There is no shortage of advice on how to save money on your next car. If you have experience dealing with salespeople, you might be able to outfox one in the dealership and beat them at the negotiation game. For those willing to wade into the private car market, you might be able to nab a deal on a car you would have paid more for at a dealership.
These techniques could work but require skill and hustle. You also take a risk by buying from a private seller without a warranty to protect the purchase. For the majority of consumers, an auto dealership is a familiar place where salespeople have to fulfill promises on some level, even if some happen to lie through their teeth.
You can still walk away with a great deal on a vehicle even when you go to your local dealership. The trick is knowing what techniques actually bring the price of a vehicle down. Everything else is unnecessary when your finances are the top priority. Here are the legitimate ways to save money on cars, ranked from methods with high probability to the only guaranteed ways.
8. Don’t trade in your car — sell it
When the “time is money” cliche came into existence, there’s a good chance the person was talking about selling versus trading in a used car. In this case, the math is simple. Dealers need to profit on the sale of your trade-in, so there is a ceiling to what they can offer you for it. Most people don’t want the hassle or time waste, so they accept the deal. It will take you much longer and raise your blood pressure to sell the car on your own, but you will get more for it. If every dollar counts, put in the time.
Next: Pay more up front but save in the end.
7. Accept a higher monthly payment
Wouldn’t it be nice if you could pay a lower monthly payment and save on interest for the life of a car loan? Unfortunately, it’s mathematically impossible. The only way you could manage it would be if the interest rate comes down, and banks will not do that after the fact. So consumers don’t get a better deal when the payment amount drops, regardless of what the salesperson says. Accept the slightly higher monthly payment, and know you saved money overall.
Next: Being flashy comes at a premium.
6. Skip the appearance package
Consumers know they are paying too much for appearance packages on trucks or passenger cars but do it anyway. In these situations, style trumps all considerations, and we understand the motive. However, we suggest you take it to a local body shop first. You might not get the same exact upgrades a dealer will get you from the factory, but you can probably get something close and save thousands in the bargain. Or just skip the package altogether, and take a vacation instead.
Next: Time your purchase to save.
5. End of month (and quarter) incentives
While we’re celebrating cliches, we have to clap for “timing is everything” as it relates to a car purchase. Auto dealerships are like most businesses in that they have to deliver sales reports to management and investors at the end of every month — and (most importantly) at the end of every quarter. For this reason, walking into a dealership around the 28th of the month puts you in the driver’s seat, so to speak. If that day happens to be March 28 or (best of all) Dec. 28, more power to you.
Next: Peel away the dealer stocking stuffers.
4. Avoid dealer fees
Every new car comes with the destination fee charged by the automaker to send the vehicle from the factory to your dealer. License plates also come with fees and can’t be avoided. However, the list of mandatory charges is short, as Consumer Reports points out so helpfully. When a salesperson charges you to remove plastic wrap and perform other menial tasks the manufacturer pays them to do anyway, call foul and demand the charge come off your bill.
Next: Wait until next year.
3. Spot the depreciation kings
Everyone knows buying used means taking advantage of auto depreciation, but some cars really drop in price after just one year. In a 2017 study by iSeeCars, the data revealed buyers picking up BMW 3 Series and 5 Series sedans for 18% off their new price just one year later. These cars define the term “lightly used,” and we dare anyone to tell the difference. But savvy auto shoppers can target them and save serious cash.
Next: Save $7,500 at tax time.
2. Claim tax credits
We don’t blame you if you think electric cars, such as Chevrolet Bolt EV ($37,500) and Nissan Leaf ($30,680), are expensive for what they deliver. High battery costs keep EVs and plug-in hybrid sticker prices near luxury vehicles. However, the U.S. Department of Energy offers tax credits to buyers in order to spur sales of these ultra-efficient and environmentally friendly vehicles. Consumers can write off up to $7,500 for a pure EV or $4,919 for models such as the Kia Optima plug-in hybrid.
Next: Dealers have to discount last year’s model with the current year coming.
1. Buy the previous model year
Another guaranteed way to save money on cars is to buy the last model year vehicle while the new one sits on the same lot. Manufacturers want dealers to move these “old” models, so they offer discounts of 15% or more to make it happen by the end of the calendar year. In many cases, there is hardly any difference between the previous model year and the current one, so buyers reap the benefits. You won’t get the same resale value later for that year’s model, but you’ll save enough up front to leave a winner.
Check out The Cheat Sheet on Facebook!