I am all about saving money wherever I can. I have been involved in purchasing a vehicle countless number of times and I just thought I should share some of my experiences. One thing you must know is that no one is going to force you into buying something and you have plenty of options available in the market when you are deciding to purchase a vehicle. So don't feel tied down and as if you have no options or nowhere to go to get a good deal. You can buy a vehicle from:
1. Private Sale.
2. New from dealer of car manufacturer.
3. Used from dealer that is affiliated with the car manufacturer.
4. Used from dealer that is not affiliated with the car manufacturer.
When considering to buy a car you should first consider your options of whether you should buy a brand new car, or a demo car, or a slightly used one or a used one that is more older. I will discuss all the options that you have. You really need to consider your pros and cons of buying a new car vs demo vs used but still good vs old. In my experience of purchasing cars I would only buy a new car if there is a very good incentive, like this one time the British government was giving a
£2000 incentive if you trade in your vehicle that is more than 10 years old and that was on top of dealer incentives. The car I had was worth a few hundred pounds so i traded it in and cashed in on two of my older cars for 2 brand new cars. Apart from that i haven't found it profitable to purchase a new car because of all the extra charges you have to pay. I have found that demo cars or executive demo cars have a really good value as compared with new cars and you can end up saving quite a lot of money. Advantage of demo cars is that they have really low mileage and you don't pay those extra charges you pay on new cars. For example, recently on our Altima purchase, we had offer of a brand new demo loaded model that would be close to $40000 brand new the dealership was selling for $32000 all in. That's $8000 dollar saving and the car only had 2500 kilometers on it. Another good option is to buy a car that has low kilometers and 2-3 years old. This is because car depreciates the most in the first 2 years. But when you go to this option make sure that you get a Carproof/Carfax of the car to make sure it hasn't been in any accidents or it doesn't have any lien/finance on it. The same goes for if you want to buy older cars as well. One thing you don't want is to buy a car then have to spend extra money fixing things in it. Also if the car has a rebuilt status or history of accident, it lowers its value and resale value. When deciding a car, see what your family/friends have and look on the manufacturer's website and if you like something, try to find reviews on edmunds and various other auto websites. See videos on youtube and see features on manufacturer's website so you know about the vehicle before you go to see it. This will give you more power to negotiate as you will already know about the product. Also keep in mind when the new shape of that model will be coming out. You don't want to buy something that has a new shape coming out the following year.
LESSON 1: Do your research
Once you have done your research, you will have a fairly good idea of what you want and how much you should pay for it and what vehicles are available in your area. Make a list of all the dealers that offer the vehicle of your choice and phone them one by one and ask information that you need on the car, like confirm owner history, accident history, features and options of car, take down name of person you spoke to. Considering everything turns out ok on the car, and if you really like the car it wouldn't hurt to throw a reasonable offer on the car. But before throwing an offer you must be experienced enough. If not then you can always go on the next step. When giving an offer you want to be careful to not make an offer that is too low. In my experience make an offer somewhere between $500-$2000 below asking price. Anything beyond $2000 the dealer might find offensive and feel you are just a waste of time. Anyhow be polite, serious and firm in your offer.
LESSON 2: Make enquiry on vehicle beforehand and if you are a pro thrown an offer.
When you walk into a dealership or into a private sale the first thing you should do is look around and talk to the person selling to you. Talk to them about general stuff and be friendly and polite. Do not jump into test driving and turn down the offer to your salesman because you will become more obliged to buy if you test drive. This gives you more negotiating power and lets the sales person know that you know about cars and you are not there to waste time.
LESSON 3: Build Rapport with the person selling to you.
Regardless of what you buy all you should consider is that final number that you will pay to take the car home which includes, the cost of car, all admin/licensing fees, taxes etc. The dealership will try and negotiate with you on car price or a lot of times and then when you sit down the final number will be a few grand above what you negotiated and then the dealer would say they can't do anything about those fees because it is out of their control. So make sure you make it clear to them you want the final number of what it costs you that includes all taxes and everything. You can say to the dealer like ok I will pay the asking price as long as they can take care of taxes and admin fees. Something to think about when negotiating.
LESSON 4: Always keep the final number in mind
Now consider your financing options. If you have cash to buy, great. But if you don't then you need to look at financing. When considering financing you need to have a good credit rating unless you want to pay extremely high interest rates which again is not good value for money. You have two options, either go to a financing bank or credit union before you go to the dealer or apply for financing at the dealer. Obviously if you want to buy a vehicle privately the seller will most likely want cash and option one is your only way. When financing, there's a few things you should consider.
1. Who's offering the lowest interest rate.
2. Sometimes the dealer offers cash incentives if you go for really high interest rate. This is slightly more complicated to understand. So what you can do is ask them the minimum amount you can finance. If you have cash, pay whatever the amount they are asking minus the minimum amount you can finance. If you don't have cash, you could apply for financing outside the dealership for that amount and again minus the minimum financing amount at dealership. Or you could just opt for the highest interest rate on the full amount at the dealership. keep in mind every time you apply for financing your credit score will lower. Let me give you example. For the Altima above the dealer offered me $32,000 only if i chose their financing option of 4.99 percent over 5 years or else it would be $33,500, so i was getting $1500 off the car if i chose financing through dealer. The minimum amount that Nissan finances is $7,500 dollars. So I would have to pay $25000 cash and finance $7,500 at a really high interest rate. Also Nissan offered that I could pay off that $7,500 at any time without penalty.
3. When financing at the dealership, they charge most of the interest in the first months of your financing so your principal payment initially will be really low and you'll mostly be paying interest. This is really cheeky of financing companies because just incase you do want to pay your financing early they have already taken most of the interest amount anyway, so keep that in mind when financing through dealer. It is different how they charge you interest in the bank.
4. Ask wherever you are getting financing from whether there is any early payment fee and accommodate that into cost as well.
LESSON 5: Make sure that you are fully aware of what you are getting into. Normally when you financing the person selling you the finance should explain everything and clear any doubts you have.
One final thing I want to touch upon is the extra protection packages offered at the dealership like paint protection, rust protection, leather/fabric protection, upholstery protection, tire protection and mechanical protection. To be honest, I will never opt for any of these. I'd rather save money and if something goes wrong use that money towards fxing the problem.
