Tips on Buying A New Car
The Right Car For You
First, write down your needs versus your wants in a car. What will you use your car for? How many people will you usually transport? What kind of driving do you do? What is your driving style? How long is your commute? How important is safety, reliability, and gas mileage to you? Do you want manual or automatic transmission? Do you need four-wheel or all-wheel drive? How much cargo space do you need? Will you be doing any towing? What are parking conditions at your home? What safety features do you want? What are the insurance premiums?
One advantage you as a consumer have is the huge selection of cars, SUVs and trucks available to you. Edmunds.com and Edmunds.com New Cars and Trucks Buyer's Guide can help you choose before visiting a dealer. Through this web site you can pick a specific car and pull up a list of similar cars within the same class. If you have no idea where to begin, check the Best Cars section of the web site and you can start by searching under Make, Type, Price Range, or Market Segment. Even with compromise, you should quickly narrow down your choices and settle on the right car to fit your lifestyle and needs, versus just what may be appealing to the eye.
Determine what color, trim, make and model, and options that you desire and can afford. Keep in mind that the more flexible you are, the better your chances are of negotiating a good deal with a dealer. The less flexible, the less negotiating power you will possess. You can send emails listing exactly what you are looking for to area dealers. On Edmunds.com you can get quotes from multiple dealers at the same time. Follow up your emails with a phone call. In time you will get a feel of how popular (attainable) your specific car is. The more dealers that have it the better your chances are for negotiating a good deal.
Dealers will often advertise buyer incentives to attract buyers to purchase a car. Incentives may come in the form of cash rebates, low-interest financing, and other incentives. When you are ready to shop for a car look for such incentives advertised on TV, radio, in newspapers, car shopping guides and on the Internet like Edmunds.com. However, make sure you understand that incentives may not apply to all models and in all parts of the country. Also, to qualify for low interest loans you will probably have to have very good credit.
Further, you should be aware that car manufacturers pay certain "hidden" incentives to dealers on certain cars that increase their profit margin. If you know of these incentives, which you can look up on the Internet on sites such as Edmunds.com, you can use this information to your advantage when negotiating the car's selling price. After you do your research, make a print out of all appropriate incentives and bring it with you to the dealership.
How Much Can You Afford
The most important part of deciding whether you can afford a new or leased car is setting a monthly payment that fits your budget. A recommended rule of thumb is that a monthly car(s) payment should not to exceed 20 percent of your take-home pay. Use Edmunds.com to figure out your target purchase price, down payment, interest rates and loan length. Make a printout and bring it with you when you shop for a car. It will help you control the numbers when you are negotiating with a car salesman.
Should You Lease Or Buy?
A lease requires little or no money up front, features lower monthly payments, and may offer you a tax shelter as a business deduction. You also can drive a higher quality vehicle for less money, you can drive a new car every couple years, and there are no trade-in hassles at the end of the lease. But at the end of a lease you do not own the vehicle and will have to replace it with another vehicle.
Buying a car is more expensive initially, features higher monthly payments, and you may be able to deduct a portion of costs for business purposes. Also, when interest rates are low it usually makes more sense to own a car rather than lease one, there is no mileage penalty if exceeded, and you can sell the car whenever you wish. Finally, you do own your vehicle after it's paid off. At Edmunds.com "Decision calculator," you can compare and see how much leasing versus buying a car will ultimately cost you.
Determine a fair, initial price for the car you wish to buy: Again, do your homework to have a good idea of what a fair price is for the car you are interested in. This will give you a point from which to start your negotiations. Edmunds.com has a tool that enables you to figure out a car's True Market Value. This tool calculates the average price that other consumers are paying for the same car within your area (see above, Do Your Homework and Developing a Basic Buying Strategy).
Since you have done your homework, both on and off line, and narrowed down your car search, now is time to schedule an appointment. Regardless if you have contacted the Internet manager of a dealership in order to save yourself time and perhaps money, it is advisable to call a dealership first to make sure the car that you are looking for is available to be test driven. You can also get a feel of the dealership by first calling them. Also, you can avoid being pressured into staying in a dealership that you may not wish to do business with. Keep in mind that the standard sales person will normally start negotiating at a high price and work down. Usually, the dealer's Internet Manager will start off at a very low figure, which will definitely save you time and possibly money. Regardless of your method, at some point you will be required to make a personal face-to-face meeting with a sales person from the dealership.
Test driving the car
Realize that the goal of test driving a car is to try to match the driving conditions that you plan to drive your car. If you will be driving in a mountainous region, see how it performs on steep hills. If you do a lot of city or freeway driving, insist on driving the vehicle in such areas. Feel how the car handles on turns, over bumps, railroad tracks, and how well it brakes, perhaps in an open or deserted parking lot. Get in and out of the vehicle and open the doors and compartments. What you are trying to do is get a feel for how the car will be like for the number of years you plan to own the car. While driving the car, concentrate on how the car performs, not its stereo system or the sales person's sales pitch because a car is too big of an investment. Therefore, you must be totally confident that you are satisfied with how it performs and how functional it is.
After the Test Drive
Leave the dealership so you are not pressured into buying the car. Besides, you should schedule all your test drives the same day so you can compare the same cars at different dealerships to figure out which car you think drove the best. This tactic may also increase your negotiating power against the dealer.
Negotiating The Best Price
Many buyers prefer to address price first. Internet Managers of dealers often will address price up front by email or over the phone and will start at a very low figure. If their price is at or below Edmunds.com's True Market Value (TMV) price, you are within the right range. If you consider yourself a good negotiator and wish to haggle further, you can call two other dealers, explain the car you are interested, and see if they can beat that price until you reach the lowest price possible between the dealers.
If you decide to enter the showroom and deal with a salesperson, start negotiating with a price that is not based on the car's sticker price but on how much the dealer paid for the car. You can find the dealer invoice price on web sites and pricing guides. Even the dealer invoice price may not be what the dealer actually paid for a car because they are often offered dealer incentives and holdbacks that increase a dealer's profit margin.
Some places where you can find such sales incentives information are in auto pricing web sites or CR New Price Reports or New Car Buying Kit. These CR services include the wholesale price that factors in dealer invoice, incentives, holdbacks, or rebates, which will give you a more accurate amount of what the dealer paid for the car. From this amount, a good point to start negotiating could be around 4 to 8 percent over dealer CR Wholesale Price. Of course the demand and type of car can affect your initial offer.
Only negotiate one item at a time because dealers like to negotiate all items, financing, leasing, and trade-ins together. This way they can offer you a favorable deal in one area and make it up in another. Also, state that you want the lowest possible markup from your starting bid and that you intend to visit other dealers to achieve this goal.
Only after you have agreed on a final selling price should you talk about financing, leasing or a trade-in. The one thing you need to keep remind yourself is that you are the customer so you are really in charge. If you are not happy you can always head for the door and find another dealer who wants your business. You may be surprised how this can make the dealer you are negotiating with reconsider his or her position.
The most important thing to remember is that getting a good deal is not just about negotiating the lowest selling price. It is negotiating the lowest total out the door cost on the car you want that best fits your needs.
Closing the deal
As stated, focusing only on a good selling price is not the entire picture. The lowest out the door costs will include sales tax and other various fees that differ from state to state. Edmunds.com ‘s calculator can give you a good estimate of what these expenses will be. If you can get a sales person to fax you a worksheet and invoice before visiting a dealer that would be best so you can sit down and review the total costs in a relaxed atmosphere. Other costs such as dealer advertising costs may be extra and nonnegotiable. However, any redundant costs such as "Administrative costs," D&H costs, or anything you think doesn't feel right, you can ask to have them removed or you will consider going to another dealer.
Reading and signing your paperwork
In order to complete the transaction, you will be given a stack of forms to sign. The dealer may try to sell you additional products such as a LoJack vehicle anti-theft locator, rust proofing, paint and upholstery protection, extended warranties, and etching VIN numbers on your windows. Unless you absolutely want them, these services are not necessary and can add to the cost of your car. Modern cars come with anti-theft devices, are already rust-proofed, and their paint coats come protected. You can also save on these fees with good off-the shelf paint and upholstery protection products. A window VIN kit can be bought for $25. If these services are advertised as extra costs, cross them off the bill of sale and insist they be deleted. If you desire the extended warranty, in many states you do have up to 60 days after purchase to cancel it. Be sure to check your local laws before going into the dealer.
Thoroughly read and double check the worksheet given you to ensure all the numbers are correct and that no additional charges or fees have been added. If you see one that you do not understand ask the dealer to explain it to you before signing. If it does not sound right ask to have it removed. You will also have to read and sign other forms to register your car new car and transfer ownership of your old car if you have negotiated that as well. At this point, the dealer may seem impatient and may try to politely rush you. TAKE YOUR TIME. A car purchase is much too important and costly to rush through the process. Remember, you are the boss because you are the paying customer. Therefore, you should be the one in control of the transaction. It's your hard-earned money after all. Once you have signed the paperwork, you are legally bound. Consequently, it will be too late to change your mind.
Inspecting your car
After the dealer details the car and fills the gas tank, take that opportunity to give the car an inspection BEFORE driving it off the lot. Walk around it and visually inspect it for any scratches, dents, dings, or imperfections that you want fixed. Check to ensure that everything is included inside that you paid for: floor mats, owner's manual, spare tire kit, etc. If anything is missing or needs repair, you can ask for a "Due Bill" that documents what is missing or needs to be done. This way you can return to the dealer and have those items addressed at a later date if you wish.
Be very careful pulling out of the dealer lot and fight the urge to drive your new car aggressively. They will advise you how many miles you need to drive your new car at an easy pace during its break-in period. If you drive it too hard you can significantly shorten the life of your car's engine. At the end of the recommended break-in period, 500-1,000 miles, it is recommended that you conduct your first oil and filter change to flush out your engine and start with a fresh filter and oil. Finally, enjoy your car and drive safely!