What to Know Before Visiting Car Dealers

Preparation is key when planning to visit car dealers. Research should begin before stepping onto any dealership lot.

Start by determining your budget. Consider not just the purchase price but also ongoing expenses like insurance, maintenance, and fuel. Many financial advisors suggest keeping your total vehicle expenses under 15-20% of your monthly income.

Next, identify your needs versus wants. A family of five has different requirements than a single commuter. Make a list of must-have features and those you could compromise on.

Research vehicle reliability ratings and common issues for models you're interested in. Consumer Reports and J.D. Power provide valuable insights into long-term vehicle performance.

Finally, check your credit score before visiting used car dealers or new car dealerships. Your score affects financing options and interest rates. Many dealerships perform credit checks during the financing process, so knowing your standing helps you negotiate more effectively.

New vs. Used: Which Car Dealership Option Is Right for You?

The decision between new and used vehicles represents one of the biggest choices when shopping at car dealers.

New car dealerships offer vehicles with the latest technology, full warranties, and no previous ownership history. The drawback is immediate depreciation—new cars typically lose 20-30% of their value in the first year. However, manufacturer incentives, lower interest rates, and the peace of mind of being the first owner may outweigh this disadvantage for some buyers.

Used car dealers provide more affordable options that have already undergone their steepest depreciation. Modern vehicles often remain reliable for many years, making a quality used car a financially sound decision. The used market also offers greater variety, as you're not limited to current model year vehicles.

Certified pre-owned car dealers offer a middle ground. These programs provide inspected used vehicles with extended warranties, often with vehicles returned from leases with low mileage. While more expensive than typical used cars, they offer some of the security of a new purchase at a reduced price.

Your decision should align with your budget, how long you plan to keep the vehicle, and your tolerance for potential repairs versus higher upfront costs.

Understanding Car Dealer Financing Options

Car dealer financing options vary widely and understanding them can save you thousands over the life of your loan.

Dealership financing often comes through partnerships with banks, credit unions, and manufacturer-affiliated finance companies. While convenient, it's not always the most affordable option. The dealer acts as a middleman and may mark up the interest rate they receive from lenders (known as the "buy rate") to increase their profit.

Financing Source Pros Cons
Dealer Financing Convenient, sometimes special manufacturer rates Potential markup, pressure to decide quickly
Bank/Credit Union Often lower rates, pre-approval possible Requires separate application process
Manufacturer Financing Can offer very low or zero interest promotions Usually requires excellent credit

Consider getting pre-approved for a loan through your bank or credit union before visiting car dealers. This gives you a baseline for comparing dealer offers and strengthens your negotiating position.

Pay attention to the total cost of financing, not just the monthly payment. Dealers sometimes focus on monthly payments while extending loan terms, which increases the total interest paid. The average new car loan now exceeds 70 months, but financial advisors generally recommend keeping terms to 60 months or less.

Remember that interest rates vary based on your credit score, the loan amount, and term length. New vehicles typically qualify for lower rates than used ones, and shorter loans have lower rates than longer ones.

Negotiating With Car Dealerships

Negotiating at car dealerships intimidates many buyers, but having the right strategy can lead to significant savings.

Start by researching the fair market value of the vehicle you're interested in. Resources like Kelley Blue Book, Edmunds, and TrueCar provide pricing information based on recent sales in your area. This knowledge serves as your foundation for negotiations.

When discussing price with car dealers, focus on the "out-the-door" price, which includes all taxes, fees, and add-ons. This prevents the common tactic of offering a low vehicle price but adding excessive fees later.

  • Negotiate one element at a time - Don't discuss trade-in value, financing, and purchase price simultaneously. Each component should be negotiated separately.
  • Be willing to walk away - Your strongest negotiating tool is your ability to leave. If a dealer knows you have options, they're more likely to offer their best price.
  • Consider timing - End of month, quarter, or year can be good times to negotiate as dealers try to meet sales quotas.

For trade-ins, know your vehicle's value beforehand using online valuation tools. Consider getting offers from multiple used car dealers or services like CarMax to establish a baseline.

Remember that the dealership's finance office is also a place for negotiation. Extended warranties, gap insurance, and other add-ons typically have markup that can be reduced. Don't feel pressured to purchase these extras without understanding their value to you.

Reading Car Dealership Reviews and Building Trust

Car dealership reviews provide valuable insights into others' experiences and can help you avoid problematic businesses.

Start by checking reviews across multiple platforms including Google, Yelp, DealerRater, and the Better Business Bureau. Look for patterns rather than focusing on individual complaints. Every business might have some negative reviews, but consistent issues with pressure tactics, hidden fees, or poor service should raise red flags.

Pay special attention to how dealerships respond to negative reviews. Professional, solution-oriented responses indicate a business that values customer satisfaction, while defensive or dismissive replies suggest potential problems.

Beyond online car dealership reviews, ask friends and family about their experiences. Personal recommendations often provide more nuanced insights than online reviews.

When visiting luxury car dealerships or any other type, observe how staff interact with you and other customers. Are they respectful of your time and budget? Do they answer questions directly or evade them? These behaviors indicate how you'll be treated throughout the purchase process and beyond.

Remember that the relationship with a dealership often continues after purchase through service departments. A dealer with excellent sales but poor service may not be your best long-term choice. Ask about service department policies, loaner vehicles, and warranty work processes before finalizing your purchase.