OK … every five years or so I go down the rabbit hole of buying a car. I learn something new each time. Fresh off of buying my pre-owned Tesla, this post shares 10 tips for buying a car in 2023.
1. Where is the value? If you want value, buy a pre-owned car with low miles. If you want the latest and greatest, prepare to wait and spend top dollar.
Tip: If you can avoid new car smell (that’s literally a scent they pump in), let someone else take the massive depreciation hit.
2. Understand the three levers – There are three elements of any car purchase. Trade-in, price (including fees), and financing.
Tip: You can eliminate two of the three to retain control and make sure you are getting the best possible deal.
3. Trade-in value – This is where a dealer lowballs you on your current car. They want to pay you less than what your car is worth if they sent it to the auctions.
Tip: Pay off your loan (if needed) and sell your car privately. I put a five-dollar ad on craigslist and sold my Lexus in 12 hours. That earned me $5K over the lowball offer.
4. OK, I realize selling your current car privately isn’t everyone’s cup of tea.
Tip: Kelley Blue Book has a free service called “Instant Cash Offer.” They provide a quote and participating dealers will contact you directly. If I went this route, it would have been $2.5K more than the lowball offer.
5. Financing – don’t wait to get financing at the dealership. The dealership gets paid if they finance your car. There is no incentive for them to get you the best deal.
Tip: I used Capital One Auto Navigator. You fill out a simple online app and the bank pre-approves you for financing. The response time was quick and the rate was very competitive. The only hitch is that you can only use the offer at participating dealers. But if you are willing to travel a little bit, there are plenty of options. Cap One has a great site that will help you search.
6. Know what you want – I recommend zoning in on the model, year, trim, color(s), and desired mileage before beginning your search.
7. Filter and Sort – Filter out all the garbage.
Tip: Use price ranges, mileage ranges, model years, trim, accidents, title, etc. when searching. Then sort your results by what’s important to you, i.e. mileage, price, value, or nearest?
8. Price and Fees – understand the nuances of how dealers work. Internet pricing tends to be aggressively low to compete. Meaning that dealers are reluctant to reduce their published price beyond a token discount.
Tip: Be upfront to ask about their fees. Fees are often a way the dealer tries to recoup margin.
9. Pay attention – the longer the dealer has a car… the more motivated they are to sell it.
TIP: Look at the pricing history of the car. Each week or few days the dealership may drop the price. Notice any patterns? Simply waiting a day before inquiring may save you another $2-3K. The end of the month, quarter, or year is also a good time to buy.
10. Checklist – to get the best deal and/or the exact car you are looking for, you might need to expand your search. I’ve flown between 500 and 1,000 miles for each of the last four cars I’ve purchased.
Tip: You want to check out the car thoroughly before hopping on a plane or driving a long distance to pick it up. I recommend creating a detailed checklist and doing a video tour/test drive of the vehicle. Walk through every detail.
I’m sure I missed a tip of three. What would you suggest as a best practice for buying a new or pre-owned car?