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View Full Version : Whats the best way to buy a car



billbenson
12-07-2008, 07:29 AM
I need to buy my wife a new or used car and I need to do it through a dealer because I can get financing. Car dealers seem to play this cat and mouse game:

Salesman: make me an offer
Me: whats you best price
Salesman: what are you willing to pay
Me: Blue Book is X, can you beat that
Salesman: let me run that by my boss.

Wife wants a small SUV type of vehicle. There are some that get good gas mileage. I'll need to get financing through the dealer.

What's the best way to negotiate with the dealers and find the best deal?

orion_joel
12-07-2008, 08:00 AM
Hey Bill, While i can appreciate the position you are in, i find that it is probably the worse position to be in when buying from a car dealer. I found that when i went looking for finance from dealers they don't seem very movable on the advertised price, while they will budge a little not as much.

Something that makes your position a lot more powerful, is when you go in and rather then negotiate, you have figures in your mind that you want to pay and you flat out make the offer. For example i know a guy who pretty much walked into a dealer with a cheque in hand which was made out for about $4,000 less then the advertised price, and pretty much said "This is my offer will you sell me the car?" He got the car without a lot of fuss, which i think is what dealers like to avoid, and if they have a cheque on the table it is about the easiest sale they will make.

your other option if you absolutely have no other choice then to get dealer finance is to go in at the end of month. Find the sales guy that seems most eager, he is probably the one that hasn't made his target yet and probably the one that will try and do any deal he can just to make his target. But then most dealers will probably be more flexible to sell at the end of month either to get their target or because they have their target and know they are in the clear.

billbenson
12-07-2008, 09:43 AM
My strategy at this point is to stick a new engine in the old car. $1100 turnkey. That way we aren't desperate. In one sense its stupid to put $1100 in an $800 vehicle. On the other side of the coin, 6 months of car payments pay for that 1100 dollars. Keep the car as a backup vehicle.

Walk into a dealer and say I like this, this, and this, and leave while they have my contact number. I'll just say I like this car, but I want to look on the internet and see what it is really worth. Takes the desperation mode out of the deal.

I know the dealers are desperate. It's just what is the best way to play them right now?

Steve B
12-07-2008, 12:11 PM
The best way to buy a car is with cash - used, and from an individual seller. Pay the extra money to have the VIN searched with a Car Fax Report and have it checked by your mechanic before you finalize the deal. This is the best way to get the most for your money.

billbenson
12-07-2008, 01:03 PM
I don't have the cash, Steve_B. I have no options but to go through a dealer.

Aaron Hats
12-07-2008, 03:31 PM
For a used card, scout the lot when they're closed, find the car you like and note the price. Then go home, do your research and decide what a fair price for the car is. Go back to the dealer, take the car for a test drive. When you get back from the drive tell the salesman he has one chance to give you a fair price for the car. Tell him you're not going to haggle for the next three hours...he has just one chance. If he doesn't give you something close to that price you had in your mind then just walk away.

For a new car, don't even walk onto a lot. Do it all via email and pit different dealers against each other.

Good luck.

Evan
12-07-2008, 04:08 PM
I couldn't recommend buying a new car. Perhaps it's the "accountant" in me, but I don't see the value in buying something only for it to lose 20% of it's value the moment I leave. Cars are not investments, but then again with only a 20% loss in value right away, you're probably ahead than where you would have been if you plopped that $30K in the stock market. But today's times are the exception, not the rule.

So with that aside, let's look at a used car. The advice the others stating you should do your homework is important.

Looking at this financially, I think you also need to understand your options as well.

- How much can you comfortably put down? You may want a $30,000 car, but few have $30,000 sitting around just to put towards a car (even if you have that much cash fluidly sitting around). Put as much as you comfortably can down on this vehicle so you can reduce your principal payments and the overall interest you're paying.

- How do you plan on financing this? Are you taking out a loan from a bank? Plan on leasing the car? Both have their pros and cons, and with tougher lending practices, it isn't as easy to finance a car today as it was even 5 years ago. Because of this, you may not even be eligible for a lease, or may be required to make a larger down payment. But if you are eligible, there are some pretty good deals out there on cars that sometimes not having the greatest financial terms isn't always the worst thing. So you may need to weigh the discount on the car versus the so-so financial terms that you'd receive today, compared with the higher-priced car of yesterday and the better financial terms that may not exist. Car loans, of course exist, and are still common. This is good if you plan to own the car afterwards. If you're ineligible for this for some reason, a personal loan is possible, but those tend to be quite pricey (high APR). Explore all options first and determine what the true cost of this vehicle really will be.

- Be able to negotiate and compromise. Just as much as you want a car, they want to sell this car. These cars certainly aren't "flying" off the lots, and they know you have options. This is definitely a buyers market, as you have the ability to have them discount prices enough where it's generally a win-win. But keep in mind, they're not in business to lose money. Many dealers have already reduced their prices significantly and now have these "your price is the price we pay" type of game where they won't discount the price any further because the price on the car is the "best price they can offer". If you're unable to negotiate any further, the rep may ask for your contact information to pester you about the car. Take this as a good thing, as if they are desperate, they may come much closer to your offer. If this is acceptable and within reason for you, buy it.

It is definitely a buyers market for new/used cars. Good luck in any case.

billbenson
12-07-2008, 05:23 PM
I'm thinking more in the 12k range. For that I can get a 2002 plus small SUV with under 70k miles. Honda has a CR-V in that price range. the new ones get 28 mpg. Honda makes a good car. A couple of good orders and I can pay off 12k. 30k, and I barely make a dent.

If I was a field sales guy, driving all day, a more expensive car would make sense. We just don't put enough miles on a car to justify something in that price range. I literally average 2 miles a day. Wife does a lot of running around, but when she gets another job it will most likely be close.

Aaron, I really liked your idea of finding the cars at night. Makes a lot of sense.

Evan
12-07-2008, 09:37 PM
The same rules can apply with $12K, and as I stated it can depend on your needs.

Plus you're in a better situation than about 8% of the United States (almost 10% in RI!!) -- you have a job! That certainly counts for something. :)

Dan Furman
12-08-2008, 06:52 PM
I couldn't recommend buying a new car. Perhaps it's the "accountant" in me, but I don't see the value in buying something only for it to lose 20% of it's value the moment I leave. Cars are not investments, but then again with only a 20% loss in value right away, you're probably ahead than where you would have been if you plopped that $30K in the stock market. But today's times are the exception, not the rule.

See, I would definitely recommend a new car.

And yes, they aren't investments, so why even care about the 20%? It's not like most people are going to sell it until it's close to worthless anyway. Personally, resale value doesn't enter the picture when I buy a car (and I would guess, most people, otherwise they would just lease.)

I have bought perhaps 10 used cars in my life, and 3 new ones. I have never regretted buying the new ones (I definitely regretted a few of the used ones). To me, there's no substitute for a new car. I LOVE having a really nice car that I can depend on, and one that I know I can depend on for years. I like being the one who put the first miles on it, and took care of it from day one. That's what you get with a new car (I will note that exceptions could exist, but I'm guessing the chance of a lemon is FAR greater used vs new, making it a somewhat pointless argument.)

Just my .02.

billbenson
12-08-2008, 09:04 PM
I decided that regardless, to plop a new engine in the old car. It has new tires, brakes, etc. I've only purchased one new car in my life. I've had a couple of expensive porsches though, that actually would have appreciated. I didn't buy them new, but they were classic models.

Right now I drive about 2 mi per day on average. I have an old beat up truck. Kind of hard to justify a nice vehicle with as little as I drive.

We do need a reliable vehicle in the family though. I'd like to get my wife something that's nice to drive. Psychologically I like having no debt so I prefer the used car with low mileage approach.

I have a truck I bought in 2002 for $1700 with an odometer broken at 100k miles. Might have 200k mi on it by now. Has a bashed in passenger door and I was in an accident about a year ago. Elderly person stopped at a stop sign to cross a rural freeway. Didn't see me and started up just as I was about at the intersection. I swerved but hit the rear of his car at about 50 mph. I got $1k so I probably have broken even on the vehicle after having it since 2002.

I'd certainly want something nicer if I drove more, but I remember the days with the porches worrying about door dings in the parking lot etc. There is something to be said for having a vehicle that you could care less if someone backs into you.

By the way, it's a Ford Ranger. I'd buy another one. It has really been a reliable vehicle.

Blessed
12-09-2008, 11:57 AM
I know you've figured out a solution already - but here's how we drove off the lot in a brand new truck a few years ago and could have sold it two months later and either broken even or made a couple hundred bucks.

Go in towards the end of the month, be very set in what you are willing to spend and say I'm sorry I really wish I could but I just can't do that... when they try to sell the vehicle to you for more than you're willing to spend, stay in touch with them for the next couple of days and if they are trying to sell just one more car to meet the quota the dealership/parent company/whoever has set for them - they'll practically give a car away. We bought a $30k truck for $20k and they paid off what was left on the loan for our trade in (about $2k), put a new rear window in it since it was shot out the day before we finalized the deal, rolled the sales tax into the total and rhino-lined the bed of our new truck for us.

When we bought our truck the sales manager shook our hands and said thank you for buying this vehicle please don't come back. The salesman looked a little shell-shocked too.

billbenson
12-09-2008, 01:35 PM
Thanks, Blessed. I found a temporary solution. I still would like to buy a decent car for my wife, so your post is helpful. I'll probably wait 6 months to do it as that way, the money I put into the new motor in her car is about the same as the payments would have been so at that point its a wash.

My intent in this post was really "how to best negociate with dealers". There has been some good advice here.

Evan
12-09-2008, 02:39 PM
See, I would definitely recommend a new car.

And yes, they aren't investments, so why even care about the 20%? It's not like most people are going to sell it until it's close to worthless anyway. Personally, resale value doesn't enter the picture when I buy a car (and I would guess, most people, otherwise they would just lease.)

Most people do not keep cars long enough to make buying them the best option, especially with depreciation factored in. If you're buying a $20K car with a 5%/5 year car loan, your paying about $377 per month. Seeing as most do not keep cars for the full five years (or get a 5% interest rate for that matter), and may purchase another one after 3 years, you're already at a loss.

You paid $20,000, and it's worth at least $18,000 now that you're off the lot. After 3 years, you've paid about $11,400 in principal and $2,200 in interest, or a total of $13,600. But you still owe another $8,600 in principal! Plus after three years, the car naturally is not worth as much -- and you may only get $14K for it. So you lose big time on this transaction.

Leasing is certainly the better option if you have the credit and plan on switching your vehicles every so often. If you plan to keep a new car for awhile, I'd say buying would probably be more advantageous.

Of course if there are certain aspects of a new car you enjoy much better than a used car, those may be worth those financial costs. But I find that hard to swallow.

Steve B
12-09-2008, 04:51 PM
"if there are certain aspects of a new car you enjoy much better than a used car, those may be worth those financial costs."

- If you read the book, The Millionaire Next Door, there are a lot of millionaires that don't think they can afford this luxury.

billbenson
12-09-2008, 06:05 PM
They used to fly us business class for international flights and frequently I could get bumped to first. The guy wearing the K Mart clothes next to you or even clothes from a thrift store might have a lot of money. I've talked to a few. He probably got bumped up as well, although flying for 9 hours on an overnight flight is pretty miserable in coach if you do it a lot.

On edit, making the post above. It just occurred to me. It's been 10 years this month since my hi tech sales career ended. I wouldn't want to go back to flying internationally 3 weeks out one week home like I was doing. Particularly with the changes in security, although international travel you were always best off showing up 3 hours before the flight, especially to the 3 rd world countries. Time even fly's when you aren't having fun.

Blessed
12-09-2008, 10:43 PM
Thanks, Blessed. I found a temporary solution. I still would like to buy a decent car for my wife, so your post is helpful. I'll probably wait 6 months to do it as that way, the money I put into the new motor in her car is about the same as the payments would have been so at that point its a wash.

My intent in this post was really "how to best negociate with dealers". There has been some good advice here.

I still think the absolute best way to buy a car is with cash - new or used, it doesn't really matter... financing them is just more debt - but it isn't always an option so when you have to deal with that part we've been pretty successful with how we've handled it, of course both of us have worked in sales in the past - I'm sure that helps too! I personally hate trying to sell anything to a salesperson.

billbenson
12-10-2008, 09:29 AM
Although, we've both been in sales, car dealers operate differently. Its a completely different structure than most other types of sales. The only person who seems has the negotiating power is the sales manager.

Unfortunately, this is for my wife and she will say she wants a particular car. I'm in a fairly small community so I can't really go to multiple dealers of the same type of vehicle.

Based on what I have seen above, I would go into a dealers lot after working hours, select a car I (my wife) likes, do some research and come up with a price. Go back during working hours with a price I'm willing to pay. If they don't like it, walk away and leave my phone number behind.

One question, if a dealer gets you financing, do they make money on the financing?

billbenson
12-10-2008, 09:48 AM
Oh, as a footnote. A story. When I was in my 20's I was making a fair amount of money. 100k per year or so back in the 80's. I walked into a dealer and said I'd like to test drive a car I liked. I would have bought it and could have paid cash. The salesman blew me off as just some kid who wanted to drive the car and wouldn't let me test drive it. He probably blew a cash deal.

To this day, I try to service the clients that might not ever turn into business as well as the big orders. Obviously, you have to prioritize, but you never know if the guy you helped on the phone will turn into a customer. I try to get my email in their computer as well so they can find me again. I even help competitors although they will never turn into clients. If they have a technical question or something, I try to help them out.

A lot of people / companies have this fear of competitors. I remember companies I worked for years ago who wouldn't put product brochures out readily available because a competitor might get one. Ya, but a customer might not get one either. Stupid IMO.

Blessed
12-11-2008, 09:03 AM
Although, we've both been in sales, car dealers operate differently. Its a completely different structure than most other types of sales. The only person who seems has the negotiating power is the sales manager.

True... and we did end up dealing almost directly with the sales manager!