Tuesday, August 30, 2011

Tips for Car Buying

Car buying can be a dreaded experience that most people don't enjoy.  You go in, find what you want, then the dickering begins.  You make an offer.  The sales person gives you this look like they really don't want to take this offer to the boss, but will.  They may even let out a breath of air when they say they will try.  They leave and don't come back in what seem like forever.  Upon their return, they shake their head and say they can't do that, but here's what they can do.  And then it goes back and forth from there.  Once you have that price agreed upon, you have to agree upon a price for the trade, which goes about in a similar fashion as the car buying.  Then you have to figure out financing.  With paperwork and all, this is an all day thing. Many people leave feeling like they have been taken to the cleaners.

So, how can you make car buying easier and save some money along the way?

Before you even step into a dealership, you should have this information handy:

  1. The make and model of car you want to purchase,
  2. The average market value of the car you want for your area, based upon age and mileage,
  3. What interest rate you can get from your bank or credit union to purchase the car,
  4. The prices of similar vehicles in the area,
  5. Find out the car's history.
With the help of the internet, you can easily find out this information.  Here's how
  1. Research the type of car you want to buy and check out reviews of it for specific model years.  Maybe that car you thought you really wanted isn't so hot after reading reviews of it.
  2. Research the car's value.  Sites like Edmunds.com will tell you what you should be paying for a car, new or used, in your area.  It also tells you how much you should get for a trade.
  3. Look for cars on Craigslist.com.  They list new and used cars, from both private sellers and dealers.  
  4. Check out Autotrader.com.  This is another great resource for new and used cars.
  5. Call your bank or credit union or visit their website to find out current loan information for the vehicle you want to purchase.
  6. Check out a car's history on CarFax.com.  Most dealerships offer this for free, but if not, it is worth checking out for any used vehicles.  It will provide information on a car's history from accidents to any service records that might be on file.
Now that you are armed with information, you have to be able to put it to good use at the dealership.  The way I see it, it is like a card game and you never want them to see your cards.  After my recent vehicle purchase, the manager said he wanted to hire me, and he never even knew all the tricks I had.  I am going to share them with you.

First, I did all the above steps.  I found the vehicle I wanted to purchase at the price I wanted to pay.  It was about an hour-and-a-half away, but the price difference was worth it.  I talked to the sales person on the phone a couple times and let him know I was just inquiring, but wasn't sure I was really wanting to buy something just yet.  Tip One:  Never appear eager or desperate to have to have the vehicle.  In fact, when he asked for my phone number, I told him that I didn't want to share that as I didn't want to be bothered.  He had my name and that was enough.  Later in the week, I called back and told him I was going to come and take a look at it on Saturday.

Then I armed myself.  I grabbed a file folder and filled it with information I printed from the internet about other similar 4Runners for sale.  I marked notations on the printouts, highlighting things such as price or mileage.  I even went as far as to star some pages and write "contact" names on the pages.  Tip Two: Even if you are not interested in any other cars (which in this case I wasn't because I was after the elusive 4Runner with 3rd row seating), fake it. When we got to the dealership, I had my file in hand.  As we were looking at the vehicle, I made sure to open it to show my husband how it compared to another vehicle and pointed out that the other vehicle had the backing cameras and built in GPS (neither thing was something I cared if I had or not).  I also pointed out another one that had lower mileage.  Although I directed everything at my husband, the salesperson noticed.  In his mind, this was not the only car we were considering.  Of course, in my mind, it was.

Of course, I had done all my homework and knew the car was priced fairly--at or below market price for the area.  It had put on sale recently.  I also knew this was a "haggle-free" dealership.  I also knew that the 4Runner had been on the lot since April.  So, even though I was willing to pay the sticker sale price, I offered less.  And less than I even hoped to pay.  They came back and offered to meet me half way, which was exactly what I wanted to pay for it.  Tip Three:  Always offer less that the sticker price, and less than you hope to pay.  Tip Four:  Just because they advertise "haggle-free" doesn't mean there isn't room to budge on the price.  It doesn't hurt to try.  Tip Five:  NEVER let them know you are going to trade before you negotiate a price.  If they ask, just say you don't plan to.  You can let them know later that you changed your mind.  Letting them know up front allows them to manipulate numbers and think you are getting a great trade, but you pay more for the new purchase.

Then we got to the part about a trade.  We knew what the trade-in value was and when they asked what we were hoping to get, we told them the high end of the range.  They didn't blink and gave us what we wanted.  Tip Six:  You have to know what the trade-in value of your car, otherwise, they may low ball you.

Now to the nitty gritty.  Financing.  Dealerships make money of selling you a car loan.  They will do what they can to get your business.  We had checked our credit union and knew what the interest rates were running.  (For those of you who don't know, credit unions historically offer lower interest rates on loans, but you have to be a member.  Membership is free but you have to qualify via employment, family, education, etc.)  We let them know that we had talked to the credit union and told them the rates we were quoted.  Of course, they wanted our business and they offered us a lower rate.  Tip Seven:  Researching loan rates in advance pays off.  

Fortunately, the last tip went unused for me, but I have used it in the past.  Tip Eight:  If you are unhappy about anything along the way, from the price of the car, the price of the trade or finance rates, WALK AWAY.  You can always go back if you want, but don't lock yourself into an unhappy deal.

I hope these tips are helpful in your next car purchase.  Let me know if you have any other suggestions.

By the way, here is my new 4Runner.  I am very happy with it!

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