Budgeting & Saving

4 Car Shopping Hacks to Save Money

Like many industries, the auto market has evolved. New models debut throughout the year and the calendar plus inventory will largely dictate special pricing and APR incentives.

Every car shopper needs to know when to buy a new car. When gas prices are skyrocketing, anticipate deals on large SUVs and trucks. At the end of the month or end of the year, expect bigger incentives to come out. For all-new models, the haggling will be tougher since there is excitement and prestige over the latest, sparkly showroom gem.

What is the best way to save on a new vehicle?

Experts say the best time to shop, really, is when you need one. No matter when you buy, there are a few strategies you can employ to save dollars and feel good about the contract you sign.

  1. Start your shopping journey online.

    A recent study found 88% of shoppers use the Internet for vehicle shopping, and 60% spend roughly five hours on third-party sites. No longer must customers schlep from dealer to dealer to compare models. They can easily cross-shop vehicle features and MSRPs with a few clicks, saving hours before heading to a lot to test drive. Check the automaker and dealer websites for rebates that are being offered.

  2. Know what you can afford.

    Shoppers often focus on monthly payment, but there are so many other variables to consider. What type of financing can you land? Where do you fall on the credit spectrum? What does this mean for your APR? Even today, there is little transparency in the finance office of a dealership. Knowing your credit scores helps you to understand what type of interest rate you can command. Even better, marching into a dealership with an approval gives you power to negotiate. If the dealer can beat your pre-approved bank or credit union offer, score. If not, you likely have the best deal in your back pocket. Recognize if you plan to lease, you'll need to arrange payment with the dealership. Banks and credit unions rarely play in the lease space, leaving that side of the business to the captive finance companies. Finally, remember your pre-approval must cover everything you plan to finance; taxes, fees, ancillary parts and finance and insurance extras.

  3. Negotiate before you head to the dealer.

    While most online shoppers start at third-party sites to cross-shop and research models, the online journey can continue once you've zeroed in on a few models. Most dealerships today employ online sales departments. Initially, they'll provide details on basic MSRP or advertised specials, but they can also identify if they have particular configured models on their lot. Reach out to several online sales departments simultaneously and you can begin negotiating price. My husband and I purchased a vehicle this summer and we employed this strategy with great success. We haggled via text and email from the comfort of our home and basically had an agreed upon price when we visited the dealer to pick up the car.

  4. Arm yourself for the finance and insurance visit.

    Even if you buy a vehicle with cash, all customers need to head to the Finance and Insurance (F&I) office to complete the vehicle transaction. This is where the final papers are drawn, vehicle registration is handled and you are offered many products like alarms, paint protection, warranties and GAP insurance. Gap insurance is an optional coverage for new cars that can be added to your collision insurance policy. This insurance can pay the difference between the remaining loan or lease balance and what your insurance company will pay if your car is totaled.These "extras" can quickly add thousands of dollars to your sale. An analysis of AutoNation sales in 2016 revealed the average per-car profit of "customer financial products" netted them $1,602. With the haggling and price compression on the vehicle, this is often where the dealer makes their profits. Perhaps some of these products make sense for you, but know what you're getting and ask for transparency around pricing. The add-ons can easily push a monthly car payment up $100 or more.

    Nothing beats that new car smell, but the vehicle shopping process takes time, research and negotiation prowess. As so many people have said, "Knowledge is power." So, do your homework, know your budget, your credit scores and don't be shy about negotiating. Your pocketbook and peace of mind will thank you later.

  5. Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer, or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.
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