2 Numbers You Absolutely Need to Know If You’re Buying a Car From a Dealer
In case you missed it, we bought a record number of cars last year -- more than 17 million, to be exact.
Low gas prices, increasing employment and low interest rates all contributed to the spike, according to the Los Angeles Times.
How many of those people got a good deal? We can’t say for sure.
But if you’re planning to jump on the bandwagon (or perhaps a station wagon?), you should know two little numbers that’ll help you get the best price from a dealer.
Car Buying Tips: 2 Numbers You Need to Know
In the past, we’ve recommended buying used.
Used and compact, to be exact.
But if you’re more apt to hitting a dealership, that’s fine, too -- as long as you walk in with these two numbers to help make your big purchase less painful.
1. Know your credit score.
Apparently 50.9% of people don’t know their credit score before buying a car, according to Instamotor. I’d definitely be included in that percentage.
You ask: Why is knowing your credit score important when buying a car?
Instamotor describes the three-digit number as an “indicator of delinquency and risk.” If you have a good, solid credit score, you can use that as a powerful negotiating tool to bring down a car’s price tag, interest rate or monthly payment.
Many dealers use an “auto score” version of the traditional FICO score.
However, our editor and resident car expert Justin Cupler says this won’t be too different than the traditional scoring tools -- maybe 25 points more or less.
Take a look at our credit score explainer, and use some of the resources we mention there to get your score for free.
And you don’t have to tell anyone, but, if it’s not too hot, see how this guy raised his score 234 points in seven months.
2. Know what you’re willing to pay.
Be sure to take some time to shop around and know what your dream car is worth.
Nowadays, that doesn’t mean you have to shuffle around to multiple dealerships to compare prices. There are plenty of online tools that’ll estimate the value of a car you’re eyeing.
Here are a few online resources to jumpstart your search:
- Kelley Blue Book: This classic car resource lists a car manufacturer’s suggested retail price (MSRP) as well as the fair purchase price. The difference between Kelley Blue Book and other resources is it takes your location into account.
- Carjojo: You can buy your dream car on this site, but the pricing tool is just as powerful since it claims to share with you the guaranteed best price. Folks have left tons of testimonials with mentions of big savings.
- Truecar: This site lists a car’s MSRP and the factory suggested price as well as the market average. You can see what others paid, too, and you have the option to show new and used.
- AARP: Think of your elders when you hear AARP? Well, it also has a car pricing tool that allows you to type in your ZIP code to see what others around you are paying. It’ll show you the estimated loan payments per month, too.
With a fair price in mind, you’ll be able to know if a dealer is fudging you. You’ll know if that “really great $1,000 price drop” is actually really that great.
In the end, be sure to know your worth -- your credit score -- and stick to your budget -- your number. Most importantly, know it’s OK to walk out and keep shopping.
Your Turn: Share your car buying tips!
Carson Kohler (@CarsonKohler) is a junior writer at The Penny Hoarder.