100 Tips for New-Car Shoppers | Edmunds.com
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100 Tips for New-Car Shoppers | Edmunds.com
These 100 pro tips will help you get the best deal and avoid hassles when you're buying a new car.
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#30. Three target cars to compare- there is nothing worse than someone coming in with 15 cars they want to test drive and compare- you WILL become overwhelmed by the third/fourth car- guaranteed. You will begin to forget important details, get specs/features confused from car to car. It's just a recipe for disaster. Just like the article states- figure out what's most important, narrow it down, start there. If you're still not satisfied and/or can't make a decision determine WHY, what you didn't like, and start over. Three, maybe four different options at a time MAX. One of the biggest resources you can have is your sales consultant- this relates to tip #73 LISTEN! If you're really struggling finding the right car for your needs, just sit down and talk to your consultant. Tell them exactly what's important, what you need and want, what you're budget is. They could very well end up making some suggestions you hadn't considered and, (because most of us are brand certified and have completed countless hours of online training and attended a dozen training seminars) most of us know what we are doing. We know the cars/brands that we sell. All of the manufacturers I work with (Honda, Kia and Nissain) require 100% of their training to be completed prior to even speaking with a customer.
#62 Being a cash buyer does NOT warrant a better deal, ever. I cannot think of one single scenario that it does within a regular dealership (I'm not referring to an auction, private sale, wholesale, etc. that's totally different). When a customer pays cash (whether it be cash from their checking/savings account OR a bank check from an outside lender- like their own personal credit union) the dealership has no way of making a little bit of profit back from one of the banks we would normally work with. Therefor, we might not be able to discount the car just that little bit further IF we know we can recoup some of that loss profit from the bank. There are a few different ways we can make money back from the banks we work with, each bank is different, but at the end of the day we send thousands of dollars in business to banks on a daily/monthly/yearly basis. Because dealerships have SO many banks they can work with, they are competitive with what they offer in return if we send them business. Some banks will offer 1-3% back to the finance manager (which really is not all that much considering finance managers are commission based just like sales). Others will set up programs for large amount of business sent to them. For example, if the finance manager sends ABC Bank a total of $100,000 (that's actually a low estimate, that could be five cars at $20,000 a piece) in loan amounts in a month they will give a $500 bonus. However, the banks are also VERY aware that they need to be extremely competitive with their rates and terms. So, they need to be competitive and on top of their game from all aspects. I can recall countless customers that we were so close to making a deal with- a couple hundred dollars- and the last question my manager will ask (if he hasn't already of course) is if the customer is paying cash of financing. If the answer is financing than we've got a deal. If not, than we cannot justify a non-profitable and/or "looser" deal when we know there is no other way we can make some of that money back. Shockingly enough, dealerships do need to make a profit to stay in business.
#77 Almost ALL leasing companies (high-line vehicles are the only ones I'm not 100% sure about, so don't take my word when it comes to luxury!) INCLUDE GAP Insurance in their leases. At no additional cost. This is to protect the manufacturer and the buyer in the event the car is totaled during the term of the lease. ASK the finance manager if it is included.
#89 Let the dealerships finance manager work on your deal and try to get a better interest rate than one you might have gotten at the local credit union or bank that you worked with directly. It is smart to know what rate you'll be approved for going into it (especially if you're unsure what your credit looks like) BUT it is NOT smart to just take the one approval and go with it. Like I said above, banks are constantly fighting to earn your business. When you go to the bank as an individual you don't have much buying power compared to a dealership who has a LOT of buying power. How do you think you'd be able to get a more competitive rate? By the finance manager calling a loan adviser and saying "we have a customer here, they are looking to buy a $20k vehicle, 750 credit score, good payment history, etc etc. Their credit union is offering them 2.9%, but I'm trying to see what I can do to get them a more competitive rate and get the payment down as low as possible. What can you do to beat the other rate?" Orrrrr, you calling your credit union and saying to them "I'm sorry but 2.9% doesn't work for me. I want 1.9%." TRUST ME when I say, you are not going to get very far negotiating with a bank/credit union on your own. It's not going to happen.
Numbers 62 and 89 are probably the two that I talk about the most with my customers. Most people get it, and understand that the goal on BOTH sides is to make a deal, and a good one. Good deals and happy customers equal positive word of mouth and online reviews (I have had at least a dozen customers call me out of the blue asking to work with me per my reviews online, Edmunds included!!) referrals and repeat business. In this business, that's ALL that matters.
I guess that's better described as a middleman fee instead of a kickback, but some of us wonder why we can't just get the cheapest rate in the first place. It pays to shop around I guess.
To compute a target price the best method, using available information, is to take invoice, less holdback, less incentives both to the customer and the dealer. That provides a target price which will likely need to be increased by 3-5 percent. Also, once this price is developed, check the various prices paid sites, including Edmunds, to see if people are paying less. If they are, there is likely a hidden dealer incentive. In that case, reduce the target price.
The biggest issue in many car deals is the trade. The best method to arrive at a figure is to take trade values from Edmunds, KBB, and NADA. Average the three at the correct condition. That should be the trade value goal. Dealers will always be $1,500 - $2,000 less.
You should then view the deal as the net between the selling price and the trade. For example, if the price goal is $25,000 and the trade goal is $10,000 the net goal will be $15,000. Negotiate up from that number not down from the dealer's numbers. If you know your number, you will not make a bad deal.
And always do everything possible to have a good credit score. To get the best interest for a car purchase, a score of 740 should be sufficient. Know your credit score and financing available from your bank or credit union. Buy always let the dealer try to beat your rate, they often can.
Finally, never buy any product offered in the dealer F&I office. The dealer's F&I manager is just another sales person whose job is to increase dealer profit though the sale of various overpriced products each having little real value. These F&I managers are heavily trained in how to convince car buyers to buy products. Everything they say is designed to sell.