Wednesday, December 13, 2006

Tips on Buying a Car

Since we just went through the process of buying a new used car, these ideas are fresh in my mind and I thought I would share with you...Some people are extremely intimidated by the process, but now, you don't have to be!

BEFORE YOU GO

Have an "idea" of what you want vs what you need. For example, you know that you want an SUV and it must have 4 wheel drive and a V6. But, are you flexible on the options? Do you need leather seats? If it doesn't have power windows and locks will you be happy?

Have an "idea" of what you want to spend. Use on of the many free payment calculators available online and know what you can afford. Play around with different terms, different interest rates and learn how the extra $1000 in taxes, dealer fees, registration, etc is going to reflect in the payments. Consider pre-arranging financing so you can go in with a check. Just be prepared that you do lose some bargaining in the price with that option, because dealers make money by obtaining financing. It's called commission and they don't like when you bring your own money to the table.

Do your research. Again, with the internet, information is available and it's fast and free. Compare different models within the same make to see what Limited vs LX really means. Compare similar makes to determine if perhaps the slightly less popular make can save you some cash.

AT THE DEALERSHIP

So, you woke up this morning, checked out your favorite car buying website, and Whammo! There. it. is. It's what you wanted and more, it's in your price range and it's even your favorite color!

1. Be prepared to be there for hours. Bring a bottle of water. Crayons for the kids. Some aspirin. A flask. Whatever you need.
2. Go early. Once the dealership starts getting busy, everything gets backed up from the finance desk to the detailer.
3. Eat. It's hard to stay focused on the task at hand on an empty stomach.
4. Find a salesperson you like. If you're a young couple and the old man makes you feel inferior at "hello", then tell him you're just looking and wait for the next guy. Better yet, walk right into the dealership to the big desk in the front and ask for the sales manager. Explain to them that you're here to buy a car and can they match you up with the right person?
5. Drive the vehicle. I know it sounds silly, but before you get wrapped up in details, make sure you like it. It may look great on paper, but the minute you sit down, your knees start to hurt.


FINANCE

I know a lot of people who hate this part of buying a car. But, if you are prepared, it can be fun. By this point, you've done your research, you know what you can afford, you know what you would be happy paying, you know what the vehicle is worth.

Nowadays, its very common that negations skip over the salesperson and go right to the finance person. They will ALWAYS present you with a full price scenario even though no one in their right mind is paying full price. Take that opportunity to look at what fees they are charging and ask them what fees are negotiable. For example, title fees. Most dealerships finance it in. Now, why would you finance $100 for 5 years when you could pay it out of pocket today or better yet, in 30 days when your tag comes in?

NOTE: IF THE FINANCE PERSON WILL NOT SHOW YOU WHAT THE FEES ARE AND GIVE YOU A CLEAR EXPLANATION OF EXACTLY WHAT YOU ARE PAYING INCLUDING THE INTEREST RATE, THE VALUE OF YOUR TRADE, WHAT YOU ARE PAYING FOR THE NEW VEHICLE, ETC - DO NOT BUY THE VEHICLE.

Now you have a clear picture of what this vehicle is going to cost you. It's time to start thinking about negotiations. Save everyone some time and don't play games. Take a few minutes to talk it over with your partner or to think it out without the salesperson/finance person staring your down. Take your old car around the block if you have to just to get some space. Figure out what you would be happy paying. Not necessarily just in monthly payments, but overall. Once you have that magic number - tell them. Don't wiggle. If they can do it, they will. If they can't they won't and then you can decide if their best offer is good enough. Here is a sample.

Asking Price: 11,900
Trade Value: (1,500) *negative equity - this is not good, but it happens
Dealer Fee: 600
Taxes: 700
Title Fee: 140
TOTAL AMOUNT: 14,700 plus $1200 cash down

After your private moment, you decide that since Christmas is just days away, you would really like to save your cash, and you really hadn't intended on the value of your trade to be so far below what you owe. So, you counteroffer:

Price: 11,000
Trade Value: (1,500)
Dealer Fee: 600
Taxes: 700
TOTAL AMOUNT: 13,800 plus title COD

Notice - this is a difference of $2100, or approximately a 15% reduction.

As mentioned above, if the dealer can do it, he will, if not, he won't.

The moral of the story is to know what you want to spend, and don't be afraid to voice your expectations and possibly even leave without the new car. Wouldn't you rather be unhappy for a day then the next 5 years?

4 Comments:

Blogger Kristen said...

When its time for me to get a car will you come do it for me please?

7:52 AM  
Blogger MrsTito said...

Sure! How's Dec 29th? Best time of the year to buy is NOW

8:16 AM  
Anonymous Anonymous said...

Sound advice! However, preparing in advance like you said may not prevent you from getting scammed. Car salesmen can use a range of techniques on you once they've figured out what category of customer you are. Read this car dealer scam news feed. Car salesmen earned their reputation for a reason.

3:43 PM  
Anonymous Anonymous said...

It's fairly accurate except the part stating "If they can do it, they will." They won't, at least not right away. Keep in mind that they are trying to make money, just as you are trying to save it. Every new car that I have bought has been lower than "their best price" and has been at or even below deals that they initially "just couldn't do." I also have received both cash back AND extremely low interests rates instead of one or the other.
So when you're at the dealership--you're the boss. You call the shots, you make the deal. They just do the paper work and hand you the keys. If they don't perform to your standards, you fire them, and off you go to the next car lot. I agree that it can actually be fun. I enjoy watching the salesman/financial team sweat.

12:44 PM  

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