How to get the best deal when buying a car
There's a reason why car salespeople have a certain reputation. Two different people can walk into the same dealership and buy the same car - yet the difference in the amount they pay for it can vary by hundreds or even thousands of pounds. It's irritating, frustrating, and confusing, but this system can be beaten. Our ten tips reveal how you can make the most of the tricks of the car trade, and save hundreds of pounds when you buy your next motor.
1. Start with how you are going to pay for the car
If you leave this until you're in the showroom, you'll fall prey to the financing deal on offer at the dealership. In some instances they'll be running a 0% finance deal, but in most cases it'll cost you dear. The sensible approach is to shop around for a competitive loan, which at the moment can enable you to borrow at around 4% over five years.
2. Research your hire purchase options
If your credit rating means that the best personal loans are beyond your reach, it makes sense to research hire purchase - where you put down a deposit of about 10% and then pay the rest off over a five year period. The big difference between this and a loan is that until you make the final payment, the car still belongs to the dealership.
However, you'll still need to do the legwork to find the personal loan rate you would be eligible for, then visit the dealership and check out what they offer in terms of hire purchase. It's also worth asking them to consider lowering the APR, as in many cases they will have some margin to play with.
3. Beware of personal contract plans
These seem attractive, because after you have paid your 10% deposit, then you will pay less per month than you would through a loan or hire purchase. The sting in the tail is that after the plan expires (often three years) you either hand back the car, or you pay a lump sum and keep the car. The trouble is that when you add up the monthly payments and the lump sum, you have paid much more for your car this way.
4. Don't be too keen on a 0% deal
When a dealership is offering an interest-free loan on a particular model, it can be a convincing sales tool. However, there are three things to bear in mind before you go anywhere near the deal. The first is that if you miss a payment you will be switched onto a interest-bearing loan, so this is not an option if there's any chance at all that you cannot cover the payments.
The second is that you will be tied into a specific model or brand: if this was the one you planned to buy in the first place then that's fine: if not, work out how much more you are spending on the car than you would elsewhere - and factor that into your calculations. Finally, bear in mind that if you go for a 0% deal you're very unlikely to be offered anything off the asking price, so you'll need to weigh up whether you stand to save more on the loan or through haggling over the car.
5. Look out for manufacturer discounts
If every model of a particular brand is discounted at more than one dealership, then this is likely to be a result of a discount provided by the manufacturer. These are particularly handy because the discount has come out of the manufacturer's margin. It means that you can still haggle with the dealership to get them to give up some of their margin too. At the moment here are a host of these deals on offer, as the manufacturers are competing hard for market share.
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6.Work out your target price
Before you go anywhere near a dealer, you need to know the 'target price' for the model - which is the most you'll ever have to pay for that car. A great source for these prices is What Car, which updates the target price each week. You might be surprised at the huge difference between the list price and the target price - which can easily top £2,000 for a £20,000 family car. The only other thing to bear in mind is that What Car bases this on a cash price, so you won't necessarily get this if you're taking the dealer's financing package.
7. Go online
Often the best deals are available from online brokers. If you're happy to buy this way, and you're not having much luck with your haggling skills, then it can be a very cheap way of buying a new car. Even if you are keen to buy a car you can see and test-drive first, it's worth going online and finding the broker price, so you can use a print-out to negotiate a better offer at a dealership.
8. Time your purchase
Car salespeople owe much of their income to commission, so it pays to time your purchase at the end of a sales period, so they are keen to get one last sale under their belt and earn a bonus. These are usually done quarterly, so pop along at the end of a quarter in which sales are usually poorer (at the end of March or December), and you may get a better result from negotiations. Another useful time to go is at 10am on a Monday. At this point there's a good chance that everyone is fresh out of the weekly sales meeting and particularly motivated to sell.
Don't be rude, but be clear that you expect a discount. It's a good idea to start with the printout from the online broker and ask them to match the price. If they cannot, ask them how close they can get to it. Once they have named a price, ask for more of a discount. They may argue their point, or insist on going to speak to a manager. These are all ploys, so take your time, and stand your ground. Once you hit the point where the salesperson will not budge, there's still room to ask them to throw in extras.
10. Be prepared to walk away
When you have put so much effort into researching and negotiating, it can be tough to leave it behind and start again. However, the salesperson will be able to tell if you don't have the energy to walk away, so will stand their ground. Use the target price: if you cannot get them down to this price, then you know you'll get a better deal elsewhere and it's time to move on.
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