by Ray Shefska | Last updated Jan 23, 2025 | Car Buying
If you’re looking for a new car, you might be tempted to investigate a new or used electric vehicle (EV). An EV is powered entirely by electricity that charges your battery at charging stations. There are a number of unique factors that must be considered as a result, such as the lifespan of the battery and the location of charging stations.
There are many aspects to consider when you’re looking into buying, selling, and trading EVs. Today, we’ll take a look at everything that you’ll encounter as you start shopping around for electric vehicles.
Is Owning an Electric Car the Right Decision?
Buying an electric car might be the right purchase for you, but it’s also not for everyone. Instead of simply heading off to the nearest Tesla dealership to check out the latest models, it’s important to take some time to consider a few unique factors that will bring entirely new variables to the car buying equation.
Just like buying a traditional car, buying an EV requires plenty of time and research before you head to the dealership. In this electric car buying guide, we’re going to go over some of the prime factors that you need to consider before you buy this type of car. We’ll cover home charging, the importance of range, and whether an electric vehicle really saves you that much money.
Is Home Charging an Option?
One of the biggest perks of an EV is also its biggest downside: No gas. While this does mean that it will have a cheaper cost-to-own, it also means that you can’t fill up on your way to work in the morning when you need a boost. You will need to be able to charge your car either at home or somewhere that’s conveniently close to your home.
If you are on a standard 120V electric circuit, it would literally take days to charge your vehicle. These breakers aren’t even rated for the number of hours it would take to charge your car fully. Instead, they are most commonly used to run your standard appliances and electronics in your home.
The other option is a 240V electric circuit. On these breakers, you can have a Level 2 charging station installed that will most likely fill you up — or at least get you close to full — every single night. Your electric oven, dryer, and central AC run on 240V.
Either option comes with a home charging setup that can be purchased and installed by a number of companies. Exact prices will vary, but as a general rule for this electric car buying guide, set aside about $1,000 to $2,000 to install a home charging station.
How long do EVs take to charge? The exact answer will vary based on the vehicle, charger, and amount that needs to be charged. On average, most vehicles take about eight hours to charge fully.
The latest and greatest charging stations put out enough power to easily stop a heart. Keep in mind that your car has an inherent charging capacity that will restrict how much power can flow between the charging station and your car. This can matter greatly when you’re buying an electric car.
You need to keep electricity rates in mind for your home, as well. Electric vehicles are measured in kilowatt-hours per 100 miles, notated as kWh/100 miles. In order to figure out how much it’ll cost to have a given car charge at your home, multiply your vehicle’s kWh/100 miles rating by the rate you’re charged for electricity at the times that you’re most likely going to be charging.
Does Range Matter to You?
In reference to EVs, range is used to describe how far a car can go on one charge. For quite some time, the lack of a comprehensive charging network was a large deterrent to the adoption of EVs. While it will certainly depend on your area, this problem has been resolved for much of the country.
You’ll need to consider where you usually drive if you plan to charge at home. You will also want to consider how often you take road trips to decide if the range limitation is even an issue for you.
For anyone looking for a nice easy daily-driver, the range might not be that big of a deal. Even people who take regular road trips should look up the network of charging stations before being deterred, since the network has grown substantially in recent years.
Electric Car Buying Guide: Cost to Own an Electric Car
Some people are drawn to EVs for their environmental friendliness. You won’t be chugging gas every time you head to the grocery store, so many people also assume that this will directly translate into saving money. However, with other maintenance purchases taken into consideration, does this assumption hold true?
Consumer Reports recently found that the average EV owner saves over $800 to $1,000 per year on fuel costs over an equivalent gas-powered car. We assumed there’d be some savings in this arena!
Maintenance and repair were also found to be about half of the amount necessary for gas-powered vehicles, with an average savings of approximately $4,600 over the life of the car.
Depreciation has traditionally hit EVs harder than gas-powered cars, but newer reports are indicating that the new lines of EVs are on par with gas-powered cars for depreciation. Teslas also tend to hold their value well, making a strong case for buying a Tesla.
Ultimately, the true cost of ownership will be different for everyone. There will be variance in how quickly your car depreciates, what you can expect costs for repairs and maintenance to be, and fuel costs.
Based on Consumer Reports, the cost to own an electric car is generally lower than a gas-powered car; however, that isn’t necessarily true of all-electric vehicles. You’ll need to research your exact cost and be satisfied with those prices before you buy an EV.
Our electric car buying guide wouldn’t be complete without mentioning that insurance rates for electric vehicles are often higher than their gas-powered equivalents. This means you need to remember to get insurance quotes while you’re shopping around.
Should You Buy a Used or New Electric Car?
Deciding between a new or used EV is a tough choice to make. Much of the traditional advice applies here, such as obtaining a pre-purchase inspection and considering a CPO if possible.
One of the main unique aspects to consider is the life of the electric battery that powers your entire car. Replacing this battery is akin to replacing an engine in a gas-powered car. This means that when you buy a used EV, you will often have fewer miles on your electric battery.
EV cars also have the potential to make you eligible for a $7,500 tax credit. Assuming that you are eligible for this credit, this can significantly offset the cost of a new EV. Only 200,000 credits were given out to each manufacturer to provide as an incentive for buying a new EV. However, many of these credits have already been awarded, and the number of credits available will need to be increased at the federal level.
Depreciation is also a factor to consider. The value of new cars depreciates once they trade owners. If you buy a new car, you’re guaranteed to lose money on depreciation, but the trade-off is that you’ll get a brand-new electric battery and the latest technology in your vehicle.
There’s a great opportunity for a flexible buyer in the used electric vehicle market. After three years or so, many electric vehicles are traded in or sold out of the desire to buy something new. Many EV owners want the latest and greatest cars out there, especially when they know they’ve been piling up mileage on their batteries. As such, there is an excellent market of used EVs available.
Leasing or Buying an Electric Car
We can’t talk about buying EVs without bringing up leases, too. There are two main points that need to be addressed when you’re considering leasing or buying an electric car.
Drained Batteries
EV batteries can cost about the same as a new engine when they need to be replaced. As such, never having to replace them can be quite advantageous. This is a major benefit of leasing a vehicle over owning an electric car. Once your lease is over, simply trade it in for a car with fresher batteries.
Outdated Technology
This point is technically true for any lease, but the technological differences that EVs have between model years are more significant. A few years of EV evolutions could greatly increase charge speed, expected distance of travel on a single charge, and battery life. Leasing to constantly have the best technology in each of these categories is well worth considering.
Look Beyond Buying a Tesla
Tesla didn’t invent electric vehicles, but its impact on the marketplace cannot be understated. Their success launched EVs into the spotlight, and now, there are EV options from many major automakers.
Let’s take a quick look into the ways that major automakers are adapting and evolving with their EVs:
- General Motors: Aiming to sell one million EVs by 2025, GM has gone all-in.
- Ford: This automaker already offers a handful of EVs and continues to keep developing more.
- Nissan: With over 500,000 Nissan Leaf EVs sold since 2010, Nissan is still pushing to sell one million EVs by 2022.
- Honda: Honda is looking to have two-thirds of all of its auto sales become electric by 2030, including hybrids, plug-in hybrids, and EVs.
- Toyota: They got an early lead on the hybrid market and they’ve carried it over to the EV market with a goal of 5.5 million EVs by 2030.
- Volkswagen: Over the next five years, this automaker is going to spend $85 billion in EV development.
- BMW: With a few EV models currently available, BMW aims to have EVs account for 15% of its sales in the coming years.
- Hyundai: This automaker has goals to sell 1 million electric vehicles by 2025.
- Kia: The goal for Kia Motors is to have EVs make up 25% of global sales by 2029.
With plenty of money being invested into EVs and a large amount of these vehicles currently in operation, we expect to see EV sales soaring throughout the next decade.
While Tesla is more like buying an iPhone, other manufacturers sales are similar to their gas-powered counterparts. See our guide to buying a car in 2021.
Is an EV Right for You?
Is buying an electric car the right move for you? As with many questions that relate to the car buying experience, the answer is: It depends.
As you’ve seen in our electric car buying guide, there are unique factors to consider at every step of the way. While many aspects of buying an electric car are the same as buying a gas-powered car, there are some unique points to consider. Put in plenty of time into researching charge locations and electricity prices, along to your standard car research if you plan to buy an EV.
by Ray Shefska | Last updated Apr 11, 2025 | Trade-in
It’s time to buy a new car. What should you do with your current car? You have two primary options: Trade it in at a dealership or sell it privately. Deciding whether you should trade or sell a car requires careful consideration.
Today, we’re going to discuss some of the pros and cons of each option so that you can get the most out of the sale of your car, whichever option you may choose.
Should I Trade in My Car or Sell It?
Presumably, everyone has the same goal: To get the most out of their existing car. When you’re asking whether you should trade in or sell a car, the decision will likely depend on your situation and your priorities.
If you’re looking for a streamlined, simple experience, consider trading in your car. You can trade in your car at any dealership, and it’s much simpler than selling it to a private party. When it comes to ease, nothing can beat trading in a car.
Another benefit of trading in your car is that your total taxable price for your new car will be lower. Depending on the numbers, this has the potential to make trading it in much more lucrative. Of course, this benefit only applies to places that charge sales tax.
The biggest con in the battle of trade in vs. private sale is that a trade-in will have a dramatically lower price. You’ll get more direct cash with a private sale almost every time. However, you may need to spend a lot of time to get this higher dollar amount. You’ll spend time on marketing your vehicle, meeting up with people who may not end up buying it, and may have to haggle over terms for a while.
Should I trade in my car or sell it? That depends on the time you’re willing to wait. You might discover that it’s nice to have an instant payment when you trade in your old car. However, for most people, as they consider the difference between a trade-in and a resale value, they decide that it’s worth the extra time to sell the vehicle privately.
Trade In or Sell a Car: How To Get the Most Value for Your Car
Whether you trade in or sell a car, you’re going to want to make sure you get as much value out of your car as you possibly can. Here are a few things that can help.
Repair Mechanical Issues
Nobody will buy a car when the check engine light is on. Having audible sounds when the engine is starting or idling is also a bad sign.
Since there’s a high probability that someone will want to take a test drive before they buy it, you should make sure that the vehicle is able to accelerate smoothly.
Repair any basic issues that your car might have. You should also consider fixing cosmetic issues. When you’re weighing the options to trade in vs. sell, this will matter.
Stay on Top of Maintenance and Keep Records
Follow the maintenance schedule and keep records of everything done to the car as you own it. Anything from new tires to a new engine should be documented. This will boost your value, whether you sell it or you trade it in.
Trade In vs. Sell: Pick the Right Price
When you’re pricing your vehicle, research is key. Pricing it too high will mean that you’ll likely be stuck waiting for a buyer, while pricing it too low can mean that you’ll miss out on potential income. Use the Kelley Blue Book and our Market Price Report to gain a thorough understanding of how much you deserve for your car.
Trade-in vs. Private Sale: Consider the Perspectives
You’re probably going to have to negotiate, whether you sell your vehicle privately or use it as a trade-in.
Think about the buyer’s perspective. A private seller is most likely buying the car for personal use. They’ll want a reliable car that still has plenty of years left on it.
In contrast, a dealership will be looking to sell your car to another customer or sell it at an auction. Either way, they’re looking to turn a profit.
Keep these perspectives in mind when it comes time to negotiate.
Should I Trade In or Sell a Car?
Should I trade in or sell a car? It depends. Do you want to spend the time to show your car to various private parties and go on a dozen test drives with them? Is it worth it to have an easy transition directly from your old car to your new car? Whatever you decide, make sure to get a good deal by fixing issues upfront, keeping the car maintained, and researching the right price.
by Ray Shefska | Last updated Jan 23, 2025 | Car Buying
Car-buying myths seem to be just as common as urban legends. Nobody knows how these myths get started. We’re willing to bet they get started when someone misunderstands the terms of a deal or when they misunderstand car buying in general. First-time car buyers can start their experience off right when they don’t let these common myths get in your way!
We’ve gathered five common car-buying myths that you may have heard at some point in your life. We’ll take a look at each myth and pull it apart to find out why it’s incorrect. Let’s get started.
Myth #5: Buying a Car in the Rain
For some reason, buying a car in the rain has become a rock-solid piece of car-buying advice for some people. Every first-time car buyer beware: The rain has no impact on car sales! This idea is based entirely on the belief that car dealerships will be slow on rainy days, so they’ll be desperate for sales.
In truth, this myth has been around for so long that some car dealerships have reported being busy on rainy days. Let’s put this myth to rest and stop flocking to car dealerships when it rains.
Myth #4: Buying Cash Will Get the Best Price
We’ve all heard that “cash is king,” and while that’s true in some areas, car buying is not one of them. This myth implies that you’ll receive a better price if you walk with a briefcase full of $100 bills and offer to buy your dream car using cash.
It might seem like a car salesperson would be all over that, but in actuality, you may get a worse deal than the next customer who is financing their purchase.
When you finance a car, the car dealership is able to bake in some profit into your loan. Financing is one of a dealership’s main profit streams. As such, dealerships are more motivated to make a deal with someone who is going to finance their car than someone who is going to pay in cash.
Learn the dealer lingo. Check out our F&I office glossary of terms.
If you want to pay for a car using cash, finance it at the dealership and make sure there is no prepayment penalty. Then, pay it off in full a few weeks later. It’ll work in the same way as it would if you had bought the car with cash, but you’ll receive a better deal.
Myth #3: Buy Now or the Deal Will Disappear
One of the main pieces of car-buying advice that we always tell first-time car buyers is to walk away if you don’t feel comfortable with a deal. As strange as it may seem, buyers can get stuck in the mentality that walking away means they’ll lose out on the car. That’s why this car-buying myth has been around for so long!
Yes, walking away from a deal will mean that you won’t get that specific deal. But next week or next month, chances are that you can get an extremely similar deal. That’s why we always recommend talking to multiple car dealerships.
The only exception to this myth comes when you’re after a limited make and model. If there’s a chance that the dealerships will run out of the car you’re after, then this myth may actually be true for you.
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Myth #2: Buying Used Will Save You Money
One of the most popular car-buying myths is that used cars are the best way to buy. The idea comes from the fact that the value of the car has already depreciated, so you’ll be buying a car that’s closer to its true value.
While there is some truth here, you shouldn’t rule out buying a new car in total. You also need to consider the cost of maintenance and upkeep that comes with a used car.
Most importantly, you’ll have far more lending options if you go for a new car. Because dealers are incentivized to reduce the time on the lot for new cars, they may be more willing to negotiate on the price of a new vehicle.
Myth #1: I Don’t Know Enough to Negotiate
Some first-time car buyers think that negotiation is a matter of knowing specific key phrases that will turn the tide in their favor. While knowing what to say and when to say it does help, knowing the value of the car that you’re buying and being confident and firm is actually the thing that is the most important.
There’s no knowledge threshold to keep you from being a skilled negotiator. Use our member solutions to determine how much you should be paying for a new or used car and confidently remain within the realms of the deal that you’d like to land.
Unraveling common car-buying myths can help you to win in negotiations. While some of the myths have nuggets of truth in them, others are legitimately bad advice. Stick with the sources that you can trust for quality advice about how to score a great deal.
by Ray Shefska | Last updated Jan 23, 2025 | Success Stories
At CarEdge, we love to hear from our members about a great deal they’ve scored. It’s fun to see the ways that people are putting our solutions and knowledge to practical use to save some money!
Today, we’re going to highlight a story from Rich about the easy sale he was able to do because he reached out ahead of time to the dealership and did his research. Let’s see how he managed to secure a great deal on a brand-new lease.
Background: An Ending Lease
The story begins when Rich took his leased van into the dealership for a service appointment. As he was leaving, one of the salespeople approached and asked if Rich wanted to get into a new car and out of their lease.
Rich knew that he was approaching his mileage limit on his lease and didn’t want to pay for exceeding it. He was also aware of the semiconductor shortage and wanted to get into a new car before that shortage had a greater impact on the market.
Rich and the salesperson traded numbers. From his home, Rich started texting the salesperson about different vans after he ran them through the Market Price Report. Rich received several quotes before deciding on a 2021 Honda Odyssey Touring.
Before he went to the dealership, Rich secured several quotes for his car’s trade-in value from Carvana and Vroom. Securing these quotes helped Rich to point out to the salesperson what he would be able to get for his car at other locations. He knew that the dealership wanted his trade-in, so this was a perfect move to help him get the most value out of it.
You can get a trade-in value for your vehicle from within our app. Join CarEdge to gain access. Powered by Black Book, this value is used by dealers.
Once he had finalized the numbers with the salesperson, he was ready to head into the dealership to finalize the transaction and begin his next lease.
At the Dealership: A Smooth Transaction
Unfortunately, Rich discovered that the color of Odyssey that he wanted would need to be brought in from another dealership, which had the potential to change some of the numbers. However, Rich noticed a burgundy Odyssey on their lot that had been there for over 100 days.
When Rich asked about the burgundy van, they said it would cost $300 more. Rich pushed back gently, and the salesperson returned from the sales manager with a $1,000 discount on the van. Pointing out the days on the lot seemed to have helped.
The rest of the transaction went smoothly. Honda had the highest offer for the old van, so Rich did the trade in there, instead of through Carvana or Vroom. Having those quotes in hand did help Rich to secure a higher trade-in value. Rich left with a 2021 Honda Odyssey Touring on a 36-month lease and he’s happy with the great deal he got.
An Outstanding Transaction and a Great Deal
Rich didn’t mention anything that happened in the F&I office, so we’re assuming that the negotiations went so well that it wasn’t worth mentioning.
As Rich said, “This was the first auto transaction where I felt I knew how to approach everything and what exactly to expect in the process.” He didn’t have to get into hardball negotiating and he still got a great deal, which is something we love to see.
by Ray Shefska | Last updated Jan 23, 2025 | Car Buying, Used Cars
🚘 Search for cars with no ads Are you thinking about buying a car in 2021? Understanding how to buy a car goes beyond just a few simple tips. To be successful (and get a fair deal), you’ll need to be aware of current market conditions, know how to find the right car, and understand what to expect during negotiations and at the end of the sale.
Today, we’re going to dive into the details of how to buy a car in 2021. We’ll examine what makes buying a car in 2021 unique, and we’ll teach you exactly how to navigate the entire used and new car buying process. We’ll take you from searching for a vehicle to signing all the paperwork so you can buy a vehicle with confidence unlike ever before. Let’s get moving!
How to Buy a Car: The 2021 Special
There are a few notable trends taking shape in 2021. Each of them will impact your car buying experience, whether you’re buying a used car or buying a new vehicle. Let’s take a look at two distinct trends that you need to be aware of.
The Semiconductor Shortage
Right now, there is a shortage of semiconductors and it’s impacting every industry that manufactures electronics, including the auto industry. Manufacturers are not currently able to keep with demand, which is creating supply chain problems for nearly every automaker. Brands are having to choose which models to build and which ones to put on the back burner.
The Semiconductor shortage is impacting prices. Learn more from our Chip Shortage guide.
Forecasts from AutoForecast Solutions project the anticipated loss in production for 2021 to be between 1.5 and 2 million units. Considering that the average number of new units built each year is 16 million, we’re talking about a significant impact to the supply of new vehicles. Semiconductor manufacturers are doing everything that they can to increase production, but there isn’t a “flip of the switch” solution at their disposal — they simply can’t ramp up semiconductor production as quickly as needed.
What does all of this mean for you? It means that people who are buying a new car will have fewer options to choose from. Dealers will have decreased inventory, but the same amount of demand. This will greatly impact your car buying experience, as the relationship between supply and demand has shifted.
What affects the new car market often affects the used car market, and that’s definitely true today. With more people looking at used cars as new cars are becoming harder to find, used car prices are going up. While this makes it a perfect sellers’ market, anyone looking to buy a used car will need to know how to navigate an under-supplied market.
The chip shortage has impacted used cars as well. Check out our trade-in guide to get the best deal.
Instead of heading into the dealership expecting them to bow to your requests, you’ll need to be aware that they have plenty of customers to work with. Still, tips for buying a car still apply and you should research, prepare, and practice before heading to the dealer. Understanding how to buy a car in 2021 means that you may just need to adjust your expectations for the experience.
The used market has been highly impacted by the semiconductor shortage on the new market. Surprisingly, we’re seeing some used cars go for similar or even higher prices than the MSRP would be if the cars were brand-new.
What about certified pre-owned (CPO) vehicles? As they are the perfect middle ground between used and new, CPO vehicles will become increasingly in demand. The more thorough inspection process is exactly what many people will want if they can’t buy a new car.
Thinking of buying a certified pre-owned car? Read about each manufacturer’s certified pre-owned program.
Overall, the semiconductor shortage is the biggest thing that’s affecting the new and used car buying markets this year. It’s a great time to sell your car, but if you’re looking to buy a new one, you need to know how to navigate this unique situation.
The One-Price Marketplace
While this trend has been in motion for a few years, we anticipate that we’ll see “no haggle” and “one-price” dealerships continue to become more popular. These dealerships won’t haggle with you (even if you wanted them to), since they do what’s called market-based pricing. This pricing model doesn’t leave any room for haggling. Instead, you pay the requested price or move on. Simple as that.
Examples of one-price marketplaces are Carvana, Vroom, CarMax, and AutoNation. Each of these dealerships sells used cars that are worth investigating, but you won’t be able to haggle whatsoever with them, at least on the front end. You may still be able to negotiate with them on the back end, referring to finance and insurance.
One of our best car buying tips is that if you’re trading your old car in to a dealership when you buy your used car, obtain quotes for the trade-in. Most “no haggle” marketplaces will provide binding quotes that you can leverage when you’re at your chosen car dealership. It’s a great way to secure more money for your trade-in. For many people, this is an early lesson in learning how to buy a car.
Adjust Your Expectations
Whether you’re buying a new car or a used one, every car buyer needs to reset their expectations for the types of large discounts that they may have heard about before. You should still expect a discount and you still deserve a fair price; it’ll just be harder to secure both this year.
You’ll need to put in plenty of research on the true value of the used car that you’re hoping to buy in order to understand what a fair price might be right now. Many of the price books out there, such as NADA Guides and Edmunds, use historical data to help predict prices. While that’s usually fine, you may see dealerships asking for more than usual due to the unpredictable shortage of semiconductors.
All of this is also true for specialized models that are coming out, such as the new Mustang Mach E. The more specialized the car is, the more people there will be to line up to buy it. If you’re buying an in-demand car this year, it’ll take even more work than usual to land a good deal on the vehicle.
Buying a Car: How to Locate Inventory
Odds are if you’re reading this you know (or at least have a sense of) what vehicle you want to purchase. Scouring CarGurus, Autotrader, or manufacturer websites for hours can be a thankless task. How can you find what you’re looking for at a car dealership? Whether you’re buying new or used, locating the car you want to pursue purchasing can be quite the challenge.
There are other tools that you can use when buying a used car, but we suggest using our Market Price Report to locate inventory at dealerships that are near you. Not only will you find out what they have cars listed for, but you’ll also find out how many days those cars have been on their lot and their “negotiability score.” The “Market Summary” will show you the breakdown of vehicles to examine.
Due to the increased demand for both new and used cars, you may need to expand your search parameters or consider other makes and models. If you’re set on one specific car, you may need to be willing to drive further in order to get it.
Take note that since there is a shortage of used cars, fraud may be on the rise. Make sure to get a pre-purchase inspection, look at every car’s vehicle history, and carefully look over the vehicle’s service records. If you’re looking at CPO options, make sure to check the repair sheet to understand what has been fixed on the vehicle.
Buying a Car in 2021: How to Negotiate
Negotiating is one of the first things you need to learn when you want to know how to buy a car in 2021. While negotiating a used car purchase is always going to be a little challenging, negotiating in a seller’s market will likely be much harder than usual.
You can start off on the right foot by contacting dealerships with our email templates. Within the Market Price Report, after you run a car, you’ll see a section called “Email Templates.” These templates are hand-crafted to help you negotiate the price of the car before you even step foot in the dealership. They’ll help you to come off as someone who knows what they’re doing and set you up for success.
Use our email templates with multiple dealerships. While there is no such thing as two used cars that are exactly the same, obtaining quotes from multiple dealerships will allow you to start a bidding war between these dealerships. Look for comparable cars and request quotes for them.
You will be negotiating what is called an out-the-door price, also known as OTD. Your OTD price is the exact amount that will be financed or paid in cash for the car that you desire. It’s a final figure and should be the only focus of your negotiations.
Once you’ve started things off the right way with our email templates, had multiple car dealerships sending you quotes, and decided that one of them is the clear winner, it’s time to head into the dealership.
You only get to buy a car once every decade or so, whereas the car salesperson gets to sell a car several times per day. This puts them on an uneven playing field with you. You can level the playing field by practicing what you’re going to say while you’re at the dealership. You should also practice how you’ll say it. Stand in front of a mirror and talk to yourself. Rehearse your negotiation skills and you’ll be well-rewarded with a better deal on the car.
Once you’re satisfied, head to the dealership and put that practice to work. Show them that you know exactly how to buy a car. Let the car salesperson know that you’re aware of the semiconductor shortage and its impact on the auto industry. Tell them that you know they are in a position to make a profit and that you’ll gladly pay them the profit that they’re due. You just don’t want to be the one paying them the most profit.
Car Buying Tips: Navigating the F&I Office
After you’ve finished negotiating with the salesperson, you’ll be whisked away to the F&I office. This office is intended to be the place where you finish the paperwork, but it’ll also be the setting of another round of negotiations.
There will be three specific areas of negotiations:
Negotiating your rate is going to be the most important part. You’re going to want to ask them a series of rate-related questions, which include:
- What’s my rate?
- How does that rate compare to the buy rate?
- Is the rate that you’re charging the best rate available?
Let’s break this down. The first question is clear-cut and the manager will answer the rate that is being offered to you.
The buy rate is the rate at which your loan was offered to the dealership. Dealerships have special agreements with lenders that mean that they’ll be able to buy your loan for a “buy rate” and then mark it up to offer it to you. For example, your buy rate might be 2%, but it might be marked up to 4% when they present it to you.
As such, the second question might be a surprise to the F&I manager. Some managers will not disclose your buy rate and they don’t have to. If they refuse to disclose the buy rate, it might be time to walk. One of our best car buying tips is to walk away from people who are being dishonest when they’re trying to sell you a car.
For the last question, you’ll acknowledge that they need to make a profit and ask if the rate they’ve offered is the best they can do. Remember, you can say no and walk away at any point.
One of the best things that you can do for yourself is to get pre-approved for a loan from your financial institution. Having this pre-approval will mean that you’ll be able to hand the pre-approval offer over to the F&I manager and ask them to beat the offer. The worst-case scenario is that you go with the pre-approval offer.
After the financing is discussed, the dealership will likely go over a suite of product offers. Some of these products include:
- Extended warranties
- Tire and wheel warranties
- GAP insurance
- Wear and tear coverage (for leases)
- Interior protection
It’s completely fine if you want to buy any of these types of products. In many cases, they’re worth having. However, you should negotiate each individual product one at a time. If you want GAP insurance, ask how much it costs specifically and understand that the price is negotiable (which is true for all of their products).
Be aware that some F&I managers will say that you have to buy the offered products today. This is only true if you are going to be rolling the cost of the product into your financing. If you’re fine with buying them later, you can. You can even obtain quotes for specific products, like vehicle service contracts, and take those in with you.
How to Buy a Car in 2021: Plan Ahead and Be Prepared
A great car deal is usually the result of planning ahead, preparation, and negotiation. Put in the time to reach out to multiple dealers about the used cars that strike your interest. Request quotes and then use those quotes against other dealerships to secure a better price.
Understand what you’re going to say when it comes time to negotiate and practice beforehand. Stand in front of your mirror and negotiate with yourself. This is one of the best ways to learn how to buy a car: Practice negotiating.
After you’ve prepared, you’ll be ready to head into the dealership and put everything into play. Acknowledge that you’re aware of the current market conditions that put you at a disadvantage and say that you’re simply looking for a fair deal.
Next, you’ll head into the F&I office. This is where you’ll really put all of our car buying tips to work. You’ll nail down the details on your used car and negotiate the price of any products that you’re purchasing. You’ll drive away knowing that you got a good deal. How can you know that you got a good deal? If you and the car dealership were both able to leave the transaction feeling good, that’s a win!
