To meet with the needs of our expanding family, Brian and I decided to buy a mini-van at the end of last year. It was not an easy decision since we just bought a new car three years ago and just paid it off at the beginning of last year, but we needed a larger car to meet the demands of going places with my family (since my nephew and my mom are frequently in tow).
In the almost 6 years of our marriage, with five cars in the mix, this was our first car that we paid for fully in cash. Well, if you don’t count an old beater car I bought for $500.
Anyway, I asked Brian to contribute his thoughts and tips on buying a new car and getting the best deal possible.
Here are his words of wisdom:
If you walk into a dealership without a game plan; you are going to pay more than you have to (sometimes a lot more!). They do this for a living and are likely really good at it. Don’t be an easy target! It will cost you some time, but stick to the plan below and you can save some real cash (that you can pass along to me if you like!)
KNOW YOUR BUDGET
• Have a figure in your head for how much you want to put down and how much you want to finance. Initially, keep this information to yourself!
• Very expensive purchases (homes, cars, boats, planes) tend to bring out a lot emotions. Leave those emotions at the door! Telling them that you absolutely love it is like handing them your wallet and saying “Sure I don’t mind spending another $50/month.”
• Buying a car on the cheap is a journey, and the salesperson (no matter how nice) is definitely NOT your friend. They just want your money.
WHAT TO DO WITH YOUR CURRENT VEHICLE?
• Selling it outright will likely give you the most cash, but the most hassle.
• Take it Carmax. They should give you a “fair” price and no pressure offer. How does it relate to the Kelly Blue Book or Edmunds estimate?
• In negotiations, the KBB and Edmunds estimates will help you only a little. But telling/showing them the Carmax offer definitely tilts the balance of power to you.
CHOOSE THE EXACT VEHICLE (MAKE, MODEL, TRIM) YOU WANT
• This is easier said than done. There are so many choices out there! Take an evening and go to your local motor mile and test drive everything you are interested in.
• Consider doing it after the sun goes down to see the interior at night (I am looking at you Nissan!)
• Be upfront with the salesperson and tell them that you are only looking to test drive and that you are looking at 26 vehicles after this one. Don’t bring up money at all and deflect if they do.
START THE BIDDING WARS
• Use sites like Edmunds and email blast the vehicle you have decided to purchase to all the dealerships within 75 miles or so. Hopefully there are at least 3-5. Tell them you want to buy the car in the next 48-72 hours and you want the out the door price will ALL the taxes, title, fees, etc.
• They will likely email you back saying “Hi nice to meet you…blah blah blah…come in and see us” or “Hi nice to meet you…blah blah blah…the best price we can possibly ever, ever, ever do is $24,789.”
• Tally up all the emails. The lowest bidder has just set the mark. Email everyone except the lowest bidder back and tell them you have cash in hand and are looking to buy in the next 48 hours and you got a price of $21,567, can you beat it?
• Hopefully, you will get a dealership to say we can offer you something that beats the previous low bidder like, $20,234.
• Email back the previous lowest bidder of $21,567 and any other dealership that could be a contender with the new lowest offer and see what they say.
• You can repeat this process one or two more times, but you will likely see diminishing returns.
• Hopefully, the dealership with the lowest offer is close to you. But if it isn’t, ask yourself if you are willing to drive an hour to save the difference? I would spend $25 in gas to save $500.
• Do some research online and on the phone with a couple local and/or national lenders.
• Go ahead start the process for the loan with your favorite lender or arm yourself with the knowledge that you can go somewhere else if the dealership is not will match the loan terms.
YOUR HOMEWORK IS DONE; TIME TO BRING HOME A NEW CAR
• After all the emailing back and forth you got an offer of $19,789 from an MSRP of $24,999! It is about Edmunds said you should pay and you are excited about not getting ripped off!
• Now you should know the max you will pay and that should certain lessen the pressure and eliminate the need for constant brinkmanship with the salesperson.
• Go test drive the car again at the dealership you have chosen to give your business and convince yourself 100% that you want it!
• Now you are likely sitting on the other side of the table from a salesperson and there might be one last point of negotiations: the trade-in.
• Since you already went to Carmax, you know what they will give you for your vehicle without any muss or fuss. Tell the sales rep to at least match it or you are walking out to sell it to Carmax and you might be back. That will likely seal the trade-in part of the deal.
• Even after hopefully cutting the price probably back to the bone, there is probably still a little room for negotiating. Try getting an accessory or two, or maybe splitting the difference.
• When they ask how much you want to put down versus finance, it is possible to get a slightly better deal if you finance a significant amount. They will be hoping to get some extra money off you in interest. If you do use this tactic, be sure to put the rest of your down payment towards the principle.
• NEVER, EVER, EVER tell them how much you can afford a month. Don’t be surprised if they ask you this over and over again. If you have already done your homework, you should know the terms of the loan you want and have a backup plan if they don’t play ball.
• Be sure to find out and agree upon the rate they want to offer you before you go back to the finance rep. They will definitely try to sneak this on you and they should offer you a rate that is at least comparable to the ones you already have been quoted on!
• Go over the final offer at least twice before finally agreeing and opening up that check book.
• After all the negotiations, there is one final thing to talk about…the extended warranty. There is a lot of debate about whether or not there is any value in it, do your own research to decide if it makes sense for you. Just know that they will likely push you into getting it with scare tactics and different pricing configurations.
If you followed all the advice above, you should feel relieved that you paid fair market value for your new ride! You got educated on what other around you paid, and other dealerships were offering. Found the best deal, and struck gold! Cheers!