I’m thinking of buying my first new car, and I’m terrified of the whole process. I just know I’m going to get screwed. Do you have any tips for me? I don’t know what undercoating is!
You need two basic items when traveling the murky waters of car buying: education and the ability to walk away. The first one is easy; the second is a little more difficult if you’re looking at a vehicle that tickles you in just the right spot.
Edmunds is a great place to start. You can look up the MSRP, dealer invoice and True Market Value (TMV = the average price other people are paying in your area) for the vehicle you’re considering. The site provides photographs and extensive reviews, and it lists any incentives that are being offered. Read this nine-part series in which a journalist goes undercover as a car salesman. It’s an eye-opening look at the pressures put on sales staff to sell sell sell and the psychology they employ to try to do the deal.
After you’ve done your research, request quotes online through Edmunds, CarsDirect, Autobytel and Cars.com. This lets dealers know that you are an educated potential customer. And you want dealers to compete against each other for your business. Most inquiries result in a phone call from a salesperson. At this point, get a ballpark price. When salespeople know you’re talking to multiple car dealers, they have to give you a fairly decent price just to get you in the door. Ask for their preliminary quote to be faxed to you so you have written proof of the conversation.
At the dealership, enjoy the test drive but don’t wear your heart on your sleeve. Even if you’ve been driving a piece of crap that belches black smoke every time you crank the engine. Even if the headliner has come loose and rests on your head while you drive. Even if the car overheats constantly and requires that the heater be run in the dead of summer. Play it cool.
After the test drive, try to keep the conversation concentrated on the cost of the car. If you are going to trade in your vehicle or apply for a loan from the car manufacturer, save that part of the discussion until after you’ve set the price of the new car. This is hard to do. A great way to keep the conversation focused on the new car is to come into the deal with a loan already secured from your bank or an online lender such as eLoan. If you have a car to trade in, take it to CarMax first to see what they’ll give you for it. They will often pay you more for your vehicle than you can get in trade, though you don’t get the tax break you do when you trade one car for another.
If the salesperson thinks they can’t squeeze money out of the loan or trade-in, they may not give you the best deal on the new car. That’s why you play it easy-breezy. Tell them that you have a loan secured, but you’re interested in seeing what they can do for you. Tell them that you have an offer for your wonderful old car, but you’d like to give the dealership a crack at it. Keep them guessing as to your intentions, and don’t let them know the APR of your loan or the amount CarMax is willing to give you. And under NO circumstances should you EVER tell them what you want your monthly car payment to be. This is an amateur mistake. A dealership can give you that $300 monthly payment you desire. But for how many months?
Walking out is the greatest negotiation tool you have. Ultimately YOU control the deal. It’s your money, and if you don’t get the price you want, move on. If you have set a realistic price target, you will find a dealer who will work with you. Stick to your guns. Salespeople who claim they’ve given you the absolute best price they can will suddenly find new options when you grab your stuff and prepare to leave.
Eyes on the prize, my friend. A little research and preparation and maintaining the ability to get up and walk will result in you not getting screwed. Oh, undercoating is unnecessary bullshit and you can Scotchgard your own upholstery for less than $10. Good luck!