The wheels of your old ride are falling off, the roof leaks, the tires are bald and every time you crank the engine it sounds like the local teen band tuning up in your garage. Even your spouse agrees it’s time to trade in the old clunker and start looking for some new wheels. So you clinch your teeth, put a rubber band on your wallet and head down to the neighborhood car dealer.
Hold it right there, pal! This is probably the second largest purchase you’ll ever make, and you’re cruising for a financial bruising if you’re not willing to do at least as much research as you would when buying an off-the-rack suit at the mall. Nearly 17 million new and an untold number of used cars were sold in the United States in 2005, and the amount of money consumers overspent would pay off the national debt.
Anyone who’s bought a car since 2000 and didn’t wear out their mouse surfing for information on the Internet before going to the showroom probably could have saved the equivalent of a year’s fuel costs. It’s all there, readily available and most of it is free.
You know the car and the cool gadgets you want and you know what the dealer paid. Now what? Experts agree that it’s always a good idea to make the salesperson aware that you have the true numbers and know how to use them. Always remember that you’re the boss.
That doesn’t mean that you should enter a showroom with an attitude. Both parties are on a mission: his is to make as much money as he can; yours is to make sure he doesn’t. Opposing goals for sure, but when an informed buyer does business with a professional salesman, a fair deal can and should be struck.
One top salesman reminds buyers that car dealerships are buyers first.
“The manufacturer didn’t just loan us those cars out on the lot and hope we sell them,” says Joe Pisciotta, an assistant sales manager in St. Louis. “We bought every one of those cars and our job is to sell them as quickly as we can. At a profit. There’s no free lunch, but not many reputable salespeople or dealers are going to really try to rip you off. You’ll eventually find out and we want you to come back again. But we’re not going to lose money, and that’s a fact.”
Consumers should listen when pros like Joe Pisciotta are willing to talk about the intricacies of buying and selling cars. Now in his 19th year of pounding car lot pavement, the decidedly non-fast talking Pisciotta was the top salesman in his 27-state region for five consecutive years.
He dispels the myth that salesmen and dealers make huge amounts in commission on every car they sell. “I average about $300 in commission on each sale,” Pisciotta said. “The dealer also gets his share, in addition to manufacturer incentives. That’s a fair profit because I do a lot of work. I’m not going to work from 7:30 a.m. until 9 p.m. five or six days a week for 70 grand a year.”
Do Your Homework
There’s that word again. Pisciotta emphasizes the importance of knowing everything you can about the car, prices and consumer reviews before entering the negotiation phase. “Don’t start your new car hunt without information. “Use the Internet,” he said. “Knowledge is power and the Internet has all the information you’ll ever need.” Managing to suppress a sigh, he added, “The Internet has made everybody smarter.”
Some of the more informative Web sites that offer reviews, pricing information and other buying tips include:
Consumer Reports (consumerreports.com)
IntelliChoice, Inc. (intellichoice.com)
Kelley Blue Book (kbb.com)
The Internet is your most valuable resource, but nothing can replace the intimate act of getting behind the wheel for the first time, inhaling that new-car aroma and peeling out of the dealer’s lot for a test drive.
Some consumer advocates suggest you take more than one test spin. The first time out you’ll probably be more concerned with avoiding an accident in a strange vehicle than you do paying attention to the details of the drive. Is the drive hard or soft? Is there room in the trunk for the golf clubs? How does it handle pot holes? Is there leg room in the back seat? Are the controls accessible and convenient? How about road noise? Can you easily get in and out of the car? How difficult is it to paralell park?
Keep your thoughts to yourself during the test drive. Savvy salesmen will take advantage of you to talk about things you want to keep to yourself. How much can you afford, and how much do you want for your trade-in? Keep your eyes on the road and the information to yourself until you’re ready to deal.
Tips from the Pros
Consumer advocates caution buyers to go into car deals with their eyes wide open. Here are a few sales traps to avoid:
Don’t tie yourself to a monthly payment. Salesmen begin salivating immediately when they learn their prospective customer is a “payment buyer.” Heck, you’ll pay a small fortune for that Chevy that’s been on the lot for month if you can keep the payments down to $350 a month! They’ll juggle trade-in value, MSRP numbers, the length of the financing and amount of your down payment until they reach that $350 monthly payment that’s so important to you. Actually, the only thing that should matter is the cost of car. Everything else is irrelevant.
Forget about the “extra protection.” Never pay more for paint protection, rust proofing or undercoating. This stuff costs a fortune, it’s pure profit for the dealer and you don’t need it anyway because most new cars already have 100,000 mile rust warranties. No thanks, it’s a sucker deal.
How about that extended warranty? Maybe, maybe not. Buying an extended warranty at the time of purchase may be a good idea if you’re absolutely sure you’ll be driving the car long after the original warranty expires. It’ll be cheaper at the time you buy the car and the the dealer’s price will usually be less expensive than that offered by a third party. But proceed with caution. Consumer Reports magazine, the Grandaddy of all consumer advocate organizations, does not recommend.
Negotiate the price first: Don’t start talking trade-in value of your old car before locking down a price on a new one. First get a fixed price, then talk about trade-in. Any other way, the salesman will toss so many variables into the formula that you’ll be dizzy. And make sure you know ahead of time what the proper trade-in price for your car really is. Don’t let the salesperson tell you what your car is worth. You tell them how much you want based on your research, then let the negotiating begin.
Rebate or Low-Interest Rate? What’s the better deal, a low or zero percent interest loan or a big rebate at the time of sale? It all depends on how much you’re borrowing and the amount of the loan, so put some batteries in your calculator and start crunching the numbers. First, figure out the monthly payment under each offer. Take that amount and multiply it by the number of months of the financing term. Then, subtract the cash you’re saving from the rebate and compare the net costs.
Why is my salesman running back and forth to the sales manager? It’s annoying, but there’s not much you can do about it. Turnover is huge in car sales and dealers know that inexperienced salespeople bear watching. The sales manager holds the key to the information treasure chest of manufacturer rebates and incentives, and your guy probably doesn’t have the authority to close the deal anyway. If the runaround gets too frustrating, demand to speak directly to the sales manager. Who knows, it might work!
Is There a Best Time to Buy?
You bet. Most experts agree that there really are best times of the month and year to prowl the showrooms. The end of the month is always good because dealers are trying to clear their lots, wipe the slate clean and start the next month anew. Another good time to strike is when the next year’s models are introduced. Once again, dealers will do everything they can to clear out their old inventory and put the fresh stuff on the floor.
December is always good. The new cars are out, but most showrooms are empty because everybody is out shopping for Christmas gifts. It’s also wise to strike when bad weather hits town and all the customers are at home staying warm and dry. The forlorn Maytag man looks like a Manhattan socialite compared to a car salesman with no customers to pressure. Want a convertible? Visit your local dealer during a January blizzard. Try buying a rag top in August when every other surfer wannabe is on the prowl and you’ll find out why.
Buying a new car needn’t be as painful as a root canal. Consider it a challenge. Just be prepared, be patient and enjoy the ride.
Did we mention to be prepared?