Everything You Need to Know About Buying a Car From a Dealership

If you‘re in the market for a new or used car, heading to your local dealership may seem like the most logical choice. But with pushy salespeople, hours of negotiations, and tons of paperwork, it can also be a frustrating experience if you‘re not fully prepared.

As someone who‘s purchased more than my fair share of cars from dealers over the years, believe me when I say knowledge is power when it comes to getting a great deal without headaches. Arm yourself with insider tips and do your homework, and you can negotiate with confidence and drive away in your dream car at a fair price.

This comprehensive guide will walk you through what to expect at the dealership, secrets to save money, and my best advice for getting the most out of your purchase. Here‘s everything you need to know to make car buying from a dealership easy and, dare I say, even enjoyable!

Know Exactly Which Make and Model is Right for You

With so many options out there, deciding on which car best fits your needs is tough. I’m going to recommend spending a few weeks really doing your research before ever stepping foot in the dealership.

Test drive the top contenders, read reviews from owners, look up reliability ratings from J.D. Power and Consumer Reports, and compare options, horsepower, cargo space, tech features and other specs. Take a hard look at what’s most important in your next vehicle and get crystal clear on the best choice before negotiating.

According to data from Kelley Blue Book, the average new car transaction price recently hit an all-time high of $48,043. Meanwhile, the average used car price climbed to $28,205. With this kind of money on the line, you want zero doubts about which make and model is right for you.

When I was comparing crossover SUVs last year, I created a giant spreadsheet with all the factors important to me, weighted by priority. Safety ratings were #1, followed by cargo space and gas mileage. Doing this diligent upfront work gave me confidence I selected the right vehicle before ever talking numbers.

Secure Financing in Advance

I cannot emphasize enough how much leverage lining up your own financing gives you when it comes time to bargain with the dealership. When I bought my last car, I got pre-approved through my local credit union. When the dealer offered me 0.5% higher interest, I politely said no thanks and we moved on to negotiating just the sale price.

Having outside financing shows you’re serious about buying and sets a firm budget cap on the purchase. It lets you dodge conversations about monthly payments and focus negotiations squarely on bottom line price. To get the best deal:

• Check your credit score first and address any issues. Aim for at least a 680 FICO score.
• Compare rates from banks, credit unions and online lenders. A good credit score can get under 4%.
• Only apply for what you will need for the car so extra inquiries don’t ding your score.
• Calculate the monthly payments ahead of time so you know your limit.

Trust me, you’ll have the upper hand walking in pre-approved rather than relying on the dealer’s financing. Don’t leave without the keys just to cut the interest rate a fraction. Focus on the big picture price.

Timing is Everything

Like many major purchases, when you buy can make a difference. I’ve had the most luck getting great deals by shopping at the right time:

• End of the month – Salespeople have quotas to hit and are more motivated.
• End of model year – Older models are on clearance as new ones arrive.
• Holiday weekends – Memorial Day, July 4th, Labor Day have big promotions.
• Black Friday – Huge deals as dealers clear out old inventory.
• Winter months – Sales are slower so dealers incentivize buyers.

Also avoid busier times like tax refund season when demand allows dealers to ask higher prices. And be flexible – I saved $2,000 just by opting to pick up my last car on a Wednesday rather than the weekend. Timing is everything!

Bring a Wingman

Car buying can be an emotional rollercoaster. When your heart is set on that sporty convertible, it’s hard to make rational choices. Having a trusted friend or family member come along helps tremendously.

They can give you a reality check if you start looking at models outside your budget. They’ll remind you of the cargo space and gas mileage you said were important. And they can review paperwork to spot any questionable add-ons.

I once had a dealership try to slip a $400 nitrogen-filled tire “upgrade” into the contract which my brother caught right away. Always bring a wingman to have your back!

Take Your Time Test Driving

Do not, I repeat, do not agree to buy a car without taking an extended test drive first. Not just a quick spin around the block either. Take that baby out for at least 20-30 mins.

• Get on the highway and test acceleration at speeds.
• Turn the stereo way up to check the speakers.
• Turn on all ventilation and climate control options.
• Take some bumpy side roads to assess ride comfort.
• Parallel park it if that‘s important to your driving.

The test drive reveals things reviews and specs sheets can’t. With big ticket purchases, informed decisions come from first-hand experience behind the wheel. So take all the time you need.

Focus Negotiations on Total Price

Here’s where having your own financing lined up really pays off. When you know your budget, you can steer negotiations toward the only thing that matters – the total purchase price. Monthly payments depend on the price.

When the dealer starts talking monthly payments, steer them back. Say you already have a payment in mind, based on the pre-approval. Keep circling back to focus on the bottom line price.

This also avoids conversations about extending loan length to lower payments. Stretching from 3 years to 5 or 6 just means paying more interest over time. Don’t fall for it – my advice is negotiate purchase price first!

Be Ready to Walk Out

Haggling can be stressful. But remember, you have the power to make it stop by walking out that door. If the dealer won’t come down to a number you’re comfortable with, politely stand up and say no thank you.

Will they chase you out the door with a better offer? Maybe. Or you may have to try again another day. The point is, you must be willing to leave a deal in order to get the price you deserve.

When I was buying my SUV, the dealer just wouldn’t budge from a price I knew was too high. Finally I shook his hand, thanked him for his time, and started towards the exit. Thirty seconds later he caved with a deal that saved me almost $3,000. So be prepared to walk – it works!

Read the Fine Print

After all the back and forth, the dealer will present a financing application, sales agreement, warranty packages, and plenty more paperwork to sign. Never let your guard down!

Read every document carefully to ensure the terms match what you negotiated. Check for extra fees added in like documentation fees. Verify the interest rate, loan length and monthly payment. Look for shady extras like theft protection packages baked in.

I once caught a dealership trying to slip in $800 for door edge guards without ever mentioning them. Take your time and review – it can save you a ton of money and headaches down the road.

Weigh the Value of Extended Warranties

Many dealers push pricy extended warranty packages that continue coverage beyond the standard 3 years or 36,000 miles included from the manufacturer. Are they worth it for peace of mind? Maybe. Here’s how to decide:

• Research typical repair costs and common issues for the model. Is it likely to need major repairs after the 36k mark?
• Compare plans to see what’s covered. Look for ones that include labor costs.
• Watch out for high deductibles that eat into any savings.
• See if you can choose your own repair shop, not just dealership service centers.
• Roadside assistance is nice to have if it‘s included.

For me, extended warranties are worth it on less reliable models once they get up there in miles. Just run the numbers to see if it makes sense. And never feel pressured to buy them upfront.

Understand Your Rights in Case of Issues

With any big ticket purchase, you want to understand your rights in case there are problems down the road:

• Every state has "lemon laws" allowing you to return chronically faulty new cars. Look these up for your state before buying.
• Most dealers have a return policy, usually 3-7 days or a few hundred miles. Ask for the details.
• "Arbitration clauses" can limit your ability to sue if disputes arise.
• Research what qualifies as an enforceable verbal promise in your state.

Being aware of your rights, combined with reviewing everything in writing, helps avoid issues. But if problems crop up, you can take action based on consumer protection laws.

Car Buying Tips to Remember

With so much advice thrown at you, sifting through it can get overwhelming. So here’s a quick recap of my top tips for getting a great deal at the dealership:

• Research cars thoroughly to identify the exact right make and model for you. Look at reviews, reliability data, pricing, and availability.

• Secure outside financing so you know your budget and have negotiating leverage.

• Time your purchase right when dealers offer the best deals.

• Bring someone with you to help weigh options objectively.

• Take an extended test drive to ensure the car meets your needs.

• Negotiate the final price before discussing monthly payments.

• Be ready to walk out if you can‘t get the deal you want.

• Carefully review all paperwork for hidden fees or incorrect terms.

• Consider extended warranties for unreliable models you plan to own long term.

• Understand your rights under lemon laws if you need to return the car later.

Arm yourself with information and self-advocate all the way from initial research to signing paperwork and you‘ll drive away satisfied with the deal you deserve. Now put this advice into action and go find that perfect car!