12 Important Money-Saving Car Buying Tips and Tricks

In my last blog post, I mentioned that my car was totaled in a hit and run accident last month. Although I wasn't attached to my last car, I cried like a baby when I got home after the accident. The thought of buying a replacement vehicle worried me, and I had no intention of buying another car anytime soon. I had paid my car off seven months ago and liked being car payment free. 

R.I.P. Stormy

R.I.P. Stormy

My accident felt like dejavu. This was the second time that I had a car totaled within months of paying it off. I started wondering if I should lease, buy a cash car, or jump back into the world of traditional financing. Since my husband and I were about to close on our house we had a few weeks to research before we could buy a another car. In the meantime, my insurance company gave me a reasonable check for my Accord which meant that I could put 20% down on a newer vehicle. 

After much research and discussion, we decided that I should go ahead and buy my dream car, a BMW X3. I remember when the X3's first appeared on the scene when I was in high school and I've loved them ever since. Since we already have a sedan, we figured that this would be the perfect opportunity to buy a vehicle that would be great for when we decided to start a family and handy for transporting large items. 

Hey Blue Ivy!

Hey Blue Ivy!

Before heading to the dealership, I did tons of research on how to negotiate, obtaining financing, and tips and tricks on how to snag a deal. I've made rookie mistakes when buying cars in the past and I refused to do the same thing this time around. Here are some great tips and tricks that helped me snag a deal on my car. These tips can be applied whether you decide to buy new or used. 

1. Secure Your Financing Ahead of Time. In the past I've always waited to secure financing until I get to the dealership. Did you know that car dealerships make money off financing? Keep in mind that pre-approval is power. If you tell the dealership that you already have financing they will try to compete for your business and attempt to give you a lower interest rate. I secured financing the second that we closed on our house, and told the dealer what my interest rate was. This put me in a position of power. The dealer asked me if I wanted to lock in with the lender I had secured or if they could try to offer me a lower rate with another lender. They actually ended up getting me an interest rate that was lower. However, this wouldn't of happened if I hadn't shopped around before going to the dealership. 

2. Know Your FICO scores. The salesman is going to ask you what your normal credit FICO score is to get an idea of where your interest rate will fall. Keep in mind that auto lenders also review your FICO Auto Industry Score. The biggest difference between your normal FICO and FICO auto score is that the auto score rates you on how you've managed your previous auto credit. It gives auto lenders insight into how you've paid your previous auto loans. Interestingly, depending on your auto credit history, your auto FICO score could be higher than your actual normal credit score. Most dealers will not show you this score, but you can purchase it from myfico.com. 

3. Do Your Research. Before you head to the dealership know EXACTLY what make, model, and trim you want. Long gone are the days where you simply roll up to the dealership to see what they have on the lot. I did tons of research on Edmunds and AutoTrader to see what types of trims were available and at what price point. When it was time for me to purchase my car, I knew exactly which trim I wanted and what features were my must-haves. Don't give the salesman the opportunity to capitalize on a lack of knowledge or indecisiveness. 

4. Negotiate the Warranty Price. My SUV is still under the manufacturer's warranty, but I wanted to purchase an extended warranty. Did you know that you can negotiate the price? Most dealers have some wiggle room when it comes to offering up warranties and add-on's such as detailing packages, tint, etc. Don't be afraid to ask for money off. 

5. Watch Out for the Extras. When the dealer gave me the first offer for the car they added a lifetime tint package, free car washes, nitrogen tires fills for life, and detailing. This would've added an extra $1,500 to the price of the car. I immediately declined. Pay special attention to the "extras" that they might try to include in your contract. By the time we were done negotiating, I was told that I could bring my car in for free washes whenever I wanted, plus I ended up getting six free oil changes.

6. Be Firm. If your car salesman won't budge, ask to speak directly to the sales manager. Typically, the salesman will play a game of deal or no deal and bring your offer(s) back and forth to him. You can eliminate this by asking to speak to the sales manager directly. Tell them if they can meet your target price, you'll be ready to buy immediately. If not, tell them you intend to visit other dealerships. Never forget that the sales manager ultimately makes the final decision when it comes to approving the deals. The sales person is just the middle man. 

7. Ask for Extras. Before purchasing my SUV, I was told that there was only 1 key available. Since BMW keys are known to be super expensive, I said that I would not buy the car without two keys. The sales person accommodated my request and added this to the contract. Also, the tint wasn't to my liking and I wanted it darker. They also did this on the house. Be sure to ask for extras before you leave the dealership and be sure that they're added to the contract. 

8. Know What The Competition is Charging. If negotiations are starting to go in flames, be sure to let them know that you're fully aware of how much the car is selling for at other dealers. You don't have to mention which dealer, but this can be used as a bargaining tool. Remember that the car is already marked up so the dealer can have some sort of profit margin. 

9. Know When to Say Yes. You don't have to play hardball forever! If the car is within your target price go for it! I didn't have to do too much negotiating on my car since the price was less than many comparables in the area and had a faster engine than all the models I could find in my price range. Plus, the dealership is close to my home, which will be convenient for repairs and maintenance. Think about the total package. Is the price right? Monthly payments? How far will you have to travel for maintenance or repairs? 

10. Know Your Car Payment Range. Before purchasing I used a car payment calculator to see where I could expect my car payments to fall.  Some luxury cars can come with quite the price tag. Some of my favorite tools are Capital One Auto Navigator which lets you see what your payment could be for a particular car with a loan term and down payment of your choice. I also used calculators on AutoTrader. 

11. Check for GAP. Due to my previous accidents, I refused to buy another vehicle without GAP insurance. In the event that your car is totaled, GAP will pay the difference between what you owe and what the car's worth so you won't be 'upside down.' Many lenders offer GAP as an add-on. Did you know that some auto insurance companies offer GAP? You can save money on your monthly payment by simply asking your auto insurance to add it to your policy. Unfortunately, my auto insurer doesn't offer it but ask your auto insurance carrier if they do before you purchase the car. 

12. Ask Others for Advice. Although I'm the negotiator in my family, I've always brought someone along when purchasing a car. Whenever the salesman made an offer, my husband and I took some time to consult in private. Definitely bring a friend or family member along to ensure that you're getting a good deal. Since my sister recently purchased a BMW,  I asked her for tons of advice and things I needed to look out for. Don't hesitate to seek help from others that might already have the car that you want, recently purchased a car, or can give you support. 

Are you in the market for a new car? What are some of your best car buying tips? Drop a line in the comments and let me know! 

p.s. Shout out to my boo @iamamandabell who purchased her dream car at 26! Her auto buying tips and experience helped me so much when purchasing Blue Ivy. Click here to read all about Amanda's car buying tips and tricks.