10 Tips for Regret-Free Car Buying
Spending too much for anything is a downer — especially a car. Here's how to beat the dealer at his own game.
There's really no such thing as a professional car buyer, but there are 268,300 professional car salesmen in the United States, according to the Bureau of Labor Statistics. And while you may go into a dealership shopping for a new car only a half-dozen to a dozen times in your life, these guys are selling that many cars each week, so you can take it for granted that they know more than you about buying a car.
There's no doubt that most salesmen want to get you into a car that you'll be happy to own . It's in their interest to make you as comfortable as possible with the buying experience so that you'll recommend them to your friends, and then come back yourself when it's time to trade in for a new vehicle. But that doesn't mean they're not in the business for the money. It's a car salesman's job to make as much profit on each sale as he can get away with.
The car dealer has the home-field advantage, but with some preparation and savvy negotiating, you can place yourself in a much better bargaining position than the average rube off the street. Here we give you 10 tips for dealing with the savvy car salesman.
Tip 1. Browse with no intention of buying
The first time you go to a dealership, you shouldn't be looking to buy. Tell dealers that you're just looking and don't let them talk you into anything. Better yet, drop by on a day when the dealership is closed. You can roam around the lot and inspect the window stickers with no pressure whatsoever. Take notes on what you like, then return home and do some serious research.
Tip 2. Find out what the dealer paid for vehicle
You can't know the dealer's hand in a casino, but you can in a car dealership. "Knowledge is key," says Michael Royce, a former car salesman who now runs the website Beatthecarsalesman.com. "One of the most important pieces of knowledge a car buyer needs is the invoice price (the dealer's cost) of the car he wants to buy. Fortunately, the Internet makes getting that vital info easy."
Plenty of websites can give you the invoice price of any vehicle (you can search for invoice prices at MSN Autos here), so plan to negotiate up from there, not down from the sticker price. Make sure to get the invoice price that includes all the options you want, not just the base price of the vehicle — the options have a dealer markup, too.
Tip 3. Get an online price quote
In fact, get a few of them. Most dealerships have an online sales department that will get you a quote within two to three days. You can also use services such as Autobytel.com and PriceQuotes.com to cross-shop multiple dealers. You're under no obligation to pay the quoted price, and it can be a potent bargaining chip with other dealerships.
Tip 4. Get your paperwork in order
Print out the invoice price on the exact model you want with an itemized list of the options you're considering. Also, research any manufacturer incentives and rebates that apply to the car you're shopping for, and subtract those from the invoice price. If you are interested in financing, find out your credit score ahead of time; everyone is entitled to one free credit report each year from each of the three major credit reporting agencies. Also, shop a loan by researching the rates at competing banks and local credit unions. Write down all the numbers and bring all the documents to the dealership. If the dealer can't match or beat those rates, tell him you'll finance the car another way.
Tip 5. Forget about leasing
"Dealerships love to push leasing because it is so profitable for them, but leasing is almost always a bad idea," Royce says. "In a lease, you are simply renting the vehicle for a set period of time. Once that term expires, you must return the vehicle to the dealership with nothing to show for your years of payments."
Must-See on MSN
It is articles like this that really make me question why I still look at MSN. Of course the obvious thing about buying a car is that you should de some research before you go and buy a car, I think that you should do research before you buy any big ticket item. But people want to make this way more complicated than it has to be. As a 15 year veteran and current sales manager, I will tell you that one of the best things you can do is be nice and be resonable. A customer that is not a complete hard @#$ will typically have a much more enjoyable buying experience and the dealers are more likely to work with them. I am not a big fan of the negotiate the price then throw in the trade method. i think if you have an idea what you should pay and what your car is worth you are just making things more complicated than they need to be and the same goes for financing check with your local bank or credit union. The odds are if you press hard enough the dealer is going to be able to get much more favorable financing.
The real advice I would give to people is buy a car that you can afford. If you have to finance more than 60 months you probably are looking at too much car, unless you can get 0 percent. The other thing is dont buy a new car just because you neighbor did. As a dealer we love it but it just doent make financial sense. There was a study that showed if you keep your cars for 10 years versus 5 it will save you 250 k over you life. But if you need to keep up with the Joneses then leasing really may be a good option as long as you dont drive more than the allowed miles. And that is a firm rule dont lease if you think you might change your driving habits because other than a mileage penalty that is the only drawback to leasing for people that need to trade frequently. But if you do lease under no circumstance should you try to trade early unless your vehicle is worth more than you owe and that very rarely happens.
I know that I am writing this for no specific reason since no one will read it but it is a good forum to vent. i get so sick of MSN's need to bash car salespeople like we are all bad. Yes, there are some that are bad but for the most part we are hard working people that put in 60 to 70 hours a week to feed our families. I have to to say there are more bad customers than salespeople. We get far more customers that lie to us. We are so regulated that it is not wirth it to be dishonest. It will catch up to you in the long run. And one last thing as far as the arbitration clause that people were talking about, most dealers that have it will not waive it. If you dont want to sign it they wont sell you a car. Oh and I laugh when people say that we have "fake" invoices. We have an invoice price that includes holdback shipping and for some advertising. I work at a Hyundai dealership and let me tell you. We really don't have that much markup in most of our vehicles and due to demand we sell most of them for MSRP. There are other dealers in our area that even mark them up above MSRP and have a large DOC fee. The point I am trying to make is before you embarass yourself by making a ridiculous offer consider available inventory. If there are not very many of the vehicle you are looking for out there the odds of you getting a big discount is slim and none. And if you are looking at a car that has big incentives you probably need to ask yourself if that is really the car that you want anyway. They are incentivized for a reason, THEY ARE NOT SELLING ENOUGH. If they have big incentives that means is is going to have a horrible resale value. Use common sense when buying a car, don't buy on emotion, and for gods sake know what you are signing because it is not our fault if you don't read the fine print!! I could go on forever hell maybe I should write a book.
So buying a vehicle is something you only do a few times (I believe the article said 10-12) in your lifetime, yet there seems to be a new article about the evils of automotive salespeople and car dealerships at least once a month. In my experience, the markup between invoice and MSRP of a new vehicle is around 5-6%, yet the markup between what a jewelry store (for example) pays for its inventory and the price at which it sells the item to the customer can be 200-300% or more! Why do we not see articles once a month exposing the "evils" of jewelry stores?
I recently was in the market for a wedding band and had selected a tungsten carbide item for its durability and value. Upon pricing similar items at various jewelry and department stores, the price ranged anywhere from $180-300. I found the identical item on Amazon.com for less than $30 INCLUDING SHIPPING!! That is a markup of 600-1,000%!! Most of us only shop for big-ticket jewelry items a few times in our lives as well .. so where is the concern for this group of consumers?
The best advice a consumer can receive when making any purchase is to shop around, stay within your budget and pay cash as often as possible. When negotiating the purchase of any big-ticket item, remember to be reasonable and keep in mind that the stores/dealerships need to make a profit to pay their employees just like your employer does!!
This article is crap along with the many others that they write about the automotive industry. The easiest way to get the best deal and have the best car buying experience is to do your research and know what you want. Yes car salseman make money by selling you a vehicle but so do retailers, real estate agents, insurance agents and every other buisness that takes money for a service or product. There isnt a big secret to the automotive industry that requires a new article every month about how car salesman are trying to take tour money and screw you over. This is our livleyhood and we support our families on this so called deceptive carreer. If you do all of your reasearch before you come out theres not bad deal anywhere. The last thing is warrantys from dealerships arent bad especially on high end cars because if they cost alot to buy they cost alot to fix and if you would put one on a $500 compter why wouldnt you out one on a $25000 car.
Asking Price is a fair price if you expect great service after the sale. If you want to build a relationship with a dealer that can make car buying easy for you and your family then don't try and play these games that some dropout that left the business wants to exploit you with.
Dealers need to make a fair profit to treat everyone fair after the deal is done, They price aggressively to begin with in order to compete in the paper and on the internet with other dealers. Just remember when you go to buy a car that it is a human your dealing with that in almost all instances just wants to help you with your purchase.
If this guy understood the car business and how it affects the economy, maybe he wouldn't be trying to slit it's throat for his personal gain.