing where to be firm and where to be flexible is essential.
Before you head to the dealer, explore the following list of dos and don’ts for buying a new car at a dealership.
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Do: Research Your Purchase
Information is a buyer’s best friend. Fortunately, websites like U.S. News Best Cars give consumers more data than they’ve ever had about the features and prices of every vehicle and option available. Not only can you find pricing and feature data, but you can also explore safety and reliability ratings.
Our new car rankings, for example, allow consumers to see how new cars compare to others in the class based on a variety of factors, ranging from performance to reliability.
The internet is also an excellent source of information about the price that the dealer paid for the car, what other customers are paying for their vehicles, and the value of any trade-in that you have.
Long before they step foot in a car dealership, smart buyers know the vehicle that they want and the price they should pay.
Don't: Go to a Dealership Without Already Having a Financing Offer
Today’s car dealers make much of their revenue in their financing offices. They get a cut of any auto loan that they get buyers to accept. The offers they present may be a great deal, but they aren't always the best ones for customers – they’re the ones that make the dealership the most money.
Before you start visiting dealerships, get a pre-approved financing offer from your bank or credit union. That way, the dealer has to offer a better deal if they want to earn your business. Without an offer in place, the dealership will have no incentive to work hard to earn your new car financing business.
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Do: Talk to Your Insurance Agent Before You Buy
It costs different amounts to insure different cars, so it can pay to talk to an insurance agent before any final decision is made. After you have purchased a new car is the wrong time to find out that it costs much more to insure than other vehicles.
Insurance companies offer many of the same products that you’ll be offered in the dealer’s finance office, such as GAP insurance and vehicle service contracts. Often, they’ll be much more affordable through your insurance company’s products, but you should always compare the specifics of each product to ensure its value.
Don’t: Start the Conversation by Saying You’ll Pay Cash
Paying cash for a car is a great thing to do. However, telling the dealer that you plan to is a bad idea. Since much of the dealer’s revenue is made through financing, they’ll have less incentive to make you a deal if they know they won’t make any money on your car loan.
Instead, negotiate the purchase price of the vehicle first, and tell them that you haven’t decided about financing. Besides, if they find you an awesome zero percent financing deal, it might make sense to save your cash.
Do: Know Your Budget and Credit Score
It is critical to know how much you can afford every month, and how much you can pay up front. Without knowing those two numbers, you're going into the purchase blind, and you might end up with much more car than you can afford.
Buyers need to figure more than just the price of the car into their buying equation. Insurance, fuel, and maintenance costs can add up, so be sure to check those factors out as part of your new car research process.
Knowing your credit score and what’s in your credit report can help you to get the best financing deal available. New car financing and cash back deals are typically only offered to buyers with top-tier credit, so take some time to correct any errors on your credit report and mend any credit blemishes if you want to get the best deal possible.
Don’t: Only Look at the Payment
Many buyers focus only on the monthly payment, but that’s a bad way to buy a new car. Instead, look at the total cost, including interest payments and other fees over the life of the loan. It’s simply not worth saving that $20 per month if it means making payments for another year.
Focusing on the monthly payment can also entice buyers into add-ons that they don’t need or that are overpriced. The car salesman might tell you that paint protectant is only an extra $8 per month, but over the life of a six-year loan, you’ll pay $576, plus interest.
The way to find out the total cost of a car is to multiply the monthly payment by the number of months in the loan, and then add the amount of your down payment, plus any taxes and fees.
Do: Break Down the Transaction Into Components
Confusion is your worst enemy and the dealer's best pal. By merging the cost of the car, financing, and the value of your trade-in into one, the salesperson can hide the fact that they are overcharging you for the vehicle, undervaluing your trade-in, or charging more than you should be paying for financing.
Instead, insist on treating the car purchase, the financing, and your trade-in as entirely separate points of negotiation. They’ll likely object to your strategy, but let them know that you are prepared to sell your trade-in yourself.
Don’t: Just Shop at One Dealer
Like any purchase, you should comparison shop before you lay down your hard-earned cash. Just letting a dealer know that they have competition can make them work a little harder to earn your business. Fortunately, you don’t have to drive around, just use their website contacts to get offers.
You should also use geography to your advantage by looking at dealers where sales of the car you are considering might be weaker than others. For example, shop for hybrids in rural areas or pickups at urban dealerships.
Do: Take a Test Drive
Before you decide to buy, test drive the car that you are considering. You can learn more from 10 minutes behind the wheel than from hours of research. Pay particular attention to your comfort and how well you can see out of the vehicle.
It is crucial to drive the specific car that you are looking to buy, not just one that is similar. Not every vehicle coming from the factory is perfect, and a test drive plus a thorough inspection can help you identify problems at the dealership before they become problems in your garage.
Be careful if the dealer asks for your social security number before they allow you to take a test drive "for security reasons." Really, they just want the number so that they can pull your credit reports while you are out on the drive.
Don’t: Take the Car Home Until All of the Paperwork Is Done
Many times, a car dealer will offer you the chance to take the car home and complete the paperwork later. Don’t fall for it, for several reasons. First, you’re liable to fall in love with the car, and you won’t be able to negotiate with the impartiality that you need to get a good deal.
Second, and more sinister, is that the dealer will tell you that they weren't able to get the financing offer that they promised "when the lender's office opened on Monday morning." Instead, they'll offer you a much more expensive deal. At that point, few consumers are willing to take the car back to the dealer and cancel the transaction. Instead, you think you are just stuck with the new offer (hint: you’re not). There are even names for the practice. They call it spotting or yo-yo financing.
You can eliminate the chance of that happening by not taking delivery of the car until every last document is signed.
Do: Bring a Calculator
In order to understand the deal and check it for accuracy, it’s important that you do your own math at the dealership. Leave the math up to the dealer, and you’ll likely find a number of other numbers thrown in that may confuse you.
Remember, the most important number is the total cost of the car, including all payments and fees.
Just pulling a calculator out of your bag can let the salesperson know that you are paying attention.
Don’t: Sign Paperwork That Isn’t What You Agreed To
If you see anything that is incorrect or that you don’t understand, do not sign the paperwork. It’s far easier to correct an error or misunderstanding before the paper is signed than to unwind a deal that has your approval on the signature line.
Be sure to compare the offer sheet to the invoice and make sure they match. If you have questions, be sure you receive an acceptable answer before you sign the documents.
Do: Be Prepared to Walk Away
A car buyer’s greatest power is their willingness to walk away from a deal that isn’t right. It’s also the dealer’s greatest fear. Surprisingly, most customers are afraid to get up and leave the table for fear of losing the time that they have already invested in the deal, or fear of embarrassment.
Unless you are looking at a car that is in such high demand that you won’t find it anywhere else, walking away is always preferable to getting stuck with a bad deal. With the increasing length of the average new car loan, a bad decision can haunt you for years to come.
Just showing the willingness to get up and leave is often a powerful enough message to get the dealership staff to take notice and make you a better offer.
Remember, your ultimate goal is to get a great deal on a great car, while the dealer's job is to make the most money on the sale (and there's nothing wrong with that, as long as they stay within legal and ethical standards).
Don’t: Be Pressured Into Buying Expensive Add-Ons
Beyond financing, dealers make a significant amount of their revenue through the sale of add-on products. Some might be valuable if purchased at the right price, but many come with high markups and are of dubious value or are available outside of the dealership at lower prices.
The time to make decisions about buying those products is not at the end of a long buying process when you just want to drive your new car home. Before you purchase items such as paint protection, key insurance, or a vehicle service contract, go home and thoroughly research the product and alternatives. If the finance officer tells you that right now is your only opportunity to buy that extended warranty or other add-on, you should consider it a red flag to avoid the purchase.
Avoid the temptation to buy the add-ons because they only add a few dollars to each month’s payment. Multiply the added cost by the length of your loan, and you’ll find the real price of the product.
For more information about this, read our article on 11 Things Never to Buy at the Dealership.
Do: Look for Deals
When the pace of sales isn’t up to expectations, or the manufacturer is trying to clear inventory off of their lots, automakers will offer incentives to increase sales. These new car deals are usually in the form of cash back offers, low-interest financing, or a combination of both.
The journalists and researchers of U.S. News & World Report track the best of the deals, and you can find them on our new car deals page. If you are interested in leasing your next car, we also track the best lease offers on our lease deals page.
Don’t: Bring Your Kids Into the Finance Office
The last step in the car-buying process is usually a trip to the dealership’s finance office to sign the final paperwork. While it is critical to make sure your new ride is a good fit for your kids, in the finance office you’ll want to concentrate on the documents that you are signing, without any distractions.
Remember, making an error on the sales documents can cost you money for years.
Do: Check With Your Lender to Ensure Payment Is Made
If you are trading in a car with an outstanding loan balance and the dealership promises to pay off your old loan, check with your financial institution to ensure that happens within a reasonable time. You are ultimately responsible for payments and interest until the loan is paid off.
The dealer has an incentive to pay off your loan, as it is how they get clear title to your old car so that they can resell it.
Don’t: Forget It Is Just a Business Transaction
Finally, buying a car can be an emotional experience, but emotions and excitement can get in the way of getting a great deal. Be friendly but firm, and don’t be the person that they want to gouge because you’re acting like a jerk.
Knowledge, friendliness, patience, and your ability to walk away are your best tools in the car-buying process, and they can make the difference between getting a bad deal and an excellent one. Your confusion, impatience, and lack of confidence can give professionally trained sales consultants the upper hand.
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More Shopping Tools From U.S. News & World Report
An excellent way to find a new car is by exploring our rankings of new cars and our new car reviews. Data for our rankings and reviews is drawn from the consensus opinions of the country’s top automotive journalists and doesn’t reflect the biases of any publication or individual.
Once you have found the right car, it’s time to find a money-saving deal. Our new car deals page shows the best offers available this month, whether they be cash back incentives or financing offers with low-interest rates.
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 MSRP, 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.