Quick Guide To Buying A New Car At The Best Price
Entire books have been devoted to the art of purchasing a new car. This is a quick guide to some of the things you can do to save yourself hundreds of dollars.
Step One – Decide Which Car You Want To Buy
In order to decide what kind of new car you want, you have to prioritize what’s important to you. Since this is subjective, the following list should be put in the order of what you feel are your most important concerns and needs:
Usage:
1) How many people will you be transporting with this car? This will determine what size vehicle you will need. A single person may be comfortable with a two-seater sports car or mini-car, while a large family may need a van or SUV.
2) What will you use it for? If you’re just going to use it to commute to work or school or shopping, a car will do. If you’re planning on hauling lumber in it or other large materials, or attaching a boat trailer to it, you should probably consider buying a truck, van, or SUV.
Initial Cost of the Car:
1) What is your budget for this purchase?
2) How are you going to buy this car?
a) Using your existing car for a trade-in, either paying the balance in full or taking out a car loan.
b) No trade-in, paying in full or taking out a car loan.
c) Selling your existing car and paying in full or taking out a car loan for the new car.
3) Taking out a loan – what interest will you have to pay? What term will you be
paying? The real cost of your purchase is going to include your interest payments
as well as the purchase price of the car.
Operating Expense & Value of the Vehicle:
1) What will it cost to use this vehicle?
a) Fuel – consider miles per gallon rating of the vehicle.
b) Warranty – what is covered and for how long?
c) Insurance – Get a quote from your insurance agent for the vehicle.
2) How well does this model car traditionally hold its value once you drive it off the lot?
Safety Of The Car:
1) How well did this car do in safety tests?
2) What special safety features does the car have (e.g., air-bags, rear-view camera, roll-bars, etc.)?
Step Two – Do Your Homework, Learn All You Can About The Car
Research:
1) What is the advertised price of this car?
a) Check newspaper ads
b) Check for internet specials
c) What is the approximate dealer invoice of this car? This will give you an idea of how much room the dealer actually has to discount the manufacturer’s sticker price.
2) Resources you can use to determine the value of your used car and dealer cost
of the new car, including reviews of the new car:
a) Kelly Blue Book
http://www.kbb.com/?trid=2&psid=2-1779-57098-5157-89-6&siomid=SI_130504085_50600665011_1&sissr=1
This will give you estimated values of your used car for two possibilities:
1) If you use it as a trade-in
2) If you sell it yourself
b) Consumer Reports
http://www.consumerreports.org/cro/index.htm
They usually put out a list of dealer costs per vehicle as well as suggestions for getting the best deals on used and new cars.
c) Edmunds
http://www.edmunds.com/index.html
Edmunds has car reviews, buying tips, quotes on insurance and loans. They also have some excellent exposes on salesmen’s tricks for closing the deal, and many useful tools for determing what kind of car you want and its true value.
Step Three – Getting The Best Deal Once You’re Ready To Buy The Car
Variables That Will Come Into Play During Negotiations:
1) The Trade-In – Don’t tell the salesman you are going to trade in a car until after you have made your best deal on the new car. How much they give you for the trade-in obviously will affect how much you end up paying for the new car.
2) Comparison Shop – Go to multiple dealers and get their best quote on the car you want to buy. If need be, go back and forth between them and let them know you got a better quote from someone else, and see if they can beat it.
3) Timing:
a) Traditionally the end of the month is the best time to purchase a new car because it’s the last chance for the salesmen to reach their quotas for incentives and performance bonuses.
b) If you’re asked how soon you plan on buying the car, tell them “Today” even if it’s not true. If they think they can close the deal right then, they will be more willing to come down to their bottom line.
4) Deal From A Position Of Strength:
a) Let them know you’ve done your homework on this car and the cost of it. I once purchased a van in California and had a print-out with me that I got from Consumer Reports that listed the Dealer Invoice on that vehicle.
b) Don’t be afraid to get up and walk away if the negotiations are not going as you hoped they would. You can always come back later.
c) Remember we’re in a weak economy and auto dealers NEED your purchase. Times are tough for everyone.
d) You can get the best deal on a car that is on the lot as opposed to ordering one that hasn’t been made yet. The dealer wants to move his exisiting inventory.
e) Know that manufacturers often give dealers incentives for selling their cars that add to the dealer’s profits that don’t show up on the dealer’s invoice.
5) Miscellaneous Tips:
a) Psychology – The salesman is going to leave you at various times during the negotiations to consult with his sales manager. He will purposely leave you waiting for 10 or more minutes to set the stage. When I buy a new car I tell the salesman not to bother with the artificial delay. I let him know I am aware of the game and don’t want to play it that way. This usually disarms them and they stop going to the back room to smoke while you worry about getting the best deal.
b) Run your own mind game on the salesman – Pull out your check book or cash, and say to the saleman, “I’m ready to write the check right now if you will sell me this car for (state the price you want).” At that point they may go to their sales manager and you may get what you want, or at the very least, another reduction. If you don’t, you may have to get up and walk away, rather than pay more than you want.
c) Be mindful of some of the ways the dealer may try to pad his profit margin:
1) You may make the best imaginable deal, but then when you go to finance the car, the dealer presents you with unfavorable interest rates that will add to the real cost of the car.
2) Beware of dealer add-ons that can dramatically raise the price on the car, such as accessory packages you may not want or need.
3) Understand that this may be an uncomfortable process, but the better prepared you are both in information and strategy, the better deal you will get. Don’t let the process overwhelm or scare you.
d) Keep in mind it doesn’t hurt to ask for extras. I usually wait until I think they’ve given me their best deal, then I pull out my checkbook, but this time I add, “I think we’re nearly there if you can throw in the light package” (or some extra accessory). The best last minute add-on I ever got was a free 3 year extended warranty.
Buying a car and getting the best deal isn’t for the faint of heart. My wife does not enjoy watching me negotiate because I do things that make a lot of people uncomfortable. To me it’s a game, and the object is to get the best deal! You can’t be over-prepared for this, but you have to have the stomach to counter the tricks they use on you, and pull a few of your own.
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