Description
This article is from the NewlyWed FAQ,
by Vicky Larmour vicky@jifvik.org with numerous contributions by
others.
6.0) Hints and resources for car buying
Notes:
- Contributions taken directly from the group are marked with >.
The contributors have been credited at the end of the contribution.
- This information is strongly biased towards the USA car buying
process - buyers in other countries are welcome to submit their
comments.
- The maintainer and contributors take no responsibility for the
legal accuracy of any of this advice!
>DH and I have bought two new cars so far, and each time we've paid
>many thousands less than sticker price.
>
>I second the recommendation for Edmunds.com. The next time you're
>at a bookstore, you may want to shell out the small amount of
>money for the Edmunds Guide to New Cars book, especially if you're
>not sure yet what you want. A good book to read is
>_Don't_Get_Taken_Every_Time_ by Remar Sutton. Edmunds.com will
>tell you if there are any extra incentives (like manufacturer's
>rebates) on the car you are considering. Don't let the dealer eat
>into those rebates - they're all yours.
>
>Basically, there are two prices associated with a car: one is the
>sticker price, which is the price the dealer wants you to pay. The
>other price is what the dealer actually paid the manufacturer for
>the car (the manufacturer's invoice price). Edmunds tells you the
>latter, for the basic car and for every option available. If you
>go in to the dealership saying that you know the manufacturer's
>invoice price and want to work from that, a good salesman will
>know how to work with you and stop playing games.
>
>If you get more than one dealership competing against each other,
>that's even better. We got our '97 Ranger for just $100 over
>invoice. The saleskid only made $50 commission, but it was better
>than no commission had we bought elsewhere. Be sure to ask the
>salesman for ALL costs involved in buying the car, because they're
>likely to slip in at the last moment junk like "paperwork fees"
>and "advertising fees." There's not much you can do about this,
>except be aware of them up front, get dealerships to compete
>against each other, and be prepared to walk out if you don't like
>what you see.
>
>Don't feel bad about not giving them a "reasonable profit." Within
>the manufacturer's invoice is what's called the "dealer holdback."
>Basically, the dealer pays the mfg invoice, gets the car, sells
>the car, and then the manufacturer returns to the dealer a certain
>amount of money, which is pure profit. They don't like to talk
>about it, but it's there.
>
>Another thing to know about is the "floor plan." Somebody has to
>pay insurance on all those cars on the dealership lot. During the
>first 30 days, the cars are on the "floor plan," where the
>manufacturer pays the insurance. After that, the dealer has to
>insure them, and that eats into profits. So, a dealer may be more
>motivated to sell you a car that they've had on their lot for a
>while, because every day is costing them money.
>
>If you plan to trade in your current car for part of your
>downpayment, you need to be aware of a few things. One thing is
>that since your car is older than 5 years old, the dealer will not
>be able to sell it on their lot. They will have to dump it to
>another level of car sales, at a low price. You'll get more money
>selling it yourself. For example, my old Toyota would have got me
>$500 from the dealer or any other used car lot, but I sold it for
>$2000 in a private sale. If you do plan to trade in your old car
>to avoid the hassle, then keep the negotiations for the old and
>new cars separate. Don't let them play the "allowance" game with
>you. Shop your old car by taking it to a few used car dealerships
>and asking what they would give you for it... then you know the
>real price and won't get snookered by the dealership.
>
>Car salesmen hate to deal with engineers. ;-)
>
>Basically, if a dealership doesn't carry cars like yours on their
>lot, they will have to dump it to the wholesale market, where
>other dealers who =do= sell cars like yours will buy it. Since
>they don't have time to putter around every old car they come
>across, they have set prices for certain groups of cars.
>
>If you want to sell your used car to a dealer, it will be possible
>to get a higher price if you find a car lot that has cars like
>yours. Of course, you still won't get retail price.
>
>It's a convenience thing. If you trade in your old car to the same
>dealer who sells you your new car, you get to simply switch your
>license plates over on the spot. Drive there in the old car, drive
>home in the new car. Convenient, but not frugal. If you sell your
>old car to a different dealer, you have to make arrangements for
>the old and new cars separately, but you still don't have to place
>advertisements and show the old car to lots of different people.
>Of course, if you sell your old car privately, you'll get the most
>money, but it's the most work.
>
>Oh, you should put down at least 40% downpayment for a new car.
>Why? Because the moment you drive it off the lot, it will
>depreciate up to that much. Your car insurance will only cover
>replacement costs. If you owe more than the car is worth, and you
>get in an accident, you'll have to pay off the rest of the loan
>before you can buy another car.
>
>Keep in mind that you don't have to settle for what's on the lot,
>if it's not what you want. You can order the exact car you want,
>and still pay only $200 over the manufacturer's invoice. (I'm
>assuming you're looking at 2002 model year cars. The factories
>won't be making any more 2001 cars right now.) If the dealers
>still have 2001 model year cars on their lots, they must be quite
>desperate to sell them, as it is now costing them money to insure
>them.
>
>Here's another tip: when you are willing to sign those papers
>today, use that as a bargaining tool. Salesmen know that a
>low-commission sale that is guaranteed is better than an iffy
>higher-commission one. When you know what you want and how much
>you're willing to pay for it, say, "If you sell me this car for
>$X, I will buy it right now."
-Jeanne P.
>Several other people have mentioned Edmunds.com -- great resource.
>
>My tips:
>Add up the dealer cost for the car and options you want.
>Reach a total
>Subtract any rebate
>Add in $200 dealer profit
>Smile at your offer amount.
>
>What I did, after arriving at the "I know what I want" moment:
>Called every Subaru dealer in a 40 minute radius, and got a
>salesperson on the line. Told them what I wanted, asked if they
>could get it. Of the 7 I called, 3 said yes. I then asked for
>their fax number.
>
>I wrote an offer letter, detailing out my desires and the price i
>was willing to pay. I told them I was pre-approved from my credit
>union, and once they calculated the out-the-door price with the
>above parameters, I could be down within 1 day with a cashier's
>check.
>
>Two of the three replied. One of them gave me some useful
>technical info about the dealer CD system (it was FM-modulated,
>which was mentioned nowhere in the literature). Since he was also
>the closer dealer, I agreed to buy it from him.
>
>The next day, DH dropped me off at the dealer after work. I signed
>a few papers, got the keys, and was out of there in 45 minutes
>with my new car. After the rebate, I paid $550 *under* dealer
>cost. :^)
>
>I *highly* recommend the fax methodology.
-Sandi
>Last time I bought a new car, I used an Internet service (the name
>of which escapes me right now). This service solicits bids from
>local dealerships. I selected the bid/dealership that I preferred,
>walked in, bought car. I don't think that this method got me the
>absolute rock-bottom price that an expert negotiator could get,
>but it was worth it to me not to have to deal with the negotiating
>process.
-Jeanne J.
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