Chapter 4: How to Get the Best Deal

Never walk onto a dealership unprepared. Before you go, you should already know:

• The model you want
• The options you are looking for
• Your transportation needs
• How much you are willing to spend
• How much you can afford to finance
• How much you can spend on a monthly payment

Gain a good understanding of price, models, and features by conducting your research using magazines, books, and the Internet. Be sure to compare models and prices in advertisements and at dealer showrooms. Visit your financial institution before you shop, so you can seek your vehicle armed with the knowledge of how much you can spend.

Negotiate
To get the best price on your new vehicle, you will often have to negotiate with the salesperson. Honing your bargaining skills will be worth it to you in the end, as it can often save you 10 to 20 percent of the advertised price. You may be able to negotiate a particularly good price on overstocked or less popular models.

But remember – a deal isn’t a deal if you end up with a vehicle you don’t really want. Sometimes ordering a vehicle will save you more money then negotiating for one on the lot, as you won’t be paying for options that you don’t need or desire.

Use the Trade In
If you already have a vehicle, you will likely be selling it and using the profit to pay for all or part of your new one. To get the best price, make sure you know your vehicle’s worth. Check reference books or the Internet to know its value. After that, you have two options:

• Sell it yourself – You will usually get the best price this way, but will have to allow for the time it takes to sell, as well as the effort of placing the ad, talking to and seeing a lot of people, and negotiating with buyers.
  
  
• Trade in to the dealer – This is often the easiest option, though typically not the best deal. To ensure you get the most from a trade-in, do so only after you’ve negotiated the best possible price for your new car.

Save On Insurance
Insurance for your vehicle can be a substantial expense. However, you can improve your chances of getting the best deal:

• Improve your credit score – Insurers may use your credit score to determine the premium. Pay down excessive unsecured debt, pay off collection accounts, and pay your current financial obligations on time, every time.

• Establish long-term residence. Even better, become a homeowner – both give the impression of responsibility.

• Avoid tickets, particularly moving violations – Attend traffic school if you can’t.

• Lower your coverage amounts and increase your deductible. If you are a careful driver with a good driving history, it may be worth the risk.

• Buy a used vehicle – premiums are cheaper.

• Avoid 4-wheel drive and high performance vehicles, which often carry higher premiums.

You may consider purchasing gap insurance, an optional product that insures the difference between what you owe on your vehicle and what an insurance company says it's worth. Without it, you would have to pay the depreciation difference in the event of an accident or theft. It is typically just available for new cars that are financed, though, and not appropriate for everyone. While it is important to have enough coverage, purchasing insurance you don’t need is a waste of money.