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How to Save Money When Buying a Car

When it’s time to replace your car with something new, you’re going to want to save as much money as possible. But that might not be as simple as you think.

Chances are, buying a car for a great price will take more than just haggling over a couple hundred bucks with the salesperson, or calling around to a few different dealers. You can save a lot of cash if you play your cards right, but the key is knowing where there’s real money on the table.

With that in mind, here are five proven ways to maximize your car-shopping savings.

1. Consider CPO

Your heart may be set on a particular new car, but ask yourself this question: When did the current version of that car debut?

Take the current Honda Accord, for example. Right now, the brand-new Accords at your local Honda will be 2015 models, but the same platform, features and styling have been in use since 2013. In fact, 2013 was the year an all-new Accord first showed up with dramatic changes. That means you’ll get essentially the same car if you buy a used specimen from 2013 or 2014. Plus, Honda’s certified pre-owned (CPO) program includes a full reconditioning by factory-trained technicians, along with a competitive warranty.

That’s true across the board for almost every manufacturer these days. You can purchase lightly used models for thousands less than new, and (with a few exceptions), the CPO warranty makes it almost like buying a new car. Many brands even offer extras such as a trial period of free satellite radio, free maintenance and roadside assistance.

If you’re looking to save a wad of cash, the CPO program is a great place to start. If any of this sounds good, consider such brands as Chevrolet, Ford, Hyundai, Kia and Lexus.

2. Sell Your Old Car Yourself

Watch out for dealerships that are eager to take your trade-in as part of the transaction. In many cases, trading your car in at the dealer can cost you dearly when compared to selling your car on the open market.

Of course, if you sell it yourself, you’ll need to be willing to spend lots of time waiting for the right buyer. Trade-ins are easy; you get the agreed-upon value right away, no questions asked.

But if you trade your car in, you’ll cost yourself at least hundreds of dollars, if not thousands. Dealers typically lowball you on the trade-in value, only to turn around and sell the car on their lot or at auction for a tidy profit, because it’s their job to make money selling cars.

Conversely, taking a patient approach on your own can net you full market value for your old whip, or close to it. Just be prepared to spend a little time and money cleaning it up and fixing any glaring issues. An Autotrader classified ad would be a great place to start.

3. Target Mid-Level Models

We know there’s a strong temptation to get the fully loaded model of whichever car you choose. Before you pull the trigger, though, compare the price of that loaded-up version to the base price of the model line. In many cases, the fancy one will cost something like 50 percent more than the stripped-down special. Are all those gadgets really worth that much bread? You could probably buy the base model of a considerably nicer car for the same money.

That’s why we recommend targeting a mid-level specification of your chosen vehicle. The above mentioned Accord is a fine example. You might want more than the base LX provides, but the top-of-the-line EX-L with Navi could run you $8,000 to $10,000 extra. Enter the Sport trim, which boasts a more upscale appearance and meaningful upgrades, including a 10-way power driver’s seat for less than a $2,000 premium over the LX. They’re all Accords, after all, and the Sport will leave a lot more money in your pocket.

4. Buy From Dealer Stock

Buying from dealer stock often requires a little flexibility, because you’re choosing from what the dealer ordered, as opposed to ordering exactly what you want. But on the flip side, the dealer has a strong incentive to move existing inventory off the lot, whereas special orders are a pain in the you-know-what. Translation? There’s typically a lot more wiggle room on cars that are already there for the taking. So if you’re tempted to place a special order, take a good look beforehand at available inventory among all the nearby dealerships to see if there’s anything that comes close. We’d even suggest exploring more distant dealerships with options for long-distance delivery. The savings could be quite substantial.

5. Pay Attention to the F&I (Finance & Insurance) Department

There are plenty of honest, straight-talking dealers out there, and they may well be able to get you the best possible rate on your loan, maybe with some attractive warranty products thrown in. But if you know the business, you know that F&I is where dealers make a lot of their money.

As usual, the key is to be a hard-nosed, well-informed shopper.

It’s fine to listen to what the dealership has to offer, but be ready with a backup plan that includes your own financing options. Make sure you read all the fine print on any warranties that may be offered. There are good deals to be had, for sure, but it’s also easy to be taken to the cleaners, and that’s especially painful if you’ve negotiated your way to a favorable position up to that point. We always advise shoppers to have their own financing in place before visiting the dealer. The truth is, the dealer will have access to specials like factory rebates and 0 percent financing. However, you generally must have excellent credit to qualify for those deals.

Autotrader Says

Educated car shoppers can save themselves a lot of money if they know how the business works. If you take the time to understand these five tips when you’re buying a car, you’ll likely have a lot more cash left in your wallet.

Russ Heaps
Russ Heaps is an author specializing in automotive, financial and travel news. For nearly 35 years he has covered the automotive industry for newspapers, magazines and internet websites. His resume includes The Palm Beach Post, Miami Herald, The Washington Times and numerous other daily newspapers through syndication. He edited Auto World magazine, and helped create and edit NOPI Street... Read More about Russ Heaps

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  1. Also know that autotrader charges dealers thousands of dollars to post their vehicles on their website, and even more to get “premium listings – larger displays in more prominent locations. All this drives up the price you as a consumer pay for used cars. You can find the same cars and cut out autotrader by simply doing a google search for the car you want.

  2. I personally disagree with #3. Whenever purchasing a new vehicle, springing for the high-end model has always paid off for us. When going to trade-in or sell our vehicles, the dealers are practically foam at the mouth to get our cars, as are potential buyers… There are less of them available, which makes them more valuable.

    • The truth is, many buyers can only afford $20,000 or less. Getting the nicer version of a car is certainly nice, but it’s a luxury many cannot afford.

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