Tuesday, August 16, 2022

How Much Should I Pay For A New Car

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How Much To Pay For Your New Car

In my career, Ive sold many vehicles for a loss to guarantee the store hit a quota required by the manufacturer to hit a bonus. For example, the bonus could be $25,000 for selling 25 Nissan Sentras within a month, and I only have 23 sold with a few days left. I dont mind losing a couple of thousand dollars to make sure the store gets the bonus. Ive also sold cars for a loss that have been sitting on the lot getting old. You never know what kind of mood a car dealer is in or what they just might do to sell a car.

Remember negotiating is a back and forth process and there is nothing wrong with being flexible with your offer. Start with your lowest offer and increase it slightly with every counteroffer until you reach the maximum amount you want to pay. Its okay to spend a little more than what youve figured. It really comes down to how much you want the car. Your goal is to pay as close to the amount youve figured to guarantee you pay the absolute lowest price available.

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Negotiating Price: How Much Will A Car Dealer Come Down

I’m a marketing professional with 13+ years experience. Also, I write about stuff and help people fix problems.

Don’t be shy about negotiating a car’s price. Car dealers expect it!

Nowadays, when it comes time to buy a vehicle, we really do have a lot working in our favor. We also have a lot of resources at our disposal. There are multiple websites we can use to browse prices, deals, factory rebates, regional discountsthe whole gamut. When buying a vehicle, most consumers can be pretty well informed. But can they negotiate? Can you wheel and deal with a pro?

Even armed with the Kelly Blue Book values and the Edmunds “True Market Value,” and having looked at a million deals online and in the classifieds, when it comes down to it and you’re sitting face to face with a professional car salesperson who haggles every single day, multiple times a daydo you have the gall to haggle with him?

When he says “I’m sorry, but that’s what the car’s worth,” do you have what it takes to say, Youre wrong? I’m inclined to think that many do not.

You will inevitably wonder: What is a good price for this vehicle? What is a reasonable offer?

Suppose the vehicles MSRPmanufacturers suggested retail priceis $35,000, and I offer $25,000, what might happen? Are they going to laugh in my face, take away the beverage they graciously offered me, and have security escort me from the dealership?

Negotiating Down From the MSRP

Can I Afford A New Car

Have some extra money saved for a down payment? The more you put down on a car, the less youll have to borrow, the less interest youll pay over the length of the loan, and the lower your monthly payment. Remember, your down payment doesnt have to be all cash. Got a trade-in? That counts too.

When you know how much car you can afford, youre removing a big chunk of the stress. So, lets take a look at how to determine if you can afford a car.

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Tools To Help Research Car Costs

When researching the cost of a car, its important to know that like other retail goods and services, prices can be marked up or down. For cars, its important to know theres the invoice price, or what the dealer pays for the car from the manufacturer. Then theres the window sticker price, or the manufacturer suggested retail price .

As a consumer, you will not know the exact invoice price. But Autotrader and Kelley Blue Book offer tools that will help you find out the of the vehicle you want to buy.

Start by researching a specific vehicle make and models on Autotrader. On the site you will find car MSRPs. Then, use the Kelley Blue Book car pricing tool. It can help you once you key in the vehicle make and model that youre considering.

From there, Kelley Blue Book calculates a suggested purchase price based on factors, including the cars popularity and the spread between base price and invoice price. Understand that you could pay a little less than Kelley Blue Books price or you might pay a little more. Either way, this tool offers an accurate representation of where you should expect to be.

Using both tools together help you determine new and used car values and also point you to actual vehicles listed for sale.

Tip: Dont lose sight of your car buying criteria. Keep in mind reviews, lists and comparisons to refine your search.

Things To Consider Before Car Shopping

How Much Can I Afford for a New Car?

Things to consider before you head to a dealership to buy a car include:

  • Your budget
  • Your amount of available disposable income after paying priority bills such as mortgage or rent, food, utilities, loans, and credit cards
  • Car-buying terms used by sales personnel
  • An understanding of pricing and whether a price offered is fair
  • Comparison shopping between multiple dealerships
  • Whether you’re prepared to negotiate a fair price to save time and money

For additional information, read about the expenses associated with buying a new car, based on a study from AAA.

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Before You Buy A New Car Anywhere In Canada

Understanding the Complexity of New Car Pricing in CanadaM.S.R.P.Dealer invoice priceHold BackMaximum dealer margin/profitDealer and buyer goalsActual dealer margin/profit Dealer overhead and bottom line profitFactory-to-consumer incentivesOR Factory-to-dealer incentivesStep 1: Narrowing Down Your Choices . . . Step 2: Research. . . auto123www.TheCarMagazine.comwww.MotorTrend.comwww.CanadianDriver.comwww.Honda.cawww.Toyota.cawww.Ford.cawww.Nissan.cawww.BMW.cawww.Mazda.cawww.Subaru.cawww.Edmunds.comwww.JDPower.comwww.ConsumerReports.orgStep 3: The Test Drive . . .Step 4: Purchase Strategy . . . The Most Important Step! CarCostCanada Invoice Price ReportStep 5: No Hassle Purchase. . .

The Factory Invoice Explained

The factory invoice lists the base model of the car, all option packages, floor mats, body trims and destination charge. For most manufacturers it will list the holdback . If the holdback isn’t listed then estimate it. To make sure the one the salesman shows you is real, compare the numbers with your research. Make sure not to confuse the MSRP on the window sticker with the “invoice” price!

Note for Honda Buyers: To maximize dealer profit, Honda options are installed at the dealer. Unfortunately this makes it impossible to lookup the cost of these options. Use Toyota’s option pricing as a “competitive guide” for negotiating.

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Changes From 1 July 2021

The grant amount for plug-in hybrid electric vehicles reduced from5,000 to 2,500 on 1 July 2021.

You can continue to get a grant of up to 5,000 for battery-poweredelectric vehicles .

Since 1 July 2021, the grant for BEVs and PHEVs only applies to carsunder 60,000.

Read more about electricvehicles and grants for electricvehicles on the SEAI website.

Finding A Car You Can Afford

How Much Should We Pay For Our New Car?

Many automotive sites, such as Kelley Blue Book, Edmunds and AutoTrader, have car finder search tools to show you different models listed by price. But remember to set the bar low. When searching for cars, set your maximum price below the total loan amount you think you can afford. Sales tax and fees can easily add up to an extra few thousand dollars.

About the author:Philip Reed is an automotive expert who writes a syndicated column forNerdWallet that has been carried by USA Today, Yahoo Finance and others. He is the author of 10 books.Read more

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What Is A Leftover Model

Leftover models are the remaining stock of last years model for a specific car. Once the new model arrives on the lot, dealers and manufacturers want to get rid of the remaining previous year models as quickly as possible to make room for the new ones, as well as to prevent taking demand away from the current models. Because dealerships are eager to sell these leftover cars, it is possible to get a great deal on a new car once the new model year cars arrive. Deep discounts for previous year new cars of up to $10,000 off are not unheard of.

For example, in fall of 2018, many car manufactures are already releasing their 2019 lineup. That means you can find 2018, and even remaining 2017 model year cars, for steep discounts if you shop around.

I just purchased a brand new 2017 Chevy Cruze LT hatchback, sticker price of about $24,000, for $14,000. Because I shopped around, I got about $10,000 off MSRP. Other dealerships in my area were selling similar used cars for about the same price that I bought mine for brand new.

While this was an excellent deal for me, there are several things to consider when deciding if purchasing a leftover model is right for you. Before you jump at a too-good-to-be-true deal, consider the pros and cons of purchasing a leftover model vs. a new current year model.

How Much Can I Haggle Isn’t The Price On The Car The Actual Price

No, it’s not. Purchasing a new vehicle is not just a big expense, but an investment, and it is definitely a negotiable endeavor.

Certain purchases are non-negotiable. Like when you walk into Walmart, you cant walk up to the guy and say, “Hey, I know that TV has a $2,000 price tag, but I’ll give you $1,500 for it.” They will simply say No. and let you walk. Same thing at the supermarket, and so on. They know someone will be along in the next minute paying the posted price.

But when you’re spending tens of thousands of dollars on something, you better believe you should be negotiating, and they do not want to let you walk.

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Electric Vehicles Grant Scheme

The Sustainable Energy Authority Ireland offers a grant scheme forbattery-powered electric vehicles and plug-in hybrids meetingspecific standards.

You can get a grant of up to 5,000, depending on the list price ofthe vehicle. However, you cannot get a grant for vehicles with a list price ofless than 14,000.

Your car dealer will apply for the grant for you, and then deduct the grantamount from the total price of your car.

You can also apply for the HomeCharger Grant Scheme, for up to 600 towards the installation costs of ahome charger.

Next Steps: Identify Cars Within Your Budget

How Much Should I Pay for a New Car? What to Pay for a ...

Establishing an auto budget is an important first step in the car-buying process. Once youve landed on a number youre comfortable with, you can move on to identifying makes and models within your price range before heading to the dealership.

Check out our guides to buying a new car or used car for tips on finding a car and financing that fits your needs.

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How Much Do You Care About Your New Car

Are you a car person? While some people buy cars in order to get to and from their workplace, other people buy cars because theyre passionate about driving or like a certain make and model.

The amount you should spend on a car as a percentage of your salary really depends on how much you care about cars. Are you buying a car just to get to and from work or are you buying a vehicle youll use for road trips and weekend drives?

MoneyUnder30 recommends using one of three percentages to work out how much you can afford to spend on a new car based on your needs:

  • If youd like a cheap, affordable and simple vehicle thats good enough to get to and from work, budget about 10 to 15 per cent of your annual income.
  • If youd like a safer, more reliable and more comfortable car for travelling to and from work and on using on weekends, budget about 20 to 25 per cent of your income.
  • If youre a car person and you view a car not just as a means of getting to and from places, but as a lifestyle item, budget about 50 per cent of your annual income.

Sound a little too simple? Dont know which category you fall into? These rule are designed to make budgeting for a car easier, but theyre not set in stone. Read on to work out how much you should spend on your next new car.

You Want A Car Thats Powerful Luxurious Or Fun To Drive

Youre a car person, and your car says more about you than anything you own. If you love cars and want to buy a car that offers more than just the bare essentials, budget around 50% of your income for your vehicle.

While spending half of your annual income on a car might seem like a lot, its not a bad decision if you enjoy driving and view your car as both a functional item thats helpful for your professional life and an enjoyable item that you like owning.

At the average UK salary of £26,000 per year, you can afford a wide range of new or used cars for £13,000. Good cars in this price range include the Ford Focus, which is available from £13,785, and the Peugeot 308, which is available from £13,779.

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Compare Car Loan Offers

The last thing you want is to be pressured into an expensive loan by a dealer when purchasing your car. Car salesmen are masters of the deal, and you may find yourself paying much more than you bargained for, or locked into a loan with unfavorable rates and terms if youre not careful.

To prevent that scenario, you should be sure to come prepared and armed with as much information as you can. Comparing offers from several different lenders can help you to figure out what rates you qualify for, and will allow you to make informed decisions about financing your purchase. Comparing rates from multiple lenders will also help to ensure that youre getting the best rate possible, which can save you a lot of money over the long term.

Loan comparison tools like are a great way to compare different lenders for free online. Monevo lets you look at loan offers from over 30 different banks and lenders in order to find one that works for you and your budget. The process only takes a minute all youll need to input is how much youre looking for, what the loan is for, and what your estimated credit score is. Then youll have a list of lenders organized in an easy-to-read list. Plus, this whole process doesnt affect your credit score!

With loans ranging from $5,000 all the way to $100,000, youll easily be able to find terms that work for your personal needs.

Car Loan Calculator: How Much Car Can I Afford

How Much Under Sticker Price Should You Pay For A New Car? Former Salesman Speaks

David Weliver|

Modified date: Jul. 12, 2021

How much should you spend on a car? Probably not as much as you might think.

You can spend between 10% and 50% of your gross annual income on a car. Thats a big range, we know, so if we had to set a rule, it would be this:

Spend no more than 35% of your pre-tax annual income on a car.

Lower is better, but we recognize personal finance is personal. You might spend more only if you can securely pay cash for your vehicle and the kind of car you drive is important to you. You can explore how much car you can accord in our car affordability calculator below.

You can limit how much money you spend on your car by:

  • Saving up and paying cash.
  • Buying used.

If you do both of these things, youll save thousands of dollars compared to financing or leasing a new vehicle.

That said, sometimes you need transportation before you have cash saved to buy a car. So there are some additional rules to consider when you get an auto loan.

Whats Ahead:

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    Calculating The Monthly Payment

    Once you know how much you can afford to spend, it’s time to work out how much you’d pay for the car you want. New car ads and review sites generally list only the total MSRP , so you’ll need to convert that to a monthly figure. Most carmakers offer a loan calculator on their consumer websites. Simply input data like your potential down payment and interest rate, and the site’s calculator will tell you approximately how much the loan would cost per month.

    We’ve also got a loan calculator available within the Roadshow website. Enter how much you want to pay per month, as well as details like your expected loan length, interest rate and other details, and our calculator will help you figure out how much car you can afford to buy. You can also go the other way with our basic loan calculator, inputting a car’s sale price and other data to figure an approximate monthly payment number.

    Bear in mind that interest rates will vary considerably based on your credit history, down payment, and whether you finance through a carmaker directly, or through your bank or credit union. Rates remain generally low right now, but obviously, this can vary significantly from person to person.

    You can use online calculators like this one from Roadshow to get an idea of how much you can spend per month.

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