Tips to negotiate the best possible deal on a new car – Jalopnik

We are currently in a time of economic uncertainty and consumers are facing rising costs across the board. While you can buy many used cars for $10,000, the average price for a new car is $50,000. It’s more important than ever that buyers understand how to get the best deal and avoid overspending in the first place.

One of the biggest mistakes consumers make is buying more than they can afford. While this may seem like an obvious thing to avoid, millions of car buyers eventually lose their cars because they can no longer manage the payments. Some of them could even end up with a seizure. While some experts will tell you not to focus too much on monthly payments, I recommend you do it sooner examine vehicles and go to a showroom. That way, you can set your budget accordingly and avoid today’s worst new car deals.

Tom McParland is a professional car buyer for new, used and lease vehicles. He runs AutomatchConsulting.coma national car purchasing service. Tom has made thousands of deals on everything from affordable compact cars to luxury exotics since launching his company in 2012. Here are his top tips to ensure you get a good deal on a new car.

Step one is to check your credit score, as that will be a big factor in the type of interest rate you qualify for. Step two is to determine what a comfortable monthly payment looks like so you can figure out how much money you can use as a down payment. You’ll want to work backward using a loan calculator, staring at your target monthly payment. You can add your down payment and estimate your interest rate, but remember that a lower FICO means a higher APR. Also set a loan period; I recommend 60 months, but no more than 72.

Here’s an example with a target payment of $500 per month with a $5,000 discount, using my local New Jersey sales tax and estimating about $800 for dealer/DMV fees. I set an APR of 7% and a loan term of 60 months. In this scenario, I can afford to buy a new car with a total retail price of about $30,000. If I’m determined to buy a new car, I should only investigate models with sticker prices in the mid to upper $20,000 range. These cars would likely be small sedans, hatchbacks and crossovers, such as the Honda Civic, Subaru Crosstrek or Nissan Kicks. If you conclude that your budget calculations put your desired new car out of reach, a used car may be the better choice. Naturally, you’ll want to test drive your selected models to see what feels best behind the wheel. What you should not do is negotiate the sales price personally.

Once you’ve found the right car, it’s time to find the right deal. Even today, most buyers prefer to purchase cars by negotiating in person at the dealer. However, this is very time-consuming and often does not guarantee you the best price. The method I recommend is to use online inventory tools from the manufacturer or third party websites Car dealer, Cars.comAnd AutoGurus to locate the desired vehicle in your area.

The next step would be to contact the dealers via emails and phone calls to request a price, but not just any price. You want an itemized price out the door. This is crucial because the discount often doesn’t tell the whole story. If you’re targeting a car that’s in high demand, being flexible on color and features can help you get a better deal. I’ve handled a few cases where the customer was absolutely locked into a very specific trim and color combination, which significantly limited the available stock, limiting their influence. In addition to being flexible about the car’s specifications, spreading a wider network beyond your immediate area can often result in better prices. Even with long travel or transport costs, it can still be worth it to get the right price from further afield.

Once you’ve collected some outside quotes, you can pit dealers against each other to see who is willing to be more competitive. In this case, however, you’ll want to look at the total cost in addition to the relative discount. Often, some dealers may charge higher fees for processing or accessory costs, softening an otherwise aggressive upfront discount. When shopping for certain models, there may be additional discounts directly from the automaker or additional savings for cash payment or financing. Some discounts may even be exclusive to special APR rates. You’ll want to run the numbers to see if it’s better to take the lower price now or give up some savings for a lower interest rate.

Finally, while you will undoubtedly incur additional costs, don’t get too caught up in negotiating every dollar. Look at the big picture and keep in mind that scoring the best deal comes from understanding how the price compares to other relevant quotes. However, you should be careful with the finance office add-ons such as service plans and extended warranties. These are rarely worth the extra cost, and consumers usually don’t get much value out of them. Completing all of these steps is easier said than done, as you will encounter dealers who simply will not cooperate or will try to prolong the process. But if you stay vigilant and stick to your plan, you can score a competitive deal without wasting hours in the showroom.