4 Insider Tips to Help You Pay Less for a Car

Buying a car is expensive. According to one report, the average monthly car payment for new vehicles in the U.S stood at $463 in 2020. Those who bought used cars paid $397 every month, whereas car lessees paid $450.

After you make the initial purchase, there are other extras to pay for, like registration, fuel, maintenance, and repairs. Whether you're a savvy car buyer or it's your first time shopping for a car, there are numerous hacks you can use to pay less for a car. Here are four insider tips to help you pay less the next time you buy a car.

1. Learn to Negotiate

You don't have to be a born haggler to negotiate the car price and get a better deal. It takes mastering a few tricks to get this right. Do some research on the car and find out what other dealerships offer for the same model. Find out the financing terms from your bank if you're not paying cash or before approaching dealerships for auto loans.

Be friendly but don't be afraid to walk away. If you're shy and don't want to appear awkward negotiating in person, do it through email or phone. Experts say salespeople tend to be more flexible when you negotiate via email. They already know the answers and questions to ask, and you have enough time to do your research before responding.

2. Buy Used

A car's value depreciates immediately you drive it off a dealer's lot. The resale value goes down significantly regardless of the mileage. If you can be patient and wait a year or two, you can get a car in perfect condition at a very good price.

Some dealerships stock well-maintained used cars and you may not be able to tell the difference between a used car and a new one by looking at a car photo. Avoid buying a used car from a private seller, but if you must, consider bringing along a mechanic to assess it.

3. Buy at the Right Time

You can buy a car more cheaply during specific periods of the year. For instance, most dealerships set sales targets to meet before clearing stock to introduce the next inventory. Cars cost less at the end of every quarter—in March, June, September, and December. Sales agents tend to be open to negotiation during the last month of the quarter when they rush to close their quarterly sale targets.

Dealerships also tend to be more lenient during the Christmas holidays or around New Year’s eve when they hold end-of-year sales events. You can also check the manufacturer's website to find out when the next car model will come into the market. Older models become cheaper when newer versions are introduced.

4. Pay Cash

Paying cash for any expensive commodity, including a car, has many benefits. You can qualify for a huge discount and don’t have to make monthly payments. Avoid the dealer’s trap to finance a car purchase using an auto loan. They can make the monthly payments sound manageable, but you'll end up paying way too much in the end. If you can’t pay cash in full, ensure you make a huge down payment of 20% or more to reduce the interest rates on monthly payments.