How You Can Save Money when Buying a New Car

A new car is probably the most expensive purchase you'll make next to a house. But that doesn't mean your hands are tied in terms of the price. You can save a lot of money if you spend some time preparing for your purchase. Here are some things you can do:

Find out if you can buy it.
Before you shop around for a new car, find out first if you can afford it. If you're paying for the car in cash, you could save money by taking advantage of special discounts and rebates. If you can't pay for the car in cash, financing is the way to go. To save money, make sure to compare offers from different companies, including the dealers. But to get the best rates, you'll need to have a good credit score.

Find out how your FICO looks like from credit reporting agencies like Experian or Equifax. You'll use this credit score later when you apply for financing. Depending on how it looks like, you can get a higher or lower interest rate on your new car.

Find the fair price.
To save money on a new car purchase, you'll have to get yourself the invoice pricing for the car you want. The invoice price is what your dealer spent for the car. Once it's out in the showroom, what you'll get is the sticker price which reflects the dealer's mark-up.

It's unrealistic to buy a new car at the invoice price (no new car dealer in his right mind will give that to you), but you can use the price for reference to help you during the bargaining process. You can get a copy of the invoice price from many consumer reports price services. A quick phone call will save you a lot of money and you'll only have to spend about $12 to $20 for a report.

There are also similar services online that you can use, some of which are for free and some which charge you. Edmunds.com, for example, offers free invoice pricing while FightingChance.com will charge you about $35. Regardless, that is still a small price to pay in exchange for thousands of dollars in savings later.