In Cash Flow, Debt Management, Financial Planning, Personal Finance, Spending

If you’re in the market for a new car or know a purchase will likely occur within the next five years, it can be a major source of financial stress. Car buying is definitely one of those large financial transactions where you can get taken advantage of if you’re not careful.

The good news is that there is so much more information about car values available now that it puts the buying power back in the hands of consumers. And with this information, you can successfully secure your next car purchase at the best price possible.

Here are ten tips on buying (and financing) your next car.

  1. Know Your Trade-In Value

Before you even start shopping around for your next set of wheels, calculate what the trade-in value is on your existing vehicle. Knowing how much you should get for your car can help you successfully budget for the remaining purchase price of your next car. A great resource for researching cars and car values is Kelly Blue Book.


  1. Know What You Need or Want

After you know what you can get for you existing car, start building those “must-have” and “nice-to-have” lists for your next car. If you’re a growing family, maybe you need more seats and five-star safety reviews. If you have a long commute, good gas mileage likely makes the top of your list. And beyond the “must-haves,” perhaps a moon roof, leather seats, or power seats would also be nice if it’s within your budget.


  1. Set a Budget

Speaking of a budget, set one for this next car purchase. Best case scenario is that you save for your car purchase so you can pay for it in cash at the time of purchase. Reality sometimes looks differently if your car suddenly needs to be replaced and you haven’t finished saving up yet. So, if you had to have payments, know what you could afford monthly without it impacting your ability to afford your life and fund your other long-term financial goals. Next, make sure you can pay off any car loan within twelve to thirty six months. Any loan that takes longer is too long.


  1. Make Your Short-List of Rides

You have your list of needs and wants and you know what your budget is. Now, make your short-list of potential vehicles for consideration. What you’ll find is you have options! Vehicles run the spectrum from very affordable to exotic, but your initial homework will help you stay focused on options that align with your overall financial situation.


  1. Compare the Cost to Own the Vehicle

Once you have narrowed down your list of preferred vehicles, compare the cost of ownership between your choices over the length of time you plan to own the vehicle. Out-of-pocket expenses, such as fuel cost, insurance, repairs, and maintenance should be taken into consideration. Kelly Blue Book offers a great tool that can assist you with comparing the cost of ownership for the vehicles you are considering.


  1. Get the Fair Purchase Price for the Car You Want

Once you decide which car you are going to buy, be sure you know that fair purchase price. Again, head over to Kelly Blue Book. This website will tell you exactly how much you should pay for a car – new, certified pre-owned, or used.  It will tell you the invoice price of the vehicle, the fair purchase price range (how much a consumer should expect to pay), and the MSRP (what the dealership tries to see the car for). Know the number you are going to pay for your next car BEFORE you buy.


  1. Solidify Your Financing

Prior to contacting the dealership, pre-qualify for the loan you will need to purchase the vehicle if you plan to finance.  Your bank or credit union is a good place to begin your inquiry about auto loan rates but don’t hesitate to shop around. A website like can assist with you auto loan research. When you speak to the representative at the financial institution, have the research you obtained from completing steps one through six above in hand. Ask about incentives the financial institution offers and make sure that the incentives are not hidden or disguised by extra fees.  For example, some lenders may offer free Guaranteed Asset Protection (GAP Insurance).[i] as an incentive.


  1. Think About Extras

Apart from the purchase price, think about any little extras you could negotiate into the transaction of your purchase. Dealerships want to make the sale and they have no clue how prepared you are before they meet you. Think about things like free oil changes for three years, floor mats, and any of those other little things you know they are going to try to upsell to you.


  1. Head to a Dealership, Call or Email

You can research dealerships beforehand. See which ones have the exact car you’re interested in and then reach out to them by phone or email first. You can accomplish much of the initial negotiations before you even step foot on a dealership lot. The separation allows you to remain unemotional and steadfast. Then, when you get to the dealership – most of the leg work can already be done and you can just test drive the vehicle to confirm your choice.


  1. Always Be Willing to Walk Away

Lastly, always be willing to walk away. There are multiple dealerships that have the car you want to buy or you can find it online. If you aren’t getting the deal you know is fair and right, just walk away.




Your hard-earned money is precious, and the last thing you want to do is throw it away on needless finance charges. Are you currently paying finance related fees without even understanding what they are? In the next installment of FRANKly SPEAKING, I’ll review the fees you may be paying that you could possibly do without.

As always, I invite you to reach out to me – in real life – with any comments, feedback, or questions!  [email protected]


Disclaimer: The information contained in this article is for informational purposes.  None of the information provided in this article is intended as investment, tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. Please consult with your accountant, finance professional, and/or legal counsel regarding your specific circumstance. Reproduction of this material is prohibited without written permission from Frank Shields, and all rights are reserved. Read the full Disclaimer.

[i] GAP insurance is optional insurance coverage that can be purchased to cover the gap between what’s owed on the vehicle and its actual cash value at the time of an accident or theft, if the vehicle is beyond repair. Auto dealerships will try to sell you a GAP insurance policy, but it’s typically cheaper to purchase coverage through your insurance company.

Recommended Posts

Leave a Comment


Student Loan Debt Holding You Back?
Learn about repayment options AND how to reach your other financial goals with this FREE easy guide!