Walking onto a car
lot can feel like a
train wreck in slow motion: At every turn you get a little more derailed, until
finally you're off the tracks entirely and the dealership has what it wants:
your entire bank account.
Part of the problem is the sheer number of
variables involved in negotiating the sale: the price, the options, the
financing, the monthly payment, maybe a trade-in.
You should methodically research and consider every conceivable scenario before
setting foot on a dealer's lot. Otherwise, dealers will do everything they can
to tilt the transaction in their favor.
"They're looking at making money off you
in stages," says Jeff Bartlett, deputy online editor for autos at Consumer
Reports, "so it's important for customers to keep the stages
separate and not lose track of what's going on."
To help you do that, we talked with several
experts about the most common mistakes that car buyers make and what you can do
to avoid them.
The goal is not to pull one over on dealers —
they're hard-working folks trying to earn a living, too. It's about arming
yourself with as much information as possible to make the best decision on what
is for many people the second-largest purchase of their lives.
Buying Unnecessary Add-Ons
Some dealers might try to sell features they
add on themselves, such as rust-proofing, VIN etching or fabric protector.
Avoid them; they're unnecessary, Bartlett says. If the vehicle you want already
has them, negotiate their cost down as much as possible. Research features you
do want online and print out the information before heading to the dealer.
Bartlett recommends pricing several different variations in case the dealer
doesn't have the exact model you want. This can help avoid being up-sold to
pricier models or to ones with features you don't need or want.
Not Enough Cross-Shopping
Many car shoppers focus on a few popular brands or models,
to their detriment. "On average, people only shop about three
vehicles," says Steve Witten, executive director of U.S. automotive
research at J.D. Power and Associates. "If someone's
shopping a midsize car, there are probably at least 10 different vehicles that
would meet their exact specifications and needs," he says. In terms of
safety, reliability and features, there are very few lemons for sale anymore.
So don't get stuck on one brand and put blinders on about others because of old
perceptions. Cast a wide net when comparing models online. Otherwise, you might
miss a good value or overlook your ideal car.
Settling for What Is on the Lot
American car buyers are impatient. Only 5
percent special-order a vehicle through a dealer and wait for it to be
delivered, according to J.D. Power. The other 95 percent either find exactly
what they want on the lot, or settle for something that's not quite what they
wanted. There's no reason to do that when making such a large purchase. If
you're set on a specific model or feature that you don't see in stock, dealers
can search nationwide inventories and have vehicles shipped from several states
away, Witten says. They can also custom-order exactly what you want from the
factory.
Skipping the Test Drive
Consumer Reports' Bartlett hears family and friends
complain about uncomfortable seats, poor visibility or a stiff suspension in
vehicles they have just bought. It's because they did not perform a thorough
test drive — if they did one at all. He recommends spending 30 minutes driving
the car, entering and exiting the highway, taking it on roads like those you
drive every day. Be sure to take competing models for a spin, too. "It
will reaffirm that you made the best decision ever, or you might find that you like
one of the other ones better," Bartlett says.
Focusing on the Monthly Payment
One of the first questions salespeople ask is,
"So, how much were you looking to spend per month?" It's to your
benefit not to focus on that number, because doing so can make the final price
of the car a moving target. Adding "only $50 a month" to get leather
and more power might sound tempting, but it will add thousands to the bottom
line. Part of this goes back to knowing what you truly need or want. The other
part involves negotiating the total price of the vehicle, not the monthly
payment. Breaking up the buying process can help: Part one is choosing the car;
part two is settling on a price; part three is financing. Be clear with the
salesperson what you want to focus on for each step so you don't get
sidetracked.
Buying More Car Than You Need
s soon as gas prices dropped from their spike in 2008,
Americans went back to buying large vehicles. Hey — it's their prerogative. But
those looking for ways to save in these lean times might do so on their next
car purchase by being honest about what they really need. "If you end up
buying a V8-powered pickup truck when all you need is a 4-cylinder commuter
car, well, you are your own worst enemy in that case," says James Bell,
executive market analyst for Kelley Blue Book's KBB.com.
Saying Up Front That You Want to Pay Cash
Telling a salesperson right off the bat that
you intend to pay in cash might seem like a power play, but it is usually not.
Doing so tips them off that they will not be making any money on you in the
loan department, and this could make them less willing to negotiate the price
of the car as they seek to maximize their profit. There is nothing wrong with
that; dealers need to turn a profit to stay in business. Witten says that to
get the best deal, first negotiate the final price of the car, and then tell
them you will pay in cash.
Being Clueless About Financing
Consumers haggle hard for several hundred dollars on the
price of a car, but can lose thousands in the financing office without even
knowing it. That's because the loans that dealers offer through partnerships
with banks might not have the most competitive interest rates. "Dealers
get paid back from those finance institutions for every loan they make,"
Witten says. "They're not really out to rip people off, but they
definitely have their best interests in mind." Learn your credit score and
find out from several banks or credit unions what kind of rates you can get on
a car loan before you go to the dealer. Then you'll know if the financing terms
that the dealer offers are worth taking, or whether to fall back on another
loan.
Negotiating Down from the Sticker Price
"The price on the window sticker is all
you have to work with if you didn't do your homework," says Consumer
Reports' Bartlett. That puts you at a huge disadvantage. Before you set foot in
a dealership, go online and research the prices of vehicles you're considering.
Not just the manufacturer's suggested retail price (MSRP), but the invoice
price, which is what the dealer pays for each car. Also look up consumer
rebates, direct-to-dealer incentives and dealer holdbacks, which are a
percentage of the invoice price that dealers sometimes get back from the
manufacturer. "When you have all of those numbers, it gives you a figure
to move up from, rather than down from the MSRP," Bartlett says. The goal
is to aim for the best price possible while still allowing a fair profit for
the dealer.
Fumbling on the Trade-In
n the same vein, it behooves buyers to
negotiate the value of a trade-in as a separate step in the car-buying process,
independent of negotiating the price of the car being bought. If discussion of
a trade-in gets thrown into the mix from the get-go, the dealer can use that
information to adjust the final price more to his liking than yours. The first
step is to understand the value of your trade-in before you go to the
dealership by looking it up on websites such as MSN Autos or KBB.com. Once at the dealer, negotiate the trade-in only after you
have settled on the price of the new car. If a dealer asks upfront about a
trade-in, focus his attention back on the process at hand, whether that is
selecting the car or negotiating its price.
.jpg)
