Auto Buying Tips

With the exception of buying a home, a new vehicle is the most expensive purchase made in most people’s life. Therefore, buying a new car or truck is a major decision for most consumers.

Take your time to find out the exact car or truck you want and research the available options. Learn what other people have paid for the vehicle you want before going to a local or online dealership. Also, Find out what the dealer paid for vehicle. A car buyer should learn the invoice price – the dealer’s cost – for the car wanted. Fortunately, the Internet makes getting that vital info easy.

Most dealerships have an online sales department that will get you a quote within a couple days. You can also use services such as Autos.com to get price quotes from local dealers. You’re under no obligation when comparison shopping online and it can be used as a bargaining chip with other auto dealerships.

The end of the month is not the only time to get a great car deal. Auto dealerships are always motivated to sell vehicles. If you do want to take advantage of the dealer’s urgency to meet their monthly goal, start negotiating a few days before the end of the month.

Before starting the negotiation, make sure the dealer has the particular automobile you want in stock. While a dealership can usually trade for it with another dealer in the area, this can take a few days and make it more likely the cost of their time may be passed on to you. There’s also no guarantee that the dealer can get the car you want. If not, you’ve wasted your time. Moreover, dealers typically offer better deals on cars they have in stock.

Ask the car salesperson about incentives. This is an amount of money that is paid to the car dealer by the car company upon completion of a sale to a consumer. The car dealer may or may not elect to pass all or a portion of the savings on to the customer in order to lower the vehicle’s price or payment.

Auto buyers should evaluate year-in-year-out transportation costs when shopping. You’ll want to look for a vehicle that retains its value well. Why? It’s because over the first five years of new-car ownership depreciation is a car owner’s biggest expense.

Fortunately, there are services to find the resale values of cars, trucks, sport utilities and vans. They include CarsDirect, Kelley Blue Book and Edmunds.

If you are interested in financing a vehicle, learn your credit score ahead of time. Everyone is entitled to one free credit report each year from each of the three major credit reporting agencies. Shop a loan by researching the rates at competing local banks and credit unions.

When there are major changes to the model such as the 2014 Corvette, you need to consider that when major changes are made to a car model, it increases the rate of depreciation for the old design. At the same time, the factory and dealers are likely to provide greater incentives to car buyers so they can sell their vehicles with the older design.

Best Overall Auto Resale Values

Make & Model Style 3 YR Resale Value
1. Toyota Tacoma 4WD Double Cab V-6 / manual transmission 61%
2. Subaru Impreza WRX STI Sedan 61%
3. Subaru Impreza WRX hatchback 60%
4. Mazda Mazdaspeed3 Touring / manual transmission 60%
5. Toyota Prius c One 59%
6. Nissan Versa S sedan / manual transmission 59%
7. Mini Cooper Hardtop coupe 59%
8. Toyota Tacoma 2WD Double Cab PreRunner / automatic transmission 58%
9. Mitsubishi Lancer SE / automatic 58%
10. Mini Cooper Clubman Coupe 58%
Car Dealership Terminology
Dealer Addendum Sticker - Dealer installed accessories added to a vehicle after its arrival from the car manufacturer.
Dealer Prep Charge - What the dealership charges to prepare a vehicle. It can be negotiated.
Doc Fees - Documentation fees a car dealer may charge to offset the cost of processing paperwork related to a car lease or purchase.
F&I - (finance and insurance) Auto buyers are sent to the F&I office to finalize the details of the deal. In the F&I office, additional products and services may be offered such as dealer financing, extended warranties, service contracts, and auto insurance.
Holdback - Car dealers must finance inventory through the auto manufacturer using a process known as floorplanning. A holdback is a percentage of either the invoice price or MSRP of a new vehicle that is repaid to the dealer by the manufacturer each time a new vehicle is sold. The holdback is designed to offset expenses associated with floorplanning and advertising. If a car dealer turns inventory rapidly, holdback money can help boost profit.
Invoice Price - Refers to the amount of money the car dealer pays the car company for the new vehicle. Generally, the invoice price is higher than what the car dealer actually pays the factory for the new vehicle, after accounting for any incentives, holdback money, or spiffs.
MSRP - The Manufacturer's Suggested Retail Price is also referred to as the sticker price. Subtract the invoice price from the MSRP to determine the minimum amount of negotiating room the car dealer has with regard to the selling price for the new vehicle. Vehicles in low supply and high demand are likely to command full sticker price, or higher. Other vehicles are expected to sell for a price closer to invoice.
Trade-in Value - The amount of money a car dealer is willing to pay for the consumer's old car. The amount is typically less than what a consumer can obtain by selling the vehicle via private party.
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