Advice to Help Save Money on Your Next Car

By Liz Opsitnik
Friday, Aug 21 2009 20:15

When a car isn’t selling, manufacturers will offer incentives so they can clear out certain models. The incentives are usually in the form of a price reduction, rebates, cash back or a low interest rate. For the best deals, shop at the end of the month when dealers need to meet their sales quota.

The 0% interest rates advertised on TV are usually only for people with the best credit scores, and even then, they’re usually restricted to short term (24 or 36 month) loans. Manufacturers are pulling the old ‘bait and switch’ with these low APRs to get you into a dealership.

Don’t put off car shopping until the last minute. You could make hasty decisions and end up regretting them later. Car shopping should take at least a few weeks, so if your current ride isn’t too reliable, start doing research and getting quotes on prices and loans now. If you spend the time to get the best loan rate possible, you’ll end up saving yourself a lot of money in the long run.

Should you lease or buy? If, over the years, you always have a car payment, a lease might be better for you. Generally, the payment will be lower and you won’t be stuck with a car that might lose value more than expected at the end of your lease. If you pay off your car within a few years then have several years without a payment, buying might be better for you.

If you want a particular color or option that your dealer doesn't happen to have on the lot, you don't have to settle for what the dealership has in stock. Dealerships routinely buy cars from other dealerships or order specific models from the factory. But watch out if you do decide to let your dealer locate a car for you, and never sign anything until you’ve had a chance to personally inspect the actual car you’ll be buying. You should never pay more for a car you had special ordered than you would have if it had been sitting on the lot.

You should never buy a car without test driving it first. It sounds obvious, but many people do not take this important step of the car buying process. Take the vehicle on the highway, around back roads and through rain and snow. See how it handles in many different conditions. If you have kids, bring their car seats with you to see how they fit.

When buying a used car, always get a Carfax report. The report will tell you if the car was ever in an accident or had flood or fire damage. If you’re buying from a private seller, have them give you the VIN number and order the Carfax report yourself. Dealerships have Carfax subscriptions, so if they avoid the report, they probably have something to hide.

Confused or unsure about some of the car loan terms used in the article? Click here for our Auto Loan Glossary.