Buying a car is still an inherently risky and annoyingly long process, full of mine fields and booby traps that work only one way — in the car dealer’s favor. The Internet, which was once seen as a great equalizer for consumers in the car-buying process, is now a part of those booby traps, and can hurt as much as it helps. First and foremost as a consumer you should never forget that car dealers are much better at selling a car than you are at buying them. Think about it, they sell every day…how often are you in the market for a new car? Your experience is no match, believe me. My husband has been a automotive technician for over 25 years now at large car dealerships in our area. Even as an employee of said dealerships we still have to negotiate and haggle, which is even harder when it comes to dealing with a co-worker who you may consider a friend. Car buying is NOT a fun process by any means.
My first word of advice…buy used if at all possible. You are getting a much better value for your money purchasing a used but in new condition vehicle than buying straight off the lot. Pretty much a no brainer knowing purchasing a new car it depreciates the moment you drive it off of the lot. My husband “flips” cars that he finds on Craigslist, by word of mouth and from used car trade-ins that he purchases from his employer. If they are in good to great condition he will fix what’s wrong with them (yes, he does have the advantage there, but some repairs are very easy it’s just that the previous owner does not want to invest the time, or a few bucks into their vehicle, they’d rather just purchase a new one.) and then sells them for a bit of a profit. But many used vehicles you find for sale directly from the owners don’t have a thing wrong with them.
If you absolutely feel that you MUST buy a new car then do your homework, or deal with a dealership/salesperson you have dealt with in the past. Remind them you have purchased from them previously and you were happy with the deal. They WANT to sell you a car, whatever car on the lot that your heart may desire, you are the one who dictates what you will pay for that new car. Word of caution though…they are going to also try to sell you extended warranties that you may not need. Car manufacturer warranties vary, make sure you know exactly what the manufacturer offers BEFORE you even think about the extended warranty, as well as how long you plan on owning that vehicle. Catch phrases like “invoice pricing, free financing” always have disclaimers. Know what those disclaimers are before you even start to haggle with pricing.
Ok are we ready for a few step by step pointers on buying that new car? Ready or not, here we go.
1. A good credit report can save you a TON of money when it comes to obtaining home mortgage loans, car loans and more! Make sure your score is good! There are a lot of websites out there who offer “Free” credit reports that end up being “FEE” credit reports. You DO NOT need to pay for a credit report. You get one ABSOLUTELY FREE Annually!! The three nationwide credit reporting companies have set up a central website, a toll-free telephone number, and a mailing address through which you can order your free annual report.
To order, visit annualcreditreport.com, call 1-877-322-8228. Or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. Do not contact the three nationwide credit reporting companies individually. They are providing free annual credit reports only through annualcreditreport.com, 1-877-322-8228 or mailing to Annual Credit Report Request Service.
2. After obtaining your credit score contact your local banks and credit unions first about getting an auto loan, if you need one (if you don’t you’re already saving money by not having to pay interest!). This is where that good credit score is also going to save you money. If you have your financing in order ahead of time you are strictly dealing with the actual PRICE of the car with the dealer, not the payment, interest rate, discounts or rebates. Dealers and their financing sales pitches are going to confuse some of the even most knowledgeable consumers. A lot of the times “FREE financing” isn’t so free when you actually get down to the nitty gritty when purchasing your vehicle.
3. DO NOT, I REPEAT DO NOT trade your old car in at the dealer, unless of course you are absolutely certain that you could not sell it for more outright (you know, one of those push, pull or drag it in for X amount of dollars kind of deals). You will be better off selling your car outright and put more money in your pocket doing so. The dealership is purchasing your car on trade to re-sell, they are going to want to make a profit on that vehicle so of course they are not going to give you what you can get selling it outright. There are plenty of individuals out there who are looking for used cars. Refer back to the 1st and 2nd paragraph of this article :) where I advised you to purchase USED. If you don’t have a clue to what the value of your car is do a quick run through on Kelley Blue Book and find out. You might be surprised.
4. As with all product you buy, there’s one only way to arrive at a fair price — to see what the market will bear by comparison shopping. Here, the Internet is still a big help. Once you’ve settled on the car you want, with the options you want, e-mail at least five local dealers and one non-local dealer, and ask for their best out the door price. Best tactic to use when purchasing a car is using the term “OUT THE DOOR PRICING” and stick to it with your salesperson when you get to the dealership…and make sure your salesperson knows that you mean with sales tax, title, licensing and all the bells and whistles. Don’t discuss the MSRP or the invoice price, strictly out the door. What is their absolute bottom line, what amount is that you are going to write the check for. Most salespeople know that you are there to haggle, but remember they still want the sale. You don’t want to waste their time nor yours (egads buying a new car is a time involved process!) If their out the door pricing doesn’t jive with what you can afford to pay or can get a loan for, then shop around more for your best deal. Your job isn’t to screw the dealer by paying less than you *think* the dealer paid for the car. Your job is to get yourself the best price. And about those discounts: Dealers may promise crazy discounts or trade-in values, such as doubling blue book value. Some even promise to give buyers a check for a thousand dollars after they finance a car purchase through what’s known as a negative amortization loan. (Some lenders let buyers borrow up to 120 percent of the value of the car!) However, neg-am loans were a disaster in home buying, and they are a disaster in car purchases, too.
5. Best time to buy a car? When model years are ending and new ones are hitting the lot. Dealers want to get the current year model cars off the lot when the next year models are coming in, as they will most likely make more profit on the new models especially on models that there may be a shortage of as manufacturers have been cutting back on production. Note that if you see rebate offers falling you probably aren’t going to get a better price by waiting to purchase, but if you see HUGE rebates you may find that the dealer may be desperate to sell that model, and sell it now. End of quarter, end of month and end of year are usually the best times to purchase vehicles..it is usually when salespeople and dealerships are trying to hit sales quotas and may be more inclined to cut a better deal to get a car out the door.
6. Rebates. I love rebates…on all products, as well as cars. If you paying the dealer with a check (remember, get that loan from a bank or credit union) this is where the rebate is going to pay off for you. Manufacturers usually offer either rebates OR financing, very rarely will you be able to get both on one vehicle. Since you already have your financing in order (hopefully) you can now take advantage of the rebate as well…and 9 times out of 10 you are getting the better deal if you do the math on financing that $25,000 car at a lower bank rate than the manufacturer rate and you add on the rebate.
7. Give yourself time, don’t feel pressured to purchase THAT DAY you are shopping. I realize that sometimes you don’t have time if your vehicle has croaked and you had it towed into the dealer for one of those drag em’ in and we’ll give you X amount of dollars deals but still, take the time to think, leave if you have to for a few hours. Put the numbers down on paper yourself, salespeople are quick to run through numbers that may leave your brain spinning. Don’t let the excitement of getting a new car overtake your rational thinking by any means. If it does, then you have fallen into the pit that the salespeople want you in. I know that’s where I’d want you if I were selling you a new car. :) And please, remember that the people you are dealing with are still trying to make a living as well. Don’t be rude, obnoxious, or have a fit. If you are having problems with a particular sales person (personality conflicts definitely can happen) see if another salesperson within the dealership you are at can assist you. It always pays back big if you are positive about your purchase than thinking that every salesperson is out there to rip you off.
8. The most important tip I have about purchasing a new car? Don’t go with an empty stomach. Make sure you have eaten a nice hearty meal beforehand…as it takes hours and hours to purchase a car….wearing you down and making you wait seems like a car sales tactic as well. Stay on top of the game and throw a snack in your car too for when you need a breather from talking to the salesperson and run through the numbers yourself.