When buying a new car, always start out by telling the dealer you are a cash buyer, regardless of your circumstances

Posted 4 years ago

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As soon as you have decided on the make and model of vehicle you want to buy, before you even contact a dealer, the first thing you need to do is determine a fair and realistic price for that particular vehicle.

One of the easiest ways to locate this information is to visit Kelley Blue Book, the trusted source for new and used car values and pricing. On their home page, simply select “What should I pay for a new car”, then follow the steps as instructed. This will provide you with a fair purchase price, information on the dealer invoice price and the manufacturer’s MSRP.

Armed with this information you are now ready to proceed.

What you should do now is complete some free quote requests. The following sites should give you an accurate assessment of what is currently available in your area:






Obviously the more dealers you work with, the more likely you are to find the lowest possible price.

Do not be shy about providing these people with your contact details; if you do not provide them with accurate contact information they will not be able provide you with their quote.

It’s most important to be open and honest with the dealers, don’t be shy to tell them you are working with multiple dealers, by telling them this you will force them to put their best foot forward, which in turn will encourage them to provide you with their lowest quote, first time around.

Make sure you tell them you want the bottom line cost, including all dealer fees.

Tell them you are a cash buyer; if they ask if you will be trading in a car tell them no, even if you intend to do a trade in. If they ask you about financing, tell them you are only interested in the bottom line cost of the car, period!

If you need financing

Don’t get sucked into doing it with the dealer – more often than not the dealer is getting a financial kick-back from the bank, and it is you, not the bank, who will end up paying for it!

Go to your own bank and ask them if they have any specials on car loans. If they don’t, find out what their best terms are, this will be the benchmark you need to try and beat.

When you are armed with your own bank’s terms, you can then go out into the marketplace to try and find something better. You may find the following links useful in your quest for a lower rate.






Make sure you know the value of your trade in

It’s time to use the Kelley Blue Book again. On their home page select “What’s my current car worth?”, then, firstly get a value using the “I plan to trade it in” link. Then do the same thing over, but this time use the “I plan to sell it myself” link. This will provide you with the comparative prices you will get for your current car if you sell it to a dealer as a trade-in, versus what you can expect to get if you sell it privately.

When you compare the two values, it’s important to understand that there are other factors to take into account before making your decision on how best to proceed.

While you will always get a better price when you sell privately, it can be a lot of hassle, plus, it’s not always easy to get the timing right! For example, you may be ready to buy your new car, but you need to sell your current car first. Or, you have sold your current car, but your new car is not ready, and you can’t do without a car. In this case you would be forced to hire a car, the cost of which would need to be deducted from the price you get for your current car. In other words, depending on your circumstances, it can be difficult.

Obviously, you will get a lower price for your current car when you trade it in to a dealer, however, because you only pay sales tax on the difference between the cost of your new car, less the value of your trade-in, you have a gain that you can add back on to the value of your trade-in. For example, if the value of your trade-in is $10,000 and the local sales tax rate is let’s say 7%, you gain an additional $700 in saved sales tax. Using this example, if the private sale would fetch let’s say $11,000, but the trade-in was only valued at $10,000, your loss is not $1,000, it is $1,000 less the $700 tax saving, meaning the difference is only actually $300 in real terms. This is something that should be carefully considered.

You’re now ready to negotiate your new car purchase with the dealer.

With all this information in hand, you are in a very strong position to get the best deal possible; you know the best price available on your new car and you know the fair value of your current car. Additionally, if you have followed our advice, you will already have your financing in place at the best rate possible.

Your negotiations with the dealer are now very straight forward; your goal is to get what you already know is the lowest price on your new car, less, what your research has determined to be a fair trade-in value for your current car.

As soon as you get the dealer to agree to terms that are acceptable to you, all you need to do is hook the dealer up with your financing source and you are done.

If you are lucky enough to be a cash buyer

It’s always worth checking if there are any cash rebates available if you finance through a main dealer. If there are, the first thing you need to do is check to see if there are any early repayment penalties on the financing agreement. If there are no early repayment penalties, and you can buy your new car cheaper by taking the financing deal, then you should do so.

Here’s why; having taken the financing deal to get a better purchase price, all you need to do is pay off the loan after a week or two, and you have locked into what will turn out to be a fabulous deal.

Even if there is an early repayment penalty it is still worth looking into. For example, if the cash rebate is worth $2,000 and the early repayment penalty is only $1,000, you can still save a thousand dollars on your purchase!

We wish you luck in your car buying…..

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