Chances are, you and almost everyone you know use a personal vehicle on a daily basis, so getting the best deal on a car is pretty important. Relying on a personal vehicle means you’ll have to learn the art of car-buying sooner or later. [If you haven’t already!]
In this eBook, we’ll provide a comprehensive guide to getting the best deal you possibly can on a car, whether new or used. We’ll discuss the best and worst times to buy a car, car financing guidelines, how to negotiate a car price, how to make an offer, and specific tips to help whether you’re buying used or new. We’ll also share our favorite car payment calculator.
Do I really need a car to live my daily life?
If your answer is a no-brainer “Yes” like most Americans currently, the time is coming when you’ll have to buy a car. And likely at the forefront of your mind is the [several thousand] dollar question:
How can I get the best deal on a car?
After all, Arizona is the 19th most affordable state for buying a vehicle. But dealerships have the reputation of being intimidating and time-consuming. Private party sales can be sketchy, and do you even know if you want to buy a new vehicle or a used one? Or Certified Pre-Owned?
Let’s dive into the details, set your mind at ease, and give you all the tools you need to get the best deal you can on the best car for your lifestyle.
If you’ve heard this slick sales tactic, you’re not alone. Car salespeople agree on a universal truth when it comes to buying vehicles – that the best time to buy a car is RIGHT NOW. But let’s step back and look at the data.
Cars are designed and released by manufacturers in cycles. Yearly, old models are shuffled off the lot to make room for the shiny new versions. This means that generally, the best time of year to buy a car is towards the end of the year: the last quarter (October, November, and December) in particular.
The summer months are a strong second option for the best time of year to buy a car, because some models for the following year release as early as spring or summer of the prior year, trying to race ahead of their competitors!
Holidays are another good time to take a look, including particular three-day weekends like Memorial Day and Labor Day. You can try to buy on Black Friday, but due to the usual frenzy, a lot of the legwork will have to be completed ahead of time – and be prepared to wait a while at the dealership!
Sometimes, need necessitates car-buying in the non-optimal months. We have no control over that transmission finally deciding to kick it, or the suspension being shot. Luckily, there’s also a best time of the week to buy a car, regardless of what month you find yourself in.
If you like saving money, plan your car-buying on a weekday. The earlier in the week, the better. Particularly, Mondays tend to be the most savings-heavy day for a buyer to seal the deal. The average savings on a Monday? 8.1%, a US News & World Reports article states. Perhaps because there’s less foot traffic during the week, or you have more focused attention from sales folks when they aren’t rushed to work multiple deals at once.
For some general advice on timing your car-buying, hear this: the best time to buy a car could be simply when there are good incentives! Keep your eyes open for unpredictable best times to buy a car like these:
Buying in February tends to be the most expensive month for car-buying, so if you’re current car is on its last legs and you find yourself in the wee hours of the new year, try to sweet talk it into hanging on for another month or two. That also means it’s probably not the savviest Valentine’s Day gift to spring for…
When you’re ready to begin shopping in earnest, there are four main options:
Let’s talk about each of these options and review some of the benefits and drawbacks of each.
An Independent Dealership is one who is not affiliated with any particular car manufacturer. These dealerships offer used cars only.* This means they may be able to be more flexible on price because they don’t have the overhead from the automaker standard [but be ready to negotiate fiercely for that better price.] They also have a wide variety of used vehicles because they buy and sell without regard to a single manufacturer. And if you’re looking for an older vehicle they will typically have a larger selection than a franchise dealership.
* A few independent dealers are also brokers, which means they can get you a new car direct from the manufacturer in the year/make/model and all the trimmings you want. Pricing will be comparable to franchise dealers because they do the negotiating on your behalf
Easy to spot due to the car manufacturing company’s name being in the title, franchise dealers tend to carry vehicles for only one (or a couple of partnering) manufacturers. For example – Bell Ford, or Camelback Toyota.
They also offer used cars but price tends to be a bit higher than independent dealers and they certainly won’t have as much variety. They do offer certified pre-owned vehicles, which is a nice option that gives the buyer more peace of mind regarding the condition and history of the used vehicle.
A newer phenomenon, online dealerships exist 100% on the web. No physical showrooms, no test drives (usually) and no price negotiation or haggling are involved. What do you get in exchange? Lower priced vehicles and a 7-day return policy. They’ll typically deliver the car to your house! The most well-known dealerships like Vroom, Carvana, and Shift may be a good option if you can live with the limitations above. Note that you should act quickly if your heart is set on a popular vehicle as they tend to sell fast.
Thinking of buying your friend’s mom’s dentist’s old car? This would be considered a private party sale. Be careful and do your homework if you decide to go this route. The Arizona Department of Transportation has a helpful checklist for you to follow if you’re buying a vehicle private party. We also offer our own Check Before You Buy – Your Pre-Owned Auto Checklist that tells you exactly what to look for when surveying a vehicle you want to buy. When it comes to financing for a private party sale, most traditional banks won’t offer it. But we’re happy to offer this benefit to members here at Copper State CU! We’ll even run the Carfax for you for free. Helpful tip? Make an appointment with us so that we can discuss all the details with you regarding financing for a private party sale.
When trying to get the best deal on a car, know this: There can be less-than-perfect sales people at a great dealership. There can be amazing sales folks at a mediocre dealership. The important thing is that you feel comfortable with the sale. If you’re uncomfortable or something doesn’t feel right, you don’t have to go through with it. And you can always check out this list for certified dealers and a stress-free car buying experience.
Now that you know your options for buying a vehicle, it’s time to pause and do the math. First, do you have a household budget? Take some time and review How to Create a Monthly Budget that Works eBook and download our popular budgeting template. Or, watch a recording of a recent budgeting workshop and read through some of the content here.
Why are we preaching about budgeting in an article about getting the best deal on a car? Because you can’t be successful in the auto-buying game if you don’t know some basics about your household finances and what you can comfortably afford. Beyond using a car payment calculator, can you answer the following questions?
Kelley Blue Book’s 5-Year Cost to Own car payment estimator and Edmunds TCO True Cost to Own car payment estimator are invaluable resources when trying to choose between several vehicle options. They both use data to help capture those other expenses like gasoline and maintenance/repairs that are difficult to estimate ahead of time. For example, did you know that a luxury car oil change can cost about $400? Performance vehicles are going to have much higher costs to maintain, even if you buy them used.
Use our favorite car payment calculator – the Auto Loan Affordability calculator to play with the numbers and see how well a certain vehicle fits into your budget and goals.
You’ll also want to call your insurance company and get a quote based on year/make/model or get the VIN (Vehicle Identification Number) off the dealer’s website. Many people think that insurance costs won’t change if you’re simply swapping one vehicle for a different one, but there can be over $100 per month difference in insurance costs, especially with high-powered vehicles.
Knowing your approximate credit score and viewing a copy of your free annual credit report is key to being prepared for financing. But even if you’re buying your next vehicle with cash, it’s still a good idea to get up to date on these two key items [credit score + credit report].
Luckily, this is easy for all Copper State Credit Union members. Copper State CU has partnered with Savvy Money to offer all of our members access to their credit score, report, and monitoring through our online banking portal! Simply log in to online banking and see the Credit Score box on the right hand side.
Not a Copper State CU member? With just $5 and proper ID with proof of address, you can open a membership savings account and register for online banking, as long as you live, work, or worship within 6 counties in Arizona. Then, your credit score, report, and monitoring tools will be right at your fingertips, and you’ll be on your way to buying a car in no time.
Why does your credit matter so much when you’re trying to get the best deal on a car? Your qualification for an auto loan as well as the interest rate you’re offered is directly correlated with your credit report and score, and this APR (Annual Percentage Rate) impacts the amount you pay for your new/used car over the term of the loan. Although the age of the car can affect rate as well, you’ll be likely to get the lowest advertised rate if your credit score is above 760. If you have mid-range credit and want to go rate-shopping to find the best deal, just ensure all credit pulls are done within a 14 day period so that it doesn’t damage your score.
There are essentially two options for buying a car – paying ‘cash’ and using financing. We’ll talk about both and give our favorite tips for each, below.
Paying for a vehicle in cash doesn’t necessarily mean you hand the dealer a fat stack of hundreds. It does mean that you have liquid (available) funds that you can pull out of your account via check, or certified money order, etc. in order to pay in full for a vehicle, without having a lien on the vehicle at all.
If you want to pay for your next vehicle in cash, our advice is to start by putting away a ‘car payment’ every month into a separate savings account. For example, if you know you’re able to afford a $350 per month car payment, challenge yourself to pay that faux car payment into your savings account every month for one year. If you can do this, you’ll learn three things:
You’ll learn whether you can afford that amount ($350, or whatever it is) per month while still covering other expenses.
You’ll find that you now have a hefty sum ($4,200 for this example) ready for use as a down payment, if you end up deciding to finance the rest.
You’ll know exactly how long it will take to save up the entire sum of the car you want to buy, to pay for it in cash. (Per our example, if the car you want is about $12,000, it’ll take 34 months to save up at $350 per month.)
Once you have your budget and credit information ready to go, it’s a great idea to get preapproved before going to a dealer. You’ll want to complete a preapproval once you’re serious about buying. Preapproval is a hard pull on your credit. You likely will get the offered rate and term, and it will give you an idea of the loan amount you qualify for. In order to get a preapproval, you will have to provide documentation like proof of income.
Preapproval makes you a ‘cash buyer’ at the dealership which is very valuable for negotiation purposes.
And remember, you don’t have to give out the information about how much you’ve been preapproved for at the dealership. Preapproval is also nice because it ensures your loan ends up at your preferred institution!
Some helpful tips to keep in mind regarding preapproval: The age of the vehicle you choose can significantly impact the rate you receive, if the car is more than a few years old. If the vehicle is over 100,000 miles this will make a big difference on rate as well.
Try to get as close as you can to the following, when it comes to financing:
Of course, we know this isn’t possible for everyone – it’s just a goal to keep in mind as you run the numbers on your car payment calculator (below!)
The data behind our 20/5/15 Rule is to help you avoid becoming ‘upside down’ or ‘underwater’ in terms of your car loan. These terms refer to a situation where the value of the vehicle is less than what you owe on the vehicle. In this situation, if you sold the car, you’d still be in debt. Unfortunately, this can easily happen due to depreciation, add-ons, and lack of significant down payment.
You’re considered ‘upside down’ or ‘underwater’ on your vehicle if:
So now you’re asking, how do I make an offer on a car? Our answer – Don’t (at first)! Instead, ask the salesperson what they want for the car. Whatever they state out loud, they can’t go any higher than that. On the flipside, be aware that once you state what you’re willing to pay, you can’t go any lower.
Most importantly, if you don’t feel comfortable, be willing to leave. Yes, even if you’ve already been at the dealership for several hours. Try not to fall into the trap “We’ve already spent so much time here, we need to see it through” a.k.a. the sunk cost fallacy. You can always leave your contact information along with a calm offer to give you a call if things change on their end.
Not sure who to trust? Copper State CU has a featured list of certified dealers you can feel safe shopping with. All of these dealers have been vetted by our organization and we work on financing for our members with these dealers on an ongoing basis.
Create a list of potential options and check prices/look in your area for what’s available. When buying used, know that you’re not likely to get the exact model or color you want, so be flexible and start with several options to see what’s available in your price range
Using VIN#, check the history of the vehicle on Carfax or AutoCheck to make sure you know accident information and ensure that the title is clean.
Copper State CU Member Benefit : If buying private party, we can run CARFAX for our members for free if they’re financing with us.
Only a mechanic will be able to see certain issues with a vehicle that an untrained eye would miss. This is especially important if you’re buying private party or from a small, lesser-known independent dealer. Getting the car inspected can help you save thousands.
Using the VIN# at https://www.nhtsa.gov/recalls you’ll be able to tell if the vehicle has any current recalls, and whether they’ve been taken care of or not.
Getting a new car at the lowest price possible starts with preparation. Searching online, you should be able to find average invoice price as well as MSRP for the car you want, before you go to the dealership. The invoice price is around what the dealer likely paid for the vehicle, while the MSRP or Manufacturer’s Suggested Retail Price is what they’ll try to sell it for. When you know these numbers going in, it gives you a better idea how to get a new car at the lowest price.
If you don’t love the idea of confrontational negotiation, try chatting online with several different dealers’ internet managers and get quotes on the same car from multiple dealers. Getting the best deal on a new car means making sure the price quotes include all fees and other charges.
Use a calculator like this one to determine whether you’re better off with a low-interest rate financing or a cash rebate offer.
In the world of car-buying, there’s a lot to learn. Hopefully, you feel more prepared to step up to the task when the time comes, and you’ll ensure that you’re getting the best deal you can on a car by following our tips above.
This article is intended to be a general resource only and is not intended to be nor does it constitute legal advice. Any recommendations are based on opinion only. Rates, terms and conditions are subject to change and may vary based on creditworthiness, qualifications, and collateral conditions. All loans subject to approval.