READ THIS Before You Buy Your Next Vehicle

Last week my wife and I purchased a vehicle in Des Moines, Iowa.  Soon after we bought it, I began to think through the steps we took during this process.  Here are seven steps you can take that will save you money the next time you are purchase a vehicle.

Step #1 – Buy Used

You can get great deals when you buy used, especially compared to buying new.  When you buy new you lose close to 25% of the value of the car the moment you drive it off the lot.  So imagine driving your brand new $30,000 car on to the road and at the first stop light you come to drop $7,500 and drive away.  Not only that, but according to Kiplinger’s Personal Finance you lose 60-70% of a new cars value in four years.  That means your $30,000 car is now worth $9,000.  That is the equivalent of losing $100/week (not counting if you are paying monthly car payments).

Step# 2 – Private Party

You have two different places you can go when purchasing a vehicle:  a dealership or private party.  It is not to say you can get a good deal at a dealership, but you can usually find out more information and negotiate a better deal when talking to an individual.

Step # 3 – Research

You want to find out everything you can about the type of vehicle you are going to purchase.  Areas that you want to familiarize yourself with our things like the value of the car, consumer reports, gas mileage, etc.  You can do that by visiting one of three websites:   www.kbb.com,  www.nadaguides.com and www.edmunds.com

Step# 4 – Vehicle’s History

When you have found a particular vehicle to purchase you want to know everything about it.  Some good questions to ask are:  How many owners have owned this vehicle?  Why are you selling this vehicle?  Do you have records of repairs and routine maintenance?

When we were looking at the vehicle we had just purchased we found out that they were the second owners of this vehicle and had kept every receipt from every repair and oil change.  They even kept a log of when every oil change was made and the exact mileage at the time.  Why is all of this important?  As our children are learning in school, “Character Counts”.  When you find someone that has kept that level of detail, chances are excellent they have done everything they can to have taken good care of the vehicle.  You really do not want to buy from someone that has trashed their vehicle.

Step #5 – Test Drive

Taking a test drive is an absolute must before making an offer.  This is the vehicle’s chance to perform to the level of expectation given by the owner.  Many years ago I went and found a car that I liked, and I was told by the dealer that this car was in excellent condition.  When I took it for a test drive, I was worried the wheels were going to fall off the car.  There was no way I was going to buy that vehicle.  Also, if you are not mechanically inclined, it would be well worth the cost to have a mechanic go over the car to see what upcoming expenses may be on the horizon.

Step # 6 – Negotiate

Never accept full asking price.  This is where all of your research and questioning can add up to savings.  Like selling a home, most sellers inflate the sales price knowing there is going to be some haggling back and forth.  Use all of the information you have gathered to negotiate a price that is fair to the seller, but also gets you a sweet deal.  Before you start the negotiating process you need to know what exactly what is the most you are willing to spend and DO NOT go any higher than that number.  You as the buyer need to remain in control during the buying process.

Step # 7 – Use Cash

One of the best techniques in negotiating is using cash.  When you can visually show a seller you have the cash right here and now, sellers can be way more willing to take the price you have offered them.  Let’s say you have someone who wants to sell you a car for $7,500.  When you go to make the offer you bring $6,500 in cash.  They will not be satisfied with your offer, but once they see your cash and realized you did not bring any more money, they very well may be willing to accept your offer.  However, they may not accept your offer, which means you need to be willing to walk away if they will not agree to your terms.   Think about it.  If you can negotiate a $7,500 sales prince to $6,500, you will have saved $1,000 (that is a 15% discount).

If you use these seven steps the next time you purchase a vehicle, chances are excellent you will have saved hundreds if not thousands of dollars.  If you would like to receive more tips on how to save money, sign up for our FREE monthly newsletter.   There is a sign up link on the right hand side of our website.

Justin Bennett

  1. Nice post Justin. Does cash actually work? We do use cash for our food category, but I think it would hard to flash around that much cash at car dealership. Would telling the dealer you will write a check carry the same weight?

    We’re getting ready to buy a newer (used) vehicle and this article has impeccable timing.

  2. Good advice Justin! As I see it the middle class in America is giving away its future for the short term “gain” of driving a new car. The only way to win with money is to whip it into shape and control it, i.e., a budget, and never, never, never go into debt for a depreciating item like a car. Thanks for setting a great example for us to follow!

  3. Justin Bennett April 16, 2012 at 1:51 pm

    Great question. Visually showing cash in hand will get you more mileage (pardon the pun) with a private party sale than a dealership. The last car I purchased at a dealership they wanted $10,000. I walked away from the deal three times, and then they finally agreed to accept $7,100 (29% discount). During any negotiation you must know the most you are willing to spend and be able to walk away if the seller will not meet you at your price. Walk away power is also very effective during negotiating.

  4. Great ideas Justin,
    As a regulare buyer of vehicles, I can say that cash does make a difference. I once purchased a vehicle that was priced at 10,500 for 8750 and this was a car dealer. I think I would add , that if you really want the vehicle , let a private iduvidual know this and the fact that you have the cash , and stick with what you are will to pay.

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