Car Buying Can Be Fun - Step Two

Now that we have our game plan set (Post - Step One) lets go buy a car.

First tip. Never buy new. Its that simple. It looks great, it smells different, the leather seats have no cracks, but as soon as you drive that off the lot, you lose 10%. That's just the rule. In a couple months the smell will be of your midnight Taco Bell runs or you buddy who threw up in the passenger seat (how he's still your buddy is not known- sorry Joel), the leather will be cracked, you may even crack your windshield. STUFF HAPPENS, why pay double for it? LET SOMEONE TAKE THE HIT. On a $30,000 vehicle, that's a $3,000 hit driving it off the lot. That's a lot of Little Debbie snacks or boxes of Kroger brand Mac&Cheese. You don't want to get an old car (its harder to tell its condition and upkeep), but get something that's a year or two old with low mileage and you can pad those gently worn in seats with stacks of dollar bills.

Second, never lease. Unless leasing is your thing, what you are willing to spend lots of money for in life, your one indulgence, and you lease ever couple years, AVOID. The rates are high and they will try to stick you with charges all over the place (such as damage or mileage). You may save cash on a monthly basis, but you have no assets. All you have is a slightly lower monthly bill. Buy the car, buy an asset. Keep it a long time (at least 5 years) and then resell it or trade it in. That's car ownership folks, that's the cheapest way to buy a car. Car companies would not lease cars when they could sell them if they couldn't make money off it.

Thirdly, rarely take the dealership financing. As I stated in the last post, maintenance and financing is how dealerships make gobs of money. They make a little off the car, sure, but the cash cow is from the manufacturer and then from you in maintenance and financing. Thus the importance of getting pre-approved for your own loan at a lower rate. If you can't, then go ahead and get their financing and IMMEDIATELY pay it off or transfer the loan to another banking institution. You could be talking a 3% difference. On a $20,000 car loan, that can be 600 clams a year in savings. That's a roundtrip plane ticket cross country plus a drink in the airport.

Finally, there is a theory that you want to buy a car at the end of the month and more specifically at the end of a model year. The thought is first, that the salesman is trying to hit a performance quota and if he is short at the end of the month, they will do most anything to get you to walk out of there as a buyer, even if that means selling to you at cost. Secondly, at the end of a model year (varies buy manufacturer), the dealer will be trying to unload inventory to make room for the next year's model. Don't be sold by the "clearances" on the radio or t.v. If they want to make more room, they will be willing to come down even more.

The first step at the dealership is finding those cars in your price AND quality range. If you can't find it there, move on. Dealerships are lined up in rows for a reason. If you feel spry, check out all of the dealerships online and check out there inventories at home. Most times, the prices listed on the internet are firm prices; their selling point has to be within the 5 seconds you are browsing, but like we said before, there are always other areas to negotiate. If you do find the car on the lot, take a look online and make sure the price listed online and posted to the window are the same. Don't let them jack up the prices on the lot.

Once you've found your car, its inspection time. First, the inside. Are there tears in the leather or fabric seats. Are all fixtures still fastened properly. Are there floor mats? (sometimes they have the old ones and your last bargaining chip can be for new floor mats thrown into the deal for free). Do all the electronics work? Does the A/C pump cold air? Do the windows go up and down with ease? Spend your time. Don't feel rushed. Systematically go through ever piece of the car are make sure you are happy with it. Next is the same thing with the exterior. Paint, glass, headlights (make sure the blinkers and brakes flash), check under the hood and make sure the engines hoses and other parts look clean and well maintained. You don't want rusty or cracked parts slowly killing your car. Finally, take your car for a spin. Make sure you can speed up and shift gears smoothly. Are the brakes firm? Do all the electronics work (you're checking again). How is the handling and the smoothness of the ride. Your main goal of car buying is purchasing something that gets you from A to B safely and comfortably and that makes you feel good getting there. If you're happy, I'm happy, so make sure you're happy, because I want you to be happy.

Car checks out, time to wheel and deal. You've invested time at this point, but its not too late to walk away. Its never too late to walk away, that should always be in your head. You will give them your car so they can inspect your trade-in and make you an offer. While they are doing so, they will start talking about pricing the current car. I've never done this, but looking back, I would recommend not evening talking price until you get the quote back on your trade-in. By locking in one price, you have less wiggle room on the remaining variables to make it fit into your budget. Instead, ask them about financing options, extended warranty, what the manufacturers warranty covers. If its a used car GET THE CARFAX. Just ask them and spend some time going over the car history. Has it been in an accident? Has it been flooded? Has it been serviced on a regular basis. Maybe it has a problem with its electornics you notice, because the radio has been replaced 3 times in 10K miles, that's a red flag. Use information to your advantage.

When you get the quote for your car, now it is time to start negotiating. Ask them to write down EVERY CHARGE for the car on an invoice. If there are random charges on there, ask them what they are and if they can be removed. If they charge you for laser etching (used as a theft deterance) say you didn't want that and you won't pay for it. If they say every car on their lot has that and its policy to include that charge, tell them to take it off the price of the vehicle then. REMEMBER, it doesn't matter what has to change to get you down to your number, find a place for it. Never take the first number on your trade in. Ask why they valued it so low. Show the Kelly Blue Book number if its higher and say you won't take less than $$$. If they only come half way, its time to start negotiating the car. What things did you notice during the inspection that you didn't like. MENTION THEM ALL. "I love the car, but..." these are negotiating points. Negotiating is not hard. Just understand where they are coming from and stick to your guns. Both parties should leave feeling good about the deal. If the can't do that, they won't do that, so don't feel like you have to either.

All negotiating is the different but based on the same principals. The goal is to get the deal done to the point you are happy when you leave the table. There are so many variables in buying a car, you can manipulate all of them, I can not go through all the ways to negotiate, but the key is stick with your principles. On a quick note, extended warranties are ONLY to be bought for used cars for short periods of time to give you piece of mind and give you surity that the engine won't explode ten minutes after driving off the lot. Its a sucker bet. Other than that, have fun with it. Its a slow process that you should soak in and get better at each and every time. Use this as a foundation. Its all about planning and then showing your patience and self control. Its a car, but its also a financial obligation, don't let it pull you down to the point where you hurt in the rest of your lifestyle. If you have any other questions, please let me know.

Other than that, DON'T BUY A PREVIA!

Sincerely,

Coco