9 Simple Steps to Pain-Free Car Buying
Dec 20 '06
The Bottom Line Use these 9 simple steps to eliminate dealer games and get yourself the best car deal possible.
Based on recently adding a new 2007 Honda Element LX to the family, here is a summary of my new car buying tips. They turned what is often a painful experience into a simple and straightforward process. With the power of the internet, there is no reason to stress yourself out and subject yourself to dealership games. Instead, do your research beforehand, follow these tips, and you might actually have fun!
Most of these tips are generic and can apply to any new car purchase, but some are a little more relevant in some states rather than others (for example, documentation fees are capped in some states, while they can run several hundred dollars in others):
1) Once you have narrowed down your choices for the type of vehicle that you want to purchase and are ready for a test drive, consider doing this via a car rental rather than visiting a dealership.
My experience: Because I was hoping to purchase our new Element at the local dealership, I went for a test drive there. It wasn't worth the hassle of trying to give them the sale. After I got my online quotes (which I'll discuss later in these tips), they said they would match the lowest one, but backed down when we showed up to make the purchase. I felt bad for the salesman who took his time to help us, and I really wanted to give him the business. But I'm not going to pay over $300 more, especially when I am told one thing on the phone and another in person.
Renting the car for a day would have eliminated that whole situation. Also, it would have allowed me to test the Element under real-world conditions vs. the limitations of a brief drive. The cost of the rental is minimal compared to the savings you can gain as an informed consumer/negotiator.
2) Before sending out your quote requests, call the dealerships that you plan to contact and ask them: a) Do they charge a documentation fee, and if so, how much is it? and b) Do they require you to sign an arbitration agreement? Make a note of the doc fees and their arbitration policy so you can address those items when you make your quote request.
Note: The documentation fee is different than the destination charge. The destination fee is a legitimate cost that the dealer will not waive; it will be listed on new-car websites as a part of the overall price.
In contrast, the documentation fee supposedly covers the dealership's cost of processing the paperwork. In reality, it's like having your local grocery store charge you a $20 "receipt printing and preparation fee." While the doc fee is negligible in some states, it is totally unregulated in others. For example, in the southeast it's not uncommon to run into doc fees of $500 and more! The salesman won't mention it until you get into the sales office and are in the middle of signing the paperwork. The doc fee will be pre-printed to give you the impression that it's not negotiable. Don't fall for it! They might tell you that they are required to charge the fee under state law; yes, some states do require that they charge the same fee to everyone, but you can insist that they then substract the fee from the price of the car.
An arbitration agreement effectively eliminates your right to sue if something should go wrong. Be very, very leery of signing away that right!
3) Research the car on several websites, not just one. Visit Edmunds, Kelly Blue Book, etc. and see if their invoice price, destination charges, and option costs agree. If they don't, make sure that you are comparing apples to apples (for example, is the lower priced vehicle a manual transmission vs. automatic?). Also, find out the manufacturer's holdback, and search carefully for any factory-to-dealer incentives. Unlike rebates, these are usually not disclosed by dealerships.
You won't use the holdback in determining your offer, but it gives you an idea of how much profit the dealer would make, even if he sold you the car below invoice.
Be leery of using numbers like Edmunds True Market Value, which I have found to generally be too high to represent a really good deal. Instead, visit discussion forums where people post the prices they are getting in specific areas of the country. On my Honda, Edmunds TMV was well over invoice. However, I got it for $250 below invoice, and that was with no factory to dealer incentives or rebates. If I had gone with the Edmunds price, I would have overpayed by several hundred dollars.
4) Formulate your offer. First, decide on a fair price if there were no incentives. People sometimes start at invoice, but you can often buy the vehicle below that price. That is particularly true if it's the end of the model year or if you are looking at an unpopular or slow-moving car. But those factors don't have to be present...as I mentioned before, we got our 2007 Element for $250 below invoice in December, 2007. I suspect that the holiday season (i.e. slow car buying season) had something to do with that.
Granted, a dealer has a right to expect some profit. Otherwise, he wouldn't be in business for long. But sometimes he will accept a deal with little or no profit just to move a unit. For example, he may need to move just one more car to qualify for a manufacturer's bonus of several thousand dollars. If you send your offer at just the right time, you might be able to get a whizz-bang deal, and even though he doesn't make any money off of you, he gets the bonus...a win-win situation for everyone.
When you have decided on a fair price, deduct any rebates or incentives. DO NOT use those items to determine your price; subtract them after doing so.
I recommend coming up with a price on the low end; you can always go up, and a dealer can always make a counter offer, but once you have tossed out a number, you can't easily go down. I recommend offering a price below invoice to start.
5) Prepare an email to send to dealers. It should contain the following:
-Your offer (the fair price you determined, minus any rebates/incentives.
-Any special stipulations. For example, I made it clear that I would not pay a documentation fee, advertising fee, prep fee, or any other type of "additional dealer markup." As I warned above, don't let them insist that they have to charge the doc. fee to everyone. Make it clear that you expect them to deduct it from the price of the car if state law forces them to show it on the paperwork. If you are not comfortable signing an arbitration agreement, state that in your document too.
In my case, I also noted that I would not pay for any options such as pinstriping or mudflaps. Some dealers put on a whole package of inflated-cost extras the moment a car arrives on the lot. At the dealer where we did our test drive, each car had something like $500 worth of extras that probably cost the dealer way less than $100. The pinstripe was $199...that's for a sticker that takes maybe 10 minutes to apply. If the dealer put those items on the car, that's HIS problem, not mine. I do not take them into consideration; they can just be thrown in or I'll buy my vehicle elsewhere.
Include your telephone number and a timeframe for your purchase in the email. That will show the dealers that you are serious and not just sending out requests for the heck of it, as some people actually do. The internet is a boon for car buyers, but it also opens the door for a lot of time wasters. You can't blame a dealer for refusing to answer potentially dubious requests, so make sure that your offer reflects the fact that you have done your research and that you are serious and ready to buy a car.
Here is an example an email request for quote. Let's assume that there is a $200 dealer incentive on the vehicle:
Dear Internet Sales Manager:
I am planning to purchase a new automtic transmission 2007 Family Truckster QX with no options within the next two weeks. Blue is my preferred color but not a necessity.
I am aware that the invoice cost is $18,900 including the destination charge. However, my research shows that people in our area are paying below invoice. Therefore, I am willing to pay $18,500 for this vehicle ($18,700 is my offer, plus an additional $200 subtracted due to the current $200 incentive).
I am not willing to pay a documentation fee or any other additional mark-ups. The only additional costs I am willing to pay are the 7% sales tax and the actual cost of license/title transfer. I understand that you have a doc. fee of $300 that must be charged to all customers. Therefore, I would expect the paperwork to reflect a vehicle price of $18,200, bringing it to $18,500 when the doc. fee is added.
Also, please note that I am not willing to sign an arbitration agreement as a condition of the sale.
If you are willing to sell me the vehicle at these terms and this price, please contact me at 312-555-0000. If you cannot meet this price, please send me your lowest offer. I am getting quotes from multiple dealers, and if none match my offer, then I will consider the lowest alternate offer.
6) Log your responses over the next two to three days. If anyone makes a phone offer, request that they follow up with an email so you have a copy in writing.
7) Once you have determined your lowest quote, decide if you are willing to pay it. Then, you can either purchase the car from that dealer or see if another will match it. The only compelling reason to look for a match is if it's more convenient to buy from a dealer close to home or if they offer other amenities (for example, one dealer I spoke with offers an extension of the manufacturer's powertrain warranty and a year of free oil changes).
But be aware that some dealers will offer to match just to get you in the door, then back out when you arrive. It may not be worth the hassle.
8) Buy your new car!!! Just make sure that the "out the door" price on the paperwork matches your quote. If not, be prepared to walk if necessary. Based on the quote you sent out, the only additional items besides the agreed-up price should be the actual tax and license/registration fees.
9) Be aware that the finance/insurance manager is really another salesman who will try to wring more profit out of you. It's up to you to decide whether you buy an extended warranty, maintenance plan, window etching (BIG scam) or any of the other items that he or she will try to talk you into. Just remember, those are very high mark-up items, and most (if not all) are not a good value.
I advise that you have your own financing already worked out through a credit union or other means. Car dealers typically gain profit by adding to the interest rate that you are given when you arrange financing through them. Eliminate that pitfall by walking in with a check from your own bank or credit union. The exception to this rule is when the manufacturer is running an unbeatable special, such as 0 percent financing.
The above steps don't address the issue of trade-ins and financing. A trade-in shouldn't affect your price negotiations, but be very, very careful because the dealer could try to make a bundle by ripping you off on the trade. You're usually better off selling the old car on your own.
I hope that these tips will be helpful. This method worked so well for me that it's the only way I will ever buy a car again! Why subject yourself to the stressful old-fashioned way? Let the internet make it a quick and painless process.
 |
|
|
|
|
|
|
Epinions.com ID:
inkkognito
|
 - Top 500 |
|
Member: Barb
Reviews written: 201
Trusted by: 58 members
About Me:
I live to travel (and to ride my horses). Visit my website: www.disneycruiser.com
|
|
|
© 1999-2009 Shopping.com, Inc.