How I saved $6,000 on a car purchase?

My girlfriend selected a car that she wanted to buy for $42,000. I asked her if she can wait for a few days, 1 week later I bought the same car at $36,000.

All I did was follow a few simple steps of negotiation. Listed below are the steps you can also follow to save huge amounts of money when you buy a car (I saved $6,000 on a car purchase using these simple steps).

Step 1: Document your requirements exactly 

I documented exactly what I needed – Make, model, color, accessories. I listed everything so that there is no discussion required with any car dealer.

This is very important. Time is of essence – visiting any dealership will take a couple of hours, and however determined you are you will not be able to do more than 2-3 in an entire day.

While on the internet you can easily reach out to 15 – 20 within an hour.

Step 2: Find all the dealers in your area

Again, internet is your friend here. Go online and search all dealers in your neighborhood.

I suggest to think of neighborhood as something really broad – would you not drive 300 miles if you can save $2,000? If yes, then search for dealers in your city and neighboring cities.

Caste your net wide – you do not have to drive 300 miles later but it does not harm to know what the price difference is. May be the price difference will be enough to warrant a drive.

The only thing to keep in mind is: stay within your state. Handling out of state registrations might be something you would like to avoid.

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Why did I refinance my car loans today

I will explain my entire thought process behind the decision to refinance my cars. I will start by telling you the reasons why I refinanced and everything that was going on in my mind while I was talking to the credit union for an hour.


I bought both the cars  (a Mercedes and a Ford) in 2013. I financed both of them with the manufacturer’s preferred financial institutions because both of them gave me an incentive via a discount on the purchase price.

I had very limited credit history (just one credit card and nothing else, that too was just about 2 years old). The rates that I received were upwards of 9% for one car and upwards of 6% on the other.

Soon afterwards, I refinanced both the car loans with my local credit union. With the exact same credit history (limited), I was able to get an interest rate of 3.89%. They dropped it a quarter point further (0.25% or 25 basis points) because I agreed to take a credit card (this was my second credit card ever).

I made all the payments on time for these 2.5 years. As expected my credit score improved tremendously.

Why did I decide to refinance today

  1. Interest rate of 3.64% was too high. I knew I will get the best rate (or very close) available given my very good credit history now.
  2. I wanted cash out of my ‘equity in the car’ – more on that later in this post
  3. I do not foresee any large purchase on credit coming up soon (like a mortgage), so a little temporary drop in the credit score (by an additional inquiry today) does not bother me.

Here is how the process went

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