Car Shopping DOs And DON’Ts

I am in the middle of looking for a new (used) car right now, and was looking for advice on the Dave Ramsey site in regards to buying a used car. I thought some of the information might be helpful to all of you out there, so I thought I’d share it here. Text below is excerpted from DaveRamsey.com

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Practical tips to know before heading to the dealership

Seems like it never ends, doesn’t it? The media is always plastered with ads from car dealerships who are offering super, close-out, blow-out, going-out-of-business deals.

It’s true that you can generally get better deals at certain times of the year, but you have to be smart about it. Here are some helpful tips to keep in mind:

  • Don’t get car fever! Look for the best deals and research the car you want.
  • Negotiate if you can. If you get a deal from one seller and take that dollar amount to another seller, they may come down on the price. If you pay with cash on top of that, you can get an even better deal!
  • Ask for factual information, especially if buying from a dealership. For example, don’t ask, “Does it get good gas mileage?” The dealer may consider 10 miles to the gallon to be good mileage, but you won’t. Ask, “How many miles per gallon does it get?”
  • Be willing to walk away. You must do this! Just like Dave says, if a dealer senses for even a second that you really want a certain car, you won’t get a good deal.
  • Forget the extras. Don’t pay for things that you don’t need like pin striping, special detailing and extended warranties. If you have your full emergency fund in place, it’ll cover any costs you have if the car breaks or has problems. That is actually one of the beauties of buying a two-year or older paid-for car; it has a lot of the kinks worked out of it.
  • 2 are better than 1. If you need support when going to buy a car, take a friend or family member who can help you keep your head. Your friend can also help you to remember details about the car that the seller tells you, which can help you make your decision.

Unless you’re filthy rich, you cannot afford a new car! New cars drop in value like a bag of rocks. A new car loses 60% of its value in the first 4 years. Save up money and pay cash for a used car. It’s much easier to save $400 a month (the average car payment) for 10 months and buy a used car than to sign up for a payment plan and pay thousands of extra dollars for several years!

Remember, the purpose of a vehicle is to get you from A to B. When you are working, playing with your children or helping a friend, you are not thinking to yourself, “Man, I am so happy since I have a new car. Life is beautiful!”

The key to happiness is not a new car, so don’t pay for it like it is!

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Last Edited: 19th August 2011

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  1. Lee says

    Cash has 0 effect on the price of the car. The dealer is going to get the money whether it directly from your pocket, or from a lender. You could actually get a better price on the car by financing as the dealer can make up some of the money lost on the sale of the car by the money he makes on the financing.

    • says

      I disagree. Cash can have a few effects. For example a friend of ours brought actual cash to a dealer, and told them that was all they would pay for a car that was already a good deal. They showed the dealer the cash, counted it out on the table. The dealer took off the extra $1000 to get the deal done. Stuff like this works even better in a tough market like it is today.

      Paying cash can also have the effect of saving you money on the back end – you don’t have to pay finance charges, and you won’t get hosed by the dealer in the back end through phantom charges, fees, etc – which happens more than people would like to believe.

  2. Mathew says

    I have to agrre with Lee on this. Cash has no effect actually you can get a better deal from the dealer by financing and payoff the loan in 6 Months.

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