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."
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As a 12 year veteran car salesman myself I have to say for the most part this article was pretty accurate and helpful to the car buyer with the lone exception being where Royce states that, "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." this couldn't be farther from the truth and very bad advise and here's why.
When you lease a new vehicle you are not "renting the car" you are simply paying for the portion of the vehicle that you are using with a number of options available to you at the lease end. In leasing your payments are based on the vehicles depreciated value with the residual value being held in reserve with that residual being a guaranteed buyout number for the lease at lease end meaning the buyer knows exactly what they can buy that car for at lesse end if in fact that is one of the options they choose, the other real benefit to leasing a car is you will NEVER find yourself upside down again and in most cases your leased car has equity and can be used as a trade in toward your next lease.
Leasing a car simply put is the lowest possible cost available when purchasing a new vehicle and the biggest problem with the stigma that these programs have received through the years is uneducated sales people that do not truly know how to present it so people understand how leasing really works.
"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."
If you are going to write an article or bring in a so-called "expert", make sure your information is accurate. There literally are hundreds or professional car-buyers and car buying services out there.
I spent 12 years in the automotive industry as both a salesperson and Finance Director and find this information laughable.
I find it laughable that the "SO-CALLED""Auto Experts" are nothing but ex car business employees that couldn't perform the job in the first place. The Automotive business is the most over regulated business in the United States, with it our country's economy would crash ( ie Chrysler, GM bailout), yet we constantly want to bite the hand that feeds us. I have a question for you Sam, with out the auto industry who would you "WATCHDOG?"
FYI Autobytel has not been a useful tool in quite some time, or at least in the Southern United States. Nice job checking you sources.
Generally, this is a good article, and that is refreshing to read something that isn't just a bunch of advertising aphorisms for a change. Here's my own favorite advice.
1. Seriously consider buying used instead of new. Let some other sucker take the initial depreciation. Ten feet after you drive off the dealer's lot, your new car loses 15-20% of its value. Ouch! Rental fleet vehicles are typically driven more gingerly than you might expect and receive regular maintenance. Search on line for sales by Hertz, Avis, etc.
2. As the author said, don't lease. It may seem like you can get more car for your dollar when you lease. However, at the end of the lease, you have nothing. If you bought your car, you still have your car. Buy a car you can afford to pay off with a three year loan.
3. Most dealer add-ons such as glass etching, paint sealing and fabric protector are worthless, do-it-yourself, or something you can get at a car detailing shop for less money.
4. You don't have to agree to binding arbitration in your purchase contract. You should ask your attorney exactly what you need to do to cross out the offending clause in the sales contract if you don't agree. If you do agree to arbitration, the dealer gets to pick the arbitrator, and historically arbitrators side with the dealer 85-90% of the time. If the dealer doesn't agree to strike out the clause, then find a different dealer.
5. The dealer may hand you a sealed envelope - it probably contains the portion of the contract that has the lopsided arbitration agreement. Don't be shy. Open all paperwork and read everything in the presence of the sales agent. The dealer may have already wasted hours of your time, but don't be lazy now, or you may regret it if you have problem down the road.
6. You don't have to pay for the dealer's cooperative regional or other advertising expenses any more than you have to pay for the dealer's phone bill or the water in their bathroom. All these are costs of doing business and the dealer should be building it into their price. They're actually doing you a favor if they want to break out nuisance fees as separate line items because that is something you can now negotiate away. After all, once you walk out the door, does the dealer's advertising really do anything for you? Then why pay for it?
7. Don't be fooled by so-called invoice prices. The dealer seldom actually pays the invoice price. Do your Internet research on car buying web sites and find out what the dealer is really paying. Also, don't forget the dealer deserves to make something on the sale; be realistic. Also popular models in demand will command a higher mark-up because if you don't buy, then next person in the door will.
My best car shopping experience. Did test drives with no intention of buying. Determined all details and options down to the last detail. Then I emailed 20 delaers in/near the city I lived. Then I just kept taking bids until I only had one dealer left. Got the exact honda accord I wanted with the options I wanted for $19,000. Good price and no face to face with salespeople. Priceless!