Buying a car the smart way and taking advantage of every resource available to you takes time and planning. From setting a budget to doing research, getting price quotes and determining what kind of interest your credit score qualify your for takes time and energy, but it can save you a very large amount of money in the long run. So the ultimate question here is how much money can you save when buying a car has many variables? I will cover all the unknowns right here on CarBuyingHowTo.com for you that will allow you to save anywhere from $500 up to $20000, that’s right I said twenty thousand dollars. Now that’s a lot of money and I am not talking about a high-line or luxury car, I am talking about a midsize, average priced car, van or pick-up truck.
Save When Buying a Used Car
I am not pulling these numbers out of the sky I am talking about what I have seen at dealerships throughout my career in the car business. The low estimate of $500 is how much money you can save when you buy a used car for cash that does not include financing and the selling price is the couple thousand-dollar price range. This could even be a private party sale or a dealership sale, but either way you should be able to save a minimum of $500 when you buy a cheap used car for cash.
Save When Buying a New Car
This section talks mostly about the money you can save when buying a new car, but it also includes pre-owned and certified cars that are only a few years old that are big sellers at car dealers everywhere. The largest amount of money that can be saved when buying a new car involves more than the price of the car, it also includes, financing, trading in a vehicle, extended warranties, insurance, add-ons, extras and options.
When I first got into the car business I would have never imagined the amount of profit that is possible for the car dealerships when they sell a car, but I learned quickly about the many different ways that I could also fill my own pocket and make money for the dealership when I sold a car. The focus of the average car buyer is on the selling price and the amount that their trade-in vehicle is worth both of which are very important, but only two pieces of the puzzle when it comes to saving money when buying a car.
Some people decide they want to get a new car on a whim and without doing anything more that having seen cars that they like make a trip to the car dealer’s showroom to have a look around. The car salesman greets them starts showing and demonstrating some of the features on their vehicle of choice. Then they go for a test drive with the car salesman and really enjoy the feel, the look and the way it drives. Soon they are back in the showroom and sitting across the desk for the pleasant, professional and knowledgeable salesperson discussing payments and trade values. They object once or twice and the salesman goes to the sales office, comes back with a slightly lower payment and higher trade value each time. Before you know what’s going on they are in the finance office signing papers and getting ready to drive home their new car. Everyone is happy and the car dealership just made a profit of nearly seven thousand dollars and they had no idea how much money they could of saved buying a car.
This happens more often than you might think, but to give you and idea of where the profit is made I will give you a quick breakdown.
Car M.S.R.P. or Sticker price $25,000.00
- Price of car (profit $2,800)
- Trade-In valuation or should I say devaluation (profit $1,500)
- Financing for 60 months (interest rate 1.5% higher than qualify profit $1,000)
- Extended Warranty (profit $1,200)
- Paint and Interior Protection Package (profit $500)
- Total Profit $7,000
Take a look how easily $7,000 can add up when you include several of the most common way a car dealership profits when they sell you a car. Now if they did some research and knew the price of the car, what their credit scores qualify them for, the value of their trade, the value of an extended warranty and the value of the paint protection they could have saved nearly $7,000 when they bought their car. What can you do with an extra seven thousand dollars? This is very good and common scenario of how much money you can save when you buy a car.