8 Tips to Save Money on Your Next Car Purchase
1. Don’t buy a brand new vehicle. I know how great it feels to sit in that new car and smell those new-car aromas, but is it really worth the cost? Right now, the loan rates are really low, but a $20,000 car will still cost you $22,100 after 5 years with a 4.0% APR. Also, after those 5 years, your car will be worth somewhere around $7,000 (average depreciation of 65% after 5 years). So, lets recap; after 5 years, you’ve paid $22,100 on a car that is now worth $7,000??
2. Buy from a Private Party. They typically have more emotion when it comes to the sale, so it’s much more likely that you can get a deal from an individual rather than from the dealership.
3. Search EBay Motors. I know what you’re thinking; “I don’t want to buy a car sight unseen! I’m just asking for trouble!” I suggest that you search eBay’s local listings. Search within a radius of 50 miles, contact the seller and test drive the vehicle. If you are satisfied, you are now ready to bid.
4. Search Craigslist. Key in your price range, but then instead of searching for specific vehicles, search for words like, ‘must sell’ or ‘Carmax’. Those that write, ‘must sell’ need to sell their car now, and if you show up interested, they just might give you a great deal. I also search ‘Carmax’ because there are a few people out there that know CarMax is ripping them off with a low-ball price, so they give the public a price that’s $500 more, but it’s still a great deal! I recently saw a BMW that was only a year old for $15,500 because CarMax offered them $15,000! Someone out there got a bargain on a great luxury vehicle.
5. Don’t Pay Sticker Price, Negotiate. There is a flaw with every car. Point them out and let them know the cost it will take to fix it. A common phrase, “That’s not good enough” (A Dave Ramsey special) works great when the seller gives you the price for the car. It will leave them searching for other ideas for you to buy their vehicle.
6. Drive Around the Neighborhood for those ‘For Sale’ Signs. If you live in an urban area, this might not be great advice, but if you are in a rural setting, there seems to be cars for sale in every front yard!
7. If you must go to a dealership, make sure to Check the Internet Price. Many times the prices on the window are far higher than the price listed online. Make sure to check both before your negotiations.
8. Pay with Cash! Especially today, cash is king. When people see a wad of $100 bills or a briefcase filled with twenties, it leaves every seller drooling. It’s incredibly emotional to see all that cash, and it makes people agree to crazy things! It’s not uncommon to get a $7,500 for $6,000 when you have cash.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.