10 Tips to Saving Cash on a New Car (That Don’t Include Buying a Used One)

Heather Comparetto/The Penny Hoarder

Thinking about buying a shiny new car?

Before you get caught up in sleek ads plastered with Matthew McConaughey’s face (or even better, Jon Hamm’s voice), it’s time to take a step back and do some careful planning.

Plunking down beaucoup bucks for a new car isn’t exactly the most money-savvy move by traditional standards.

But say you want a new car. You think you’ve earned a new car. Maybe you had a bad experience with a used clunker, and you’re scarred for life.

Fine. If you want a brand-new car, you don’t have to justify it to me. But I do expect you to find every possible way to save.

Here are a few tips for buying a new car that should sound vaguely familiar — and a few that might surprise you.

1. Get Preapproved for a Loan

Visit your bank, or go online to see what sort of rates and terms you can get for an auto loan.

“Know what you can afford,” said David Bennett, manager of AAA’s automotive program. “It can give you a reality check right off the bat.”

And if you don’t know your credit score, it’s a must-find before you head to the dealership.

Knowing your creditworthiness along with the loan terms you can get from your own bank helps you negotiate with the dealer’s finance office.

You can’t judge how good of a financing offer they’re making you if you don’t know what you deserve!

2. Keep a Business Mindset

“This is a business decision, not an emotional decision,” Bennett said.

If a salesperson tries to get you to test drive a car that’s out of your budget or has bells and whistles you don’t care to pay for, don’t get snookered.

“Bring it back to center and remember, ‘what financially makes sense to me?’ If you get excited about features, you lose your edge.”

3. Research Incentives Before You Test Drive

Auto manufacturers often give dealerships rebates on certain vehicles. You might see these advertised on TV or in the paper as cash-back offers of a few thousand dollars off the manufacturer’s suggested retail price, or MSRP.

Some of these offers have conditions. You might have to finance through the manufacturer’s preferred lender, or you may not be able to combine it with any other deal.

Search the web and check the automaker’s website before you visit a dealership.

If you don’t see any manufacturer incentives, be sure to ask (casually, so you don’t sound too excited) if there’s anything available for the car you’re considering.

Some incentives stay off the advertising radar, and dealers can offer them at their discretion.  

4. Bring Your Student ID

Some manufacturers and dealers offer new-grad discounts for buyers who have graduated college in the past few years or plan to earn their degrees in the next few months.

Be sure to read the fine print on this one, as you may need good credit to take advantage of this offer. You may also need proof of employment or income.

For details, call the dealership you’re interested in or check online.

5. Repeat Customer? That’s a Discount

Say you drive a Honda and are thinking of getting a new one. Not only could you trade in your old Honda, but you might also get a “loyalty” cash-back offer just for being a repeat customer of that manufacturer.

If you’re not planning to trade in your old car, you’ll probably have to prove you own the same make.

6. Call it a Conquest

OK, what if this is your first time buying a Honda? If your old car is a competing make, you may be eligible for a “conquest bonus” of a few hundred dollars knocked off the MSRP.

7. Show Off Your Military Status

Car dealers love to wave a flag. If you or your spouse is a veteran or active-duty military, you may be eligible for cash back or a discount of $500, $1,000 or more. Call the dealership you’re interested, or check online before visiting.

8. Get the Basic Package

That fancy Bluetooth package may be sexy, but what if it becomes obsolete, and we can make calls through some other newfangled technology? (Through our minds, obviously. We’ll make calls with our minds.)

Richard Reina, product training director at CarID, warned against lusting over high-tech features. “These models often have a lower resale value than a more basic model when it comes to trade-in,” he said.

9. Haggle That Interest Rate

The price isn’t the only thing you can negotiate when buying a new car — your interest rate is on the table, too. If you have good credit but get a quote for a high interest rate (5%? That’s too high!), see if they’ll ding a point or two off. It can’t hurt to ask.

10. Don’t Compare Your Deal With Anyone Else’s

“A good deal is one you’re comfortable with,” Bennett said. He warns of situations with friends where you might get to talking about what you paid — and what others paid for the same car. Someone else’s total price might be better than yours, but you don’t know about their credit, down payment or any other factors of the sale.

“If you’re comfortable with the price of the vehicle and your monthly payment, it’s a good deal. You’re the one who has to live with the payments or the check for that much money.”

Your Turn: Would you ever buy a new car, or are you a used-car devotee?

Lisa Rowan is a writer and producer at The Penny Hoarder.