Now might seem to be an unlikely time to be dropping a healthy chunk of change on a new set of wheels. But if you managed to bide your time for the last few years, squirreling away your money waiting for the right time to make your move - now is that time. Much like the housing market, the deals to be had on new cars right now are unprecedented. Combine that with government-backed incentives and you have yourself an ideal situation for new car buyers. But the dealers will smell you coming! Here's how to purchase a new car in this brave new economical world we live in.
By Brad Iger
The following article does not represent the opinions of Spike TV or its affiliates.
Step 1: Do the Research Beforehand
Simply put, an uninformed buyer is a car dealer’s wet dream. Before you ever set foot on a lot, you need put in some time sorting everything out. Find two or three models you’re interested in and research those cars carefully. Figure out which options you want and which ones you absolutely need.
After that, figure out what you’re willing to pay, out the door, for each one. It’s also worth noting that in the current auto sales climate, many companies are offering incentives like “employee pricing” – meaning you get the same price that company employees would. Incentives like these are worth literally thousands of dollars, but often don’t last long, so if you see things like this, they’re worth jumping on quickly.
If you’re very particular about the car’s options, you’ll find that many brands have vehicle inventories online for each of their dealerships within specific regions. Pick the farthest distance you’re willing drive out to (you’ll probably be making that drive several times, so keep that in mind) and search all the vehicle inventories of the dealerships within that distance until you locate a couple of vehicles you’re interested in.
Once you’ve honed in on said vehicles, call the dealerships and see if the car actually exists on the lot. Don’t be discouraged if it doesn’t, because it very well may not. Dealerships like to advertise good deals on desirable cars, even if they don’t have them, because it generates interest – then they can sell you a slightly different car at a slightly different price. Don’t fall for it. The key to getting a good deal is patience and tenacity.
But let’s assume the cars are in fact there. In that case, it’s time to schedule some test drives.
Step 2: Feel ‘Em Out
Source: Motor Trend
When you get to the dealership, are the employees a bunch of jerks, or do they treat you like a king? It’s a good idea to take note of how different dealerships treat their customers because if you buy a car from them, you’re going to deal with them again sooner or later, so the less attitude involved, the better.
Test drive the cars. Agree to absolutely nothing. If they won’t let you test drive the car without agreeing to something (like the price) beforehand, it’s time to walk out. If they’re informative, straightforward, and refrain from trying to sell you on something you don’t want, they may be worth keeping on the short list. Regardless, do not buy the car right after the test drive. Again, patience is key. Exchange information with the dealer and tell them you have a few more cars to check out before you make a decision.
Expect that you’ll get a call from that dealership the following day, trying to gauge how serious you are about buying a car. If you’re ready to pull the trigger, you can start talking numbers with them at this point (i.e. I’m interested in the car, but I want to get it “out the door” for X amount). Expect that there will be some back and forth at this point, but remember that right now is probably the strongest buyer’s market in decades – they need you to buy a car, so ignore the lines about “special options” the car might have, etc. Stick to your price, and be willing to walk away from the car if they’re not willing to play ball. There are lots of cars out there.
Step 3: Sell Your Old Car Privately
Never ever use your old car as a trade in with a dealership. Dealers make a grip of cash this way by taking your car in trade for thousands under market value, then washing it, and selling it again for the price you could’ve gotten had you simply sold it yourself.
Posting an ad on Craigslist is free, nearly effortless, and a great way to sell your car locally. Just remember to insist on cash only. Duh.
If you’re able to sell your old car before you buy the new one, you’ll have more leverage negotiating the financing because the stack of cash that’s now burning a hole in your pocket can be used toward a bigger down payment.
Step 4: Hold Out for the Deal You Want
Source: Our American Shelf Life
So now you’re in the home stretch. Before you sign anything, agree on the “out the door” price for the car with the dealer. After that, it’s time to secure some financing. Typically, your bank is often a better bet than the car dealer when it comes to financing terms – but that may not be the case right now. Again, this is an extraordinary time for the auto industry, and many companies are offering up to 0% financing for people who’ve managed to keep their credit score intact.
Let the dealership do some legwork in getting you a good financing rate. They will likely come back with initial terms that are less than ideal, and try to convince you that they’re actually great terms. Hold your ground. Call their bluff and wait for the terms you want, and tell them you want the car but that it’s not worth getting a shoddy deal to get it. They’ll more than likely tell you they’ll “call you back in 15 minutes” at which point they’ll come back with better terms. It’s amazing how two sentences can save you thousands of dollars.
Step 5: Skip the Add-ons, Drive Away Happy
Source: Motor Trend
So now you’ve locked in the price, you’ve secured financing, you’re at the desk, and you’re filling out the paperwork. Here come the dealer add-ons! Just remember – you don’t want them. No, you don’t want to the extra aftermarket alarm to supplement the one built-in from the factory. No you do not want the undercarriage sealer wax treatment, and no you do not want the fancy floor mats. All these items are marked up through the roof, and you can get them anywhere else for literally a fraction of the cost.
Don’t let the anticipation of being so close to driving your new car cloud your judgment. 450 bucks is still 450 bucks, even when you’re buying a $30,000 car. There’s no reason to give your money away. They may try to make you feel like a jerk when you reject this stuff, but you came here for the car, keep your eye on the prize and remember car dealers are in the business of trying to make money. You’re currently in the business of saving it.
Besides, once they hand over the keys and you hit the road in your badass new ride, the last thing you’re going to want to think about is whether or not you should’ve sprung for that $100 set of fuzzy dice.