Featured Articles

Buying A New Car? Avoid These Mistakes

Posted in Car Buying, General by Kurt Ernst | January 15th, 2011 | 1 Response |

Here comes the salesman - cue Jaws soundtrack...

Buying a new car shouldn’t require a prescription for Xanax. If you spend the time to figure out exactly what you’re looking for and what you’re willing to pay for it, then it’s just a matter of finding a dealer who’ll work with you. Sure, I’ve encountered my share of amoral scumbag car dealers over the years, but the vast majority of businesses I’ve dealt with have been courteous and helpful. Here are a few tips to ease the pain of your next new car buying experience:

Remember: there's no such thing as a free lunch...

- Don’t believe the dealer’s advertising hype. If a dealership spends the bulk of its advertising budget trying to convince you that they’re the little guy, or that it’s a family business, or that they have the lowest prices in town, chances are that none of it is true. If they offer you a “free extended warranty”, you’re paying for it somewhere. Car dealerships are like Las Vegas or strippers: they exist to separate you from your money as quickly and efficiently as possible. You’re not car shopping to make a new BFF; you’re shopping to get the vehicle you want at a price you’re willing to pay.

- Always have financing worked out ahead of time. If you’re lucky enough to buy new cars with cash, this rule doesn’t apply. For the rest of us working class heroes, make sure you know what special deals are available from the manufacturer and from your bank or credit union. Get pre approved, as this eliminates any last minute surprises when you go to close the deal. Never fall for the “how much can you afford per month?” line from a car salesman; know what you’re willing to pay, and how much you’ve qualified for before you walk in the showroom.

- Always test drive the car you’re going to buy, even if the dealer has to special order it. I never cease to be amazed at the new cars I drive that have rattles, bad alignment or other QC related issues. If something is wrong with the way the car drives or sounds, pick another vehicle or dealership.

- Understand everything you’re paying for. See something on the sticker you’re not sure of? Ask for a full explanation. If the salesman won’t give it (or worse yet, tries to feed you BS), don’t be afraid to walk away. A good example is ADM, which stands for Additional Dealer Markup and can commonly be found on high demand, limited production vehicles. If you see this on the Shelby GT 500 KR you’re lusting after, try to negotiate. If you see this on a Toyota Camry, just walk away from the dealership.

- Know exactly what you want before heading to the dealer. Do your homework ahead of time; pick the models and trim levels you’re interested in and build a cost analysis spreadsheet. You can find invoice and list prices at several internet sites (including KBB and Edmunds). Decide what you think is a fair price for the car, based upon its popularity, availability and your need to drive that make and model. Remember that there’s money changing hands that you won’t see; dealers get holdback (generally 2% or 3% of the car’s sticker price) from the manufacturer, and may get additional manufacturer’s incentives for selling targeted volumes. Even if a dealership sell you a car at invoice, they’re still making a slim profit.

- Don’t fall for the bait and switch. See an ad for a car at an unbelievably good price, only to find out the dealer just “sold the last one”? Is he willing to make it up to you by selling a different car for only a few thousand more? That’s called “bait” (the car that never really existed at a once-in-a-lifetime price) and “switch” (the car that the dealer is now willing to sell you at list price). How about this: You want an AWD Honda Element but you live in Florida. The dealer tells you, “Sorry, we can’t get them here”, which really translates to, “I wouldn’t sell enough to justify keeping them in stock, and I really want to sell you something from my bloated inventory”. If the dealer you’re at can’t or won’t locate the car you want, move on to another dealership that’s willing to work with you.

I told you the window etching wasn't negotiable!

- Don’t be afraid to be rude. I’ve walked out of showrooms because a salesman has pissed me off, and you should be willing to do the same thing. If the salesman is making you uncomfortable in any way, don’t waste your time asking for a manager. Simply get up and go on to the next dealership.

But the Blue Book says it's worth more!

- If you’re trading in a vehicle, prepare to be disappointed. Even though you’ll find “trade in” values on sites like KBB and Edmunds, I’ve never had a dealer offer me anywhere close to that number, regardless of the car’s condition. You’ll make more money if you sell the car on your own, but that can be a big pain in the ass if you still owe money on it. Decide in advance if the convenience of trading in a used car is worth the cost.

- Beware of leases. Sure, they make sense for some drivers, but they can be a huge money pit if you exceed the annual mileage (typically somewhere between 10k and 12k miles) or return the car with damage or excess wear. If you trade up every two or three years, don’t customize your ride and drive less than 10k miles per year, then a lease may be worth looking into. If you don’t fall into that category, you’re probably better off buying a new car.

- Talk to your insurance agent before you buy a new car. Chances are, you premiums will be higher because it’s new, even if it’s the same make and model you’ve been driving for years. If you’re going from a four door Buick to a Corvette ZR-1, your premiums will be much, much higher. Be sure to factor the increased cost into your budget, because nothing sucks more than realizing you can’t afford to own the car you just purchased.

Our Best Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

One Response

  1. BigRuss says:

    dont forget when they say they have X amount of cars for Y price.. you can drive off the lot for a new car under Blue Book… did that with my ram… Sticker price after dealer mark up was 40k, MSRP was 32k, i paid 25k…