5. Don't start looking for financing at the dealership
Financing at the dealership may be easy, but it's not necessarily the best deal. Dealers are essentially acting as middlemen to offer you a car loan. They get paid for every loan they write, whether the loan is through the automaker or a local lender.
It is possible to get the best car-loan interest rate at the dealer, but you're likely to find that it pays to shop around first. Be especially wary if a dealer offers you a car loan at a rate that is far better than other lenders. Sometimes, dealers entice prospective customers with rates to get them to sign a contract to buy a car. Read all contracts carefully to make sure that the interest rate is not contingent upon approval.
6. Determine the best interest rate
It's best to get preapproved for an auto loan from a bank or credit union, even if you plan on getting financing from the dealer. Don't assume that you'll qualify for the zero percent or low-interest dealer loan because typically less than 10 percent of buyers qualify.
Even if you qualify for the best dealer financing, you may be better off taking the manufacturer rebates and getting financing elsewhere. Use Bankrate's rate search tool to see current interest rates. Also, check with any local lenders you do business with, as well as local credit unions, which typically have interest rates that are 1 percent to 2 percent lower than conventional banks.
7. Find all possible discounts
Automakers often advertise rebates and cash-back incentives on new cars to attract customers to their lots. Some dealers also will offer incentives on certified pre-owned cars or noncertified used cars. In addition, automakers often have discounts that apply directly to the buyer, such as for members of the military, current students or recent graduates or even members of certain local credit unions.
Research all of these incentives online at the manufacturer and dealer websites before you visit the lot so you know what you qualify for to save the most money.
8. Know the car's bottom-line price
The auto information websites where you researched the cars you were interested in also should have listed the cars' invoice prices if new. If used, they should have listed the average selling prices for the same models in similar condition and mileage in your area.
Use these numbers as a guide in your negotiation with the dealer or private party. If you are buying a new car, aim to reach an agreement for an amount that is similar to the invoice price before any applicable discounts are applied, but remember that the dealer needs to earn a bit of profit to cover his costs of running a dealership.
9. Be prepared to negotiate
Since buying a car is such a pricey purchase, be prepared to negotiate to get the best deal. Before you visit a dealer, gather all your research materials so you are prepared. Then, make an appointment to test-drive the car or cars that interest you.
At a dealership, these salespeople are less likely to try to strong-arm you into a sale and are more likely to be willing to negotiate. If you are trading in a car, be sure to negotiate the purchase price of your new car separately and be aware of the value of your current car so that you know whether you're being offered a fair price.
10. Take your time on the test-drive
Since you are spending a lot of your hard-earned dollars and you'll be spending a lot of time behind the wheel, take extra time during the test drive. Make sure that you are completely comfortable in the car and can adjust the seat and mirrors so you have good visibility. Make sure you are comfortable driving on surface streets, in traffic and on the highway, as well as in parking.
Take extra time when the car is parked to make sure you'll be happy with all the dashboard controls and understand how the features work. Although it's not necessarily easy to imagine, think about how this car will suit your lifestyle years from now in terms of passengers and cargo you may need to transport.