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Buying a car may seem a daunting endeavor.  It should not be this way.

If you are reading this, it means that you opted to buy.  The discussion about leasing or buying is a good one.  One which we will have but not now.

Steps BEFORE actually going to the dealership to buy the car.

1. Determine what car you want

This is the most important step.  You need to do your research ahead of time.  When you ar ein the dearly, this is not the time to do the research.

  • Live within your means.  Stay away from the luxury cars with the bells and whistles.

  • Remain practical

  • Remember, the car is a depreciating asset.  What this means is, the moment you drive out of the dealership, the car starts losing value.

  • Set up a budget of how much you are will to spend and draw a line where to stop.

2. Find here the Kelley Blue Book price of the car you want

Once you know what the car is worth here, you will know if the price the dealership gives you is an acceptable one.  That is why it is important to do the research ahead of time.  Knowledge is power!

It is important that you specifically narrow down the car you want. 

KBB will give you a range of what is appropriate to pay for the car, this way when they give you a price you will know if it is a competitive price or not. 

3. How are you going to pay for the car?

Financing the car is another part that pays off doing the research ahead of time.  You need to focus on the interest rate the lender (banks) will give you. 


  • Interest rate will depend on:

    • Credit score​

    • ​Bank​

    • ​Economy​

  • Do your research and get at least a quote from a bank. 

  • The dealership might offer you financing through them.  If they do, ask these questions:

    • How much is the interest?

    • Any penalty for paying early?

  • If the interest rate the dealership offers you is lower than the one you got on your own, take it!  Read the fine print of the loan, of course.  I just recently helped my mother buy a car and we got 0% interest rate through the dealership.  This means no money paid for borrowing the money.

4. Negotiating the final price of the car














DO NOT negotiate what you will pay monthly, instead negotiate the price of the car. 

Negotiating monthly car payment is a costly mistake.

Now armed with all of the above, you are ready for battle!

  • Go into the dealership and locate the car you want with the agent.  

  • Clarify you want to negotiate the price of the car not the monthly payments. 

  • He will print out a paper with a lot of numbers to confuse you.  You should only focus on ONE number: the price of the car not including dealer fees and taxes. This is the price you will pay for the car.

  • You should reject the first price they give you.  However, if the price they gave you was consistent with the research you did then take it (this is very unlikely!).

  • What will happen next will be that the agent stands up and goes to "talk with the manager" sitting usually cubicle surrounded by glass next to the showroom.  You will see both individuals arguing.  But what is really happening is that the "manager" telling the agent that the "more you go down the price, the less your commission will be."

  • He will come back with a "better" price.  You will see, if it is close to the price you did research, then take it!  If not, tell him you need a better price.  Be prepared to walk out if they say they cannot. 

  • Do not fall in love with the car.  There are many dealerships who will love to have your business.  Remember, you are in control here, not them.

5. Signing all the final paperwork


You are not done yet. 

After all is agreed with the agent, they will hand you over to a financial guy.  This will be a long wait, so sit tight!  This individual will get all the financing together.  There are a few points to discuss with him in my opinion.

  • Get GAP insurance.  This will cover the "gap" between the amount they owe and the car actual cash value if an accident would happen. 

  • Review carefully the final price receipt for any hidden charges.  For example, my mother was charged $75 for a first aid kit which essentially had a few bandaids/antibiotic cream.  She could have easily declined this and saved $75.  

Understand these are my views on buying a car, you can tweak this as deemed necessary. 

Till next time.


Disclaimer - This blog is meant purely for educational discussion of finance. It contains only general information about financial matters. It is not financial advice, should not be treated as such.

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