All of us at some point in our lives have bought, or are planning on buying, an automobile. For many, however, this is not a very pleasant experience. This comes as no surprise when, according to Forbes, “Of the top 10 industries that received the most consumer complaints last year, three were auto related”. It doesn’t have to be like this, though, and in today’s show we explain how to make the most of your car buying experience.
First, if you are planning on purchasing a new car, there are 4 very straight-forward steps you can take to “win the car-buying game”:
- Know what you want – Do your research and determine which car you want including which options are important to you. You can use Consumer Reports and Edmunds to help with model specific research. Once you settle on a car, take a test drive, but promise yourself that once you test drive the vehicle YOU WON’T BUY THE CAR TODAY!
- Go to the manufacturer’s website and locate the exact cars you want – Find at least two cars but hopefully three to five. Find all the dealers within 30-60 miles of your house and use Yahoo or Google to determine their zipcodes. By using each dealer’s zipcode, you can see what they have on their lot. Most manufacturers have their inventory listed.
- Figure out what to pay – Start with CarsDirect to see what the MSRP and invoice prices are, including the options that you consider must-haves. The site will also provide you with a tentative price that a dealer is willing to sell at through the internet. Next, go to Edmunds and click the “Forums” button on the top of the page. From the “Forums” main page you can browse discussion by vehicle by first choosing the manufacturer, then the model, and finally choosing the discussion topic titled “Prices and Buying Experience”. From here there will be hundreds of postings from all over listing your model of car and what others have paid (this is valuable information because you are seeing what others in your area are paying for the cars).
- Call the dealership directly and ask to speak with the sales manager – Let whomever answers the phone know that they have the car you want on their lot and that you are ready to buy. Also tell them that you need rock bottom price because you have located 2-3 other cars of the exact same model at other dealerships and you are showing up with a check to whichever dealership has the best price.
As you listen to the show, we also explain some of the common car dealer scams and tips to avoid them. Here is the full article from Forbes. Some of the scams we explain include:
- The Ambush
- The Confiscation
- The Bum Rush
- The Buried Bill
- The Bait and Switch
If you enter into a car buying situation already knowing these scams, they become very obvious and easy to avoid.
To close out the show, we share an article from U.S. News explaining why now may or may not be a good time to start buying American. We explain our thoughts on this as well as some things you may want to think about.
Peter says
May 8, 2010 at 9:55 amThe single best thing you can do to protect yourself is to buy the car (or at least do all the legwork) before you absolutely need to. If you walk in there and you need to buy a car because something happened to your current one and you have no way to get to work on Monday, you will never be able to get yourself a good deal.
Knowing that you can always get back in the car you drove there in and go home is the most powerful bargaining chip you have.
I would disagree a little about the “don’t negotiate on-site” recommendation. For many people that probably is good advice, they will get too emotionally involved. For those of us who can be cold and calculating and are willing to spend the time, doing it on-site has the benefit of them not wanting to see you leave. If you do it on-site and make it take a long time, you have then also tied up so much of their time (that they weren’t using to sell cars to other customers) that they are going to be more likely to give you what you want then to see you leave and have wasted a few hours of their time. On the phone, you can ask for what you want, have them say “no” and be done with the whole thing in 15 minutes. They don’t have as much invested either so it’s easier to let you go.
My wife and I once spent almost an entire day at a dealership waiting for them to give us what we wanted. We even had to take a break for lunch. But in the end, we got what we wanted by simply sitting in the sales office and making them go through the back and forth game until they gave in. We were non-emotional and very patient. After several hours it was worth it to them to not see us walk out and go home without a car. Granted, that wasted an entire day of our time too, but if you keep your car a long time, then giving up one day of your life every 10 years in order to save thousands of dollars isn’t a bad trade off.
David Hutton says
May 31, 2010 at 11:53 amWell I am one that only buys a car every 10 year or so. My current car is a 2003 that I purchased new and has just over 100,000 miles on it. I might keep it another 7 years!! Everyone says you can save money by buying a used car but I find that I can commoditize a new car and can negotiate better for it than a used car. I would agree with you on your podcast except for a couple of things.
1. Know what you want. – I would agree with this. Go around and test drive and check out the different models and see what you like and don’t like.
2. Once you know what you want you can use the web to find all of the dealerships that sell the type of car you want. For example I purchased a Honda Accord and I obtained the Name and FAX numbers for all the dealerships that I was willing to drive – I figured I could drive up to 200 miles for a deal.
3. I sent a FAX to all of the dealerships telling them the make and model that I wanted down to the floor mats. I directed them to send their price (that being a drive off the lot price to include any dealer/handling fees) to a email address. Once I got replies from all of them, I responded to all of thanking them for their prices but that I had obtained a lower price and telling them what I had been bid. A couple responded back with even lower prices.
4. I took the lowest price and since I am a AAA member I called their car buying service. I understand that there are warehouse clubs with the same service that you can check out. He gave me a price and when I told him I had already beat that price he did some homework and was able to beat it by $50. Not much but everything helps. AAA also has a service where you can pick up the car from the AAA office rather than the dealership.
I have done this FAX pricing a couple of times, I find that these often get sent to the fleet manager and that is where you are going to get the best price. I came across the site http://www.fightingchance.com/ and he wrote a book that is out of print but I found it at my local library – Car buyer’s and leaser’s negotiating bible W. James Bragg ISBN 0375720677 where he talks about what he calls the FAX attack. Doing about the same thing as what I did. I think that the book is out of print but check your library.
Using the FAX and email allows for you to negotiate without emotional involvement. It also eliminates the annoying phone calls. I agree that you should have your financing lined up before you go. I had an interest rate from my credit union but I choose the dealer financing because at the time Honda was doing a lower interest rate special.
From time to time I stop at a dealership lot but I really get annoyed at the games that they play. I like being able to stand back and just let them bid on the price that they are going to sell me the car for. It puts me in control not them.
Have fun.
David