Buying a New Car from a Dealer (The Right Way)


now in this video I’m going over everything there is to know about buying a new car from a dealer so that you can get the best deal possible when it comes to buying a new car when I was 20 years old I bought my first new car that was listed at $19,000 and guess how much I paid for that new car while I paid eighteen thousand eight hundred dollars for that car and I paid for every single fee on the planet because of my ignorance so in this video I want to pass on some real knowledge to you so that you don’t do what I did when you buy a new car now if you just found this channel I’m Jason with honest finance and I make a lot of videos on different financial topics so if you are interested in this type of content feel free to subscribe or at least give this video a like and now on to car buying we all have the choice to buy a new car or a used car but there’s actually quite a few advantages to buying new for starters you never have to worry about how the car was treated in its past which is always something that I worry about now when I buy a car because I once bought a used Ford Explorer with only 11,000 miles on it and after just a couple weeks of driving it I realized that there is something really wrong with it there was nothing wrong with the title but every once in a while when you were driving you could feel the transmission do some sort of a jolt and there was a lot of rust under the seats so I went into a local dealer and I looked under the seats of the new Ford Explorers and I noticed that there wasn’t any rust so that was a huge indicator that something was wrong with my car and obviously the issue had never been reported on the title so now I was stuck with a car that I really regretted buying so just keep in mind that a new car eliminates any bad history and they all come with warranties as well and as far as tires and brakes go you won’t have to worry about those annoying costs for at least a few years now when it comes to buying a new car you’ll want to do the research for the car you’ll want to get the best price for the car and you’ll want to get the best financing for the car as well these three parts are essential to getting the best car deal so pay attention starting with research you’re gonna want to hop online and look into the different type of cars that you’re interested in buying my advice would be to check edmunds.com truecar.com and Kelley Blue Book for any of this type of information they all have really good information when it comes to any type of car find out if it’s safe if it’s reliable or if it holds its value well so unless you’re okay with super-fast appreciation don’t buy a car just because it’s cool if the research doesn’t prove that it holds its value well or it’s good for your family or your budget then look into a different car also find out how well it does on gas mileage and what type of fuel it requires because if you drive a car that requires premium gas you’re gonna be spending about 250 bucks more a year based on 12,000 miles driven and give the car’s maintenance schedule look to because you’ll find that a lot of new cars don’t require much maintenance until about a hundred thousand miles I mean seriously my truck doesn’t require new spark plugs until it hits a hundred and fifty thousand miles and the oil changes are only required every 10,000 miles so that’s a good thing in my opinion so if you have to replace or flush a bunch of stuff every 30,000 miles then it’s probably worth looking into something else not that it’s the biggest pain in the world but all those little things do add up and before you buy a new car please call up your car insurance and find out how much more the new car is gonna cost you I Drive one of the new aluminum f-150s and I had heard before I bought the truck that insurance was really expensive because they were hard to fix well I made sure to call my insurance before I bought the truck and I found out that it was only four bucks more than what I was already paying so that wasn’t a big deal at all so just call your car insurance before you buy a new car so that you don’t have any big surprises and if you’ve made it this far could you please give the video a like because it’ll help me out a lot thanks now on to the price of the car which is kind of a big deal in my opinion new cars are a lot easier to negotiate than used cars because the prices are a lot more transparent it’s a lot easier to see how much the car should really cost you because the information is available everywhere online and it’s available at the dealerships as well there are basically two prices that you need to pay attention to when you’re buying a new car you’ll need to pay attention to the MSRP which is what the sticker price is and you’ll want to pay close attention to the factory invoice which is what the dealer paid for the car and just to be clear you can find both of these numbers on all of the websites that I mentioned earlier now you’ll usually see a difference of about 10 percent or less between these two numbers which would indicate that the dealer has the upper to make 10% on the sale if he sells it at full retail so if you buy a car at invoice then that means that the dealer makes nothing but yet they still stay in business you’ve got to understand that invoice is not the exact price that the dealer necessarily paid for the car because they have secret incentives like dealer hold back dealer hold back is typically 1 to 3% of the invoice of the car or the MSRP of the car depending upon the manufacturer that’s actually paid to the dealership after you buy the car so if you buy a new car at invoice for $30,000 and the dealer has a 3% hold back then they’re gonna make at least $900 on the sale of that car now just look these up online and you can find holdback really easily just from a quick google search it looks like most car manufacturers do an MSRP hold back which is even better for the dealer now the 900 bucks that the dealer can make doesn’t even include any factory to dealer incentives any financing charges or any accessories that add to their profits and keep in mind that really hot cars like the new Ford Mustang can actually have contingencies where the dealer can charge more than the MSRP because of the demand now if you’re ok with that then just go ahead and buy that new sweet car but understand that the depreciation is going to be huge on the car because you just spent more than the MSRP on it now before I move on to the negotiation process I first need to talk about factory rebates and buying a year end car now if you’ve done your research you’ll find that factory rebates will save you instant cash on the car whether you pay invoice or you pay full retail for it the rebates don’t matter to the dealer because they’re gonna be reimbursed from the car manufacturer it’s a win-win for everyone so make sure that you find every single cash rebate you can on the car that you’re buying and as far as your end cars go this just means that the new models are currently on the lot but the old ones are still in the lot and they’re trying to get rid of them as your end cars and these are the best bargains car manufacturers will even give bigger rebates for the year end cars to close out the inventory and that’s just a better deal for you I bought my truck as a year end car and that alone saved me about $6,000 I was totally fine buying the year end car because the next year’s model didn’t really change very much so it didn’t matter to me the only downside to buying a year end car though is that you might not get the exact color you want and you might not get the features you want but most of the time there’s enough inventory to find something that fits your needs now on to getting the best price for the car and this is easier than ever when it comes to buying a new car all you need to do is find the car you want using edmunds.com true car comm or even Costco auto so that you can find out what the average buyer is paying for that car in your area car prices can fluctuate a lot based on where you live so make sure to put your zip code in when you’re doing this information these prices are usually below invoice based on the car’s demand and they’ll include the factory rebates as well and keep in mind that demand has a lot to do with what you’ll be paying for the car if it’s an easy sale for the dealer they’re not gonna dig into their hold back because they know that the car is gonna sell really easy however if the car’s been sitting on the lot for a while then the dealers most likely paying interest on their flooring vehicle so they’re gonna want to move it as quick as they can so with the car that’s been sitting for a while you can probably dig into the hold back and save more money on it but it all just has to do with demand now once you’ve found the car that you want online just submit your information for no-haggle pricing and just wait for the salesman to call you at this point you need to confidently tell them over the phone that you want the best out the door price including all the associated fees so it’s your choice here you can either go into the dealer physically or you can just call around and just remember to aim for a price that’s below average from all the dealers and make sure to tell the salesman that you’ll be shopping other dealers and don’t be timid or rude be confident and polite and you’re gonna get the price you want because nobody wants to deal with an asshole when I was in sales I used to have customers ask me confidently to not bullcrap them and give them the best price that I could offer no I knew that I had competition so I would always give the best offer that I possibly could in order to get the sale most of the time I could get the sale by being upfront with everything but if I couldn’t the only reason was usually because the competition had a better price that I couldn’t compete with so in this case the sale was still worth it to me even if I didn’t make any money directly from the sale and that’s because of other incentives so any good salesman will understand this because he can just be frank with you and win your business just let the dealers fight for your business because if it’s worth it to them then they’ll give you the sale now once you find the best offer and the best service go ahead and go with that dealer and prepare for the final step of financing now this is the part where you can let your guard down so make sure to pay attention once you’ve got your new car price below invoice just go ahead and sit down in the financing office and begin the process now as far as interest rates go just go ahead and let the dealer find you a rate as long as they’re not getting a cut that’s the easiest way to do it because they’re gonna find you all the best rates and as long as they’re not getting a cut and it’s a really really good value to you and just a warning to you do not take out a loan that’s longer than five years because you’re gonna pay way too much in interest and you’re probably gonna end up upside down in the car now if you need some help with financing or interest charges anything like that check out these videos right here so as far as extended warranties and carpet cleaning and things like that understand that these are negotiable – and that you do not want to pay full price for any of these so if you do want an extended warranty then just tell the salesman that you want to buy it at invoice he’ll probably sell it to you at invoice because it’s most likely still in his best interest to make the sale now fees and taxes are next so pay attention to these because I’m gonna save you even more money fees are just a hidden way for dealers to make more money and profits and taxes just plants suck I mean honestly the dealer’s margins are pretty thin if you’re gonna buy a car the way that I do so fees are somewhat justifiable but even though they’re justifiable they are a bit dirty because they’re hidden from the customers now there’s no way that you can get out of taxes and registration but you can get out of the fees and the easiest way to know if it’s a mandatory tax or if it’s a fee is if you have to pay sales tax on it you’re not gonna have to pay sales tax on a tax but you will have to pay sales tax on a fee so if you look on your paperwork and you see that you have some stupid vehicle theft registration fee for 300 bucks plus tax then that’s a fee just tell the salesman confidently that you want to have the fees removed and if they tell you that they can’t remove the fee because it has to be documented then tell them to lower the price of the car or add more to your trade-in to compensate for the difference that way they still have it documented on paper but you’re getting out of the fee in a different area and trust me at this point they’re not gonna be super stoked on the deal because you’re getting out of everything now once you’ve got all this stuff settled and signed the can truly drive away knowing that you got the best price possible for a new car now once again I’m Jason with the honest finance channel feel free to subscribe if you’re into this type of content or at least give this video a like that’s all