What's your car buying strategy?

In My Humble Opinion
1

My girlfriend just bought a new BMW 328i. She turned in her Infiniti G32 Coupe, which she was still upside down on, and ended up putting $1,500.00 down, with monthly payments below $500.00, under a program that lets you finance for 5 years and end up with an $11,000.00 balloon payment.

None of this is my financial responsibility, so I don’t care about the terms. She has a friend who used to sell cars, so he came in and haggled on her behalf for the price of the car. I was happy to just peruse the brochures and smell the new models in the showrooms. When I bought my car (a 2008 Saturn Sky - very pretty little 2 door convertible), I mainly jumped on 0% financing for 5 years, but suspect that I may have paid a few grand too much for it (what the hell, though. I got a comfortable payment I can afford).

I tell you all of this because I really have no good sense on how to buy a car. There’s tons of information on the internet, but that just results in information overload. I know that nobody pays the MSRP (sticker price), and that the dealer makes money even if they sell you the car at the invoice price. I also learned that you can take your trade-in to Carmax, and they’ll give you an appraisal in about 45 minutes, which you can use to negotiate the price the dealer gives you. Similarly, you can always ask your bank for a rate that they’d finance a car loan, so that you know what the dealer is going to have to beat. Beyond that, I’ve got no clue.

What is your car buying strategy? Do you come into the dealership at the last minute on the last day of the last month of the quarter, or some such thing, to get your great deal? Do you just end up liking a certain salesperson better than the others, and just trust this person to take care of you? Do you have any tips for my next big car purchase, whenever that may be?

2

Until my mid-20’s, I used to bring my father along, figuring that with 30 years of experience on me, he’d help me get a better deal.

Turns out he sucks at buying cars - he has a tendency to buy the first thing that fits the bill, fails to have used cars checked out, and probably ended up costing me a couple of thousand bucks each time we bought one.

I bought my first new car - an '09 Outback - this past spring. Since there are only two Subaru dealers in town, my choices were rather limited. Still, I saved about 30% off of MSRP by doing three things:

[ul]
[li]Knowing that the Outback was due for a refresh for 2010[/li][li]Walking away from the first dealer when they wouldn’t do the deal I wanted[/li][li]Parking my ass at the second dealer for three hours until they finally gave in to the price I was looking for[/li][/ul]

I went to the second dealership on my lunch break, explaining that I didn’t intend to buy anything that day but that I was interested in seeing what they had in stock. They had the color I wanted, and I took it for a spin. The sales guy eventually got around to asking how much I wanted to spend.

“About 30% off of MSRP,” I said.

“Well, let me see what I can do.”

He came back ten minutes later with a couple thousand knocked off the sticker price - basically the factory cash back and some change. “I know it’s your lunch break, so why don’t you take a look at this and maybe we can close it out.”

“Actually,” I said, “I’m salaried, so I can take a pretty long lunch. Here’s what I’ll pay you: about four thousand less than that number you just gave me.”

We went back and forth for a couple of hours, and he finally gave in. Then we started on the trade-in. It took about an hour for them to double their offer on that.

All and all, I think I walked out with a pretty sweet deal.

3

I buy really nice used cars about two to three years old. I test drive the ones I am interested in and then make a take or leave it offer and I am dead serious about it. I don’t haggle or play sales games at all. If that type of thing starts up from the salesperson which it always does, I will (somewhat politely) tell him that we have already gone over this and there is no need to go further if the dealership doesn’t want to sell it for that price and terms that I just stated. I have always gotten the car because I want to be fair and I do lots of research beforehand about what they current low-range market value is. I am sure a really experienced haggler could get some better deals than I can but I don’t have those skills. I am just completely stubborn and almost sales-proof and use that to my advantage. I don’t like buying new cars because of the serious initial depreciation and I like to take advantage of the fact that some other people eat that cost only to keep the vehicle for a fairly short time.

4

I’ve bought three cars in my life, all under very different circumstances, so I wouldn’t claim I have a strategy:

  1. My first car purchase was in South Africa as soon as I started working. No real strategy, just sort of went with the flow and ended up with a used Toyota Corolla. I get the sense that there is not so much haggling in South African dealerships - I paid the price the car was advertised which seemed inline with my expectations. Of course I was young and naive, so maybe I got taken for a ride!

  2. Second car purchase was five days after newly arriving in the United States. My strategy was to be hugely surprised that anyone would offer financing to someone who doesn’t exist from a credit history perspective and has a temporary work permit, and to take whatever I could get. I ended up buying a new Honda Civic financed over 3 years at 10%. Not very good at all, but probably the best I could do under the circumstances.

  3. Third and current car was this year. Things were a little different now as I am married and settled financially and we bought the car with cash (minus the Honda Civic trade-in).

I’m not sure I could offer detailed strategy information. In fact, even if I could I probably wouldn’t. I think it is key to remember that you do this very infrequently, but the salesperson does this every day. If you are going to play games it is extremely likely that the salesperson is going to be much better at it than you will be, simply due to experience.

What you should do is have a very clear idea of what you want and how much you expect it to cost you before you go into the dealership. I would do your test driving and car research before you go into a dealership with the intent to buy (meaning resisting the “what would it take to make you buy this car NOW” spiel). Use online resources to get an idea of what people are paying for the new car and what people are getting for a trade-in like yours. I quoted your Carmax statement because I don’t think they are a good reference - in my case their quote was a serious lowball offer ($3500 versus about $7500 from Kelly Blue Book, which we used to much greater success for negotiating purposes - obviously I did not mention the Carmax “offer”).

What we did do which I suppose counts as a very general strategy is purchase our specific car model at a time when demand was low. We bought a new Toyota Prius during the slump, where car sales sucked and the price of gas had fallen dramatically. I think 6 - 12 months prior to our purchase there was a premium on fuel efficient cars, but that was defiantly not the case when we bought.

All in all, I think we did well on the latest purchase. I am happy with what we paid for the new car and what we got for the old car. Not having to finance the car probably gave us a little bit more power too, so if that is not an option you may want to get that approved in advance through a bank or credit union. You can always see what the dealership will do for you (they may beat it) AFTER you agree on the final purchase and trade-in prices.

5

How did you arrive at that price? Why is 30% off MSRP a good deal? What if MSRP is 50% over the invoice price? Aren’t they still gouging you? I thought the idea was only to pay the price they dealer paid for it, sine they make money just by making the sale.

Or does it not matter to you, since you got the car you wanted for the price you were willing to pay? (As an aside, it’s odd that car buying seems to be the one area of consumerism where there’s a resentment towards the retailer making a profit).

6

Employee price. Order on the phone. Show up at the designated time. Sign. Drive away.

7

Pretty much.

As it turns out, it came out to be substantially less than invoice. I didn’t really intend to buy a car right away - I was planning on saving up a couple of additional months worth of down payment and waiting until the model year end clearance.

Though when I saw how much inventory was sitting on the second lot - a good thirty units of the model, though not necessarily in the trim I wanted - I figured it was worth seeing if I could wheedle out the deal I wanted to do.

8

The only car I’ve bought was about four years ago, and my strategy was to ask for internet quotes from a couple of different dealerships for the model I wanted. I got one from a dealership about an hour away for a price that was consistent with what I thought was a good price (consistent with what the internet thought that model was worth). However, I didn’t want to have to go that far away, so I went to the local dealership, with the internet quote from the far-away dealership printed out. Now, my husband and I really, really, suck at negotiating, and there was a point at which we were at an impasse with the dealer at about $3000 more than my quote. If I hadn’t had that quote, we would’ve ended up overpaying by that amount. As it was, I said, “Look, I know I can get the identical model from these guys for this much, and I’ll do that unless you can match it.” The dealer pointed out they might not have the color we wanted, yadda yadda, but since we didn’t care about color that didn’t hold much weight. Next time, I’m gonna just go with the dealership that gives me the internet quote and save myself the hassle.

Also, they tried to sell me one of those 5-year extended warranty things. I said, “What, your car is so awful that it’s going to break down in five years? Maybe I should get another kind of car,” and they changed their mind on that one really quick.

9

I buy used cars, ranging from almost new (our main cars) to seriously used (my work trucks).

I start looking waaaaay before I need to. I usually start getting “the car bug” long before I’m interested in buying. This way I’m rarely in a “need-it-now” frame of mind. I generally spend six months looking but not *really *looking.

I explore prices on Edmunds.com. (That site is up there with The Dope for my faves.) Then I generally don’t deal with dealers who are not advertising prices in the neighborhood of where I want to pay.

When I see one with something that looks like it’s less “retail” and closer to “private party” price, I pay the dealer a visit or make a call.

It’s worked well for me. The first time I tried this, I got a three-year-old 2003 Mazda Protege5 for less than trade-in value. Seriously. 48,000 miles then; 115,000 now.

The second time, I got a four-year-old 2004 Mazda MPV. I checked the prices on Edmunds while I was showing the car to the family at home. I went back to the dealer with the “private party” price for the van and the “trade-in” price for my van. They went $700 over the trade-in price and $700 under the asking price of the van before I even showed them the print-outs. Slam dunk; I bought it on the spot. 68,000 miles then; 92,000 now.

Two weeks ago I found an '02 Silverado for under the trade-in price. I still got $200 knocked off, which was almost 10 percent.

Oh, and I ALWAYS get them checked out by my mechanic. He’s the greatest, and didn’t even charge me for looking at the truck. Usually it’s the best $25-$50 I’ve ever spent. But the people whose cars you reject tend to be, uh, pissy.

JK

10

I’ve only bought three new vehicles in my life. Two motorcycles and a Ranger pick-up truck.
Here’s my strategy:

  1. Do a lot of research, know exactly what you want. I’m going to assume your choice makes sense as far as reliability, holding it’s value etc.
  2. Get a low interest loan (if you’re not paying cash) and pay it off as fast as you can.
  3. Maintain the hell out of the vehicle and drive it as long as you possibly can.

When I bought my truck my main focus was getting exactly the truck I wanted. I had to push the dealer a little to bring in a truck optioned precisely as I requested as opposed to one they had on the lot. I might have negotiated a better price if I took one out of thier stock but I’ve never regretted paying a little more for the color and options I wanted. It’s worked out great, love my truck, long since paid off, still running strong and looking good. Lots of life left in it.

11

Eeep, I know you said you’re not responsible for any of her financial stuff; but trading in when upside down and going with the extended amortization seems a recipe for disaster.

Anyway, for my recent car purchase (my first). I figured out online which models I thought would best suit my needs (1 or 2 per make)and then went to test drive them over a couple of weeks. I was entirely upfront with the salesmen on what I was doing and I got cash price quote from all the dealers (no haggling yet). I made a two car shortlist and got in invoice price for the trim level I wanted online. After setting up appointments I test drove em back to back and made my choice.

I didn’t have to haggle for long since the sticker was pretty damn close to invoice but I got a few hundred off. Only when the final price was agreed on did I even talk financing. I went with 0 down 3 years at 0% but could have paid cash.

One thing I did was absolutely refuse to even discuss monthly payments, refused to be up-sold on trim level and extended warentee/rustproofing/paint protection and didn’t make a decision without sleeping on it.

12

I explore the car on edmunds.com and generate a fair market price (they have a tool for that based on your location). Once I’ve decided on a car, they have an option where dealers write you emails with offers for the same car. It’s very easy to compare and since they know you are getting mutilple offers, it seems like you get a good price.

13

  1. Spend hours on end at Edmunds.com doing research to create a list of 5 cars. Since I visit the site almost daily this is the easy bit.

  2. Once I have the list of 5 cars I test drive. I narrow it down from 5 to 3.

  3. A month or so later I test drive the 3 I’ve chosen again and do more research on Edmunds so that I know what the incentives, rebates, etc. are and narrow it down to 1 vehicle.

  4. Once I’ve settled on a vehicle I want, I determine the options I want and calculate the price. I look at the invoice price and I check for rebates and marketing support to get a total price, (plus the Tax, Tag & Title) that strikes me as a reasonable profit for the dealer, but just barely.

  5. I check my credit union to see what their interest rate is. I compare that to any interest rate specials going on. I have my spreadsheet set up so I can compare interest rate vs. rebates if that’s an either/or situation. If the CU’s rate is the better deal, I go ahead and get approval.

  6. Find a large “volume” dealership in the area with the exact model and options I want and go there. They’re usually willing to operate on thinner margins. I try to go at the end of the month as the incentives are usually highest at this point, and the dealership is most motivated to try to hit their sales goals. I take one last test drive and and go inside to “Look at some numbers”. That’s usually when they try to hit me with the four square.

  7. I take out my own sharpie and put a nice fat X on top of the four square. I put down what I want for my trade (if applicable), what I will pay for their car, and an interest rate that is a quarter percent lower than my CU rate and tell them that is my offer. The sales guy usually goes to talk to his manager at this point. Usually the manager comes back to try to negotiate with me.

  8. I reiterate my offer. “If you can’t meet the interest rate, that’s fine. I’ll go to my CU tomorrow and come back then, but the rest stands.” If they try to negotiate further, I say, “This is the only deal I’m willing to make. Can you do it? If not, thanks for your time.” That usually does it. It helps that my credit is good, that I’ve done my research and that I never “have” to buy, so I can walk away easily. That keeps the power on my side. The actual purchase rarely takes very long. I also refuse any “Mop & Glow” or other addons like extended warranties.

14

Arrange financing beforehand with a bank. Go to dealers, test drive stuff. Figure out exactly what model, color, option package etc. you want.

Go home, call dealer fleet service departments. Tell them you’re paying cash for best offer. Buy car.

Do happy dance because you didn’t have to deal with the idiot salesguys playing the “four square” game or “upgrading” you to stain-treated upholstery.

15

My experience is pretty much like this. Dad is retired from Ford. I choose what Ford model is best for me at the time. I option it out at the Ford A-Plan site. The site tells me where I can buy it. I drive it. I buy it.

16

Start with Edmunds like Joe Kerrman, madmonk28 and Sundrop sez. Look for 0% financing or large rebates.

Then use the Edmunds feature to allow the dealers to give you a email price quote.

That gives you a good price.

Then, find out what your bank and Credit Union will give for financing. See if the dealer can beat it.

Stand firm on extra dealer add-ons- no undercoats, over coating, etc.

17

The payments on the Infiniti were ridiculous - $770.00 a month (this, because she had rolled a Lincoln Navigator’s debt into this payment - she had made some bad financial decisions in her past). With this car, her payments drop to $480.00 a month, plus she gets a new car. Yes, at the end of 5 years, she’ll owe 11 grand, but I expect the car to be worth more than that, and BMW will jump on the chance to exchange it for another when the time comes.

My main suggestion was that she get out from under that ridiculous car payment she was paying on a 5 year old car with 60,000 miles. I actually liked the crossover SUV’s she was test driving (like the Toyota RAV-4 and the VW Tiguan), but she really wanted a Beamer.

How do you determine what you want for your trade?

And can you, or someone else similarly familiar, elaborate on the “four square”. I’ve heard of it, and have a vague understanding. The four squares are the trade in, the down payment, the interest rate, and the monthly payment (I think). Isn’t the point just to create confusion, or get you focused on a monthly payment when you ignore how they are gouging you on the interest rate?

18

If possible, start early & take your time.
A good deal will come along.

19

Consumer Reports, baby.

I subscribe to CR online. I determine the car I want, down to options and such. CR sends me a report about what it should cost me based on their data.

I think CALL all of the dealers in about 100 miles that stock that make. Tell each of the salesguys who get the call that I want this car, that consumer reports tells me this is the CEILING of what I should pay, and that I’m talking to multiple dealers. I then give them 24 hours to make their best offer. Then I wait. I make them deliver it, too.

Once I actually went into the showroom. But that was because my four-year-old had seen a commercial with a ‘wind tunnel of CASH!’ and wanted to give it a try. They let her, she got two dollars, and they filmed it for a commercial. Everyone wins.

20

See here.