Women's
Southwest
FCU
Tel.
(214) 887-0700
www.feministcu.org
~
WSFCUDallas@sbcglobal.net
HOW
TO BUY A CAR FOR
LE$$
©
1994, 2002, & 2006 by Teryl Springstead,
In
General
--How much can you afford?
--Why to apply for a loan before you buy the car
--How to decide on the type of vehicle
About
Used Cars
--Where to find used cars
--How to price used cars
--What to do when you find the used car
--How to inspect a used car yourself
--How to get the seller to agree to let a mechanic
inspect
the car.
--How to negotiate the price of a used car
About
New Cars
--How to walk away from a dealer
--How to price new cars
--How to shop for new cars by phone
--How to negotiate the price of a new car
--How to handle trade-ins
--About auto brokers
--Leasing vs. borrowing vs. paying cash
--How a shy, introverted person bought a new car for $100 over dealer
invoice
(and could have paid less).
I.
HOW MUCH CAN YOU AFFORD; OTHER FACTORS TO CONSIDER
Loan Payment: If you borrow money for part of the purchase of your
car, you'll want to ensure that you can truly afford the monthly payment.
Otherwise,
you could hurt your credit rating and, worse yet, risk losing your car.
Consider your average monthly income that you have left after paying
taxes. If you are employed, this would be your net pay vs. your gross.
Some financial counselors suggest the following guidelines: out of every
dollar you earn, spend no more than 35 cents per month on your rent or your
mortgage payment; no more than 15 cents per month on your required (or
minimum) monthly payments on car loans, signature loans, charge accounts
and credit cards. Add to your savings accounts 5 to 10 cents per month so t
hat you'll have money to keep your payments up to date in case your current
income
is interrupted or you have a financial emergency.
To keep your monthly debts manageable, fill out "Planning Your
Purchases: When to Buy on Credit and When Not To." This worksheet will help you figure out how much
of
a monthly payment you can afford on your vehicle.
to a working printer, we'll be happy to print one out and give or mail it to you. Contact us. If you would
like to become a WSFCU member, click on Easy to Join
Once you know how much of a payment you can afford, contact some
prospective lenders--such as Women's Southwest FCU-- and ask, "If I want to keep my loan payment to no
more than $______ per month, how much can I borrow on a 36-month loan?
A
48-month loan? A 60-month
loan?" and so on.
Keep in mind how long you think each vehicle will last. Will a 5-year
loan enable you to buy a car that will last 8 years, giving you 3 years free of
car payments? Might a 36-month loan give you a vehicle that will last 36
months? Whatever you do, don't set up a loan with a repayment period that is longer
than the number of years you think the vehicle will last. To decide, factor in the number of
miles
you're likely to put on it each year.
Monthly auto expenses: To compute average monthly expenses
for a particular vehicle, (including fuel, maintenance, repairs, registration
and insurance) complete "What Are the Costs of Buying a Car?"
If you are a member, and you do not have access
to a working printer, we'll be happy to print one out and give or mail it to you. Contact us. If you would
like to become a WSFCU member, click on Easy to Join
Once you've narrowed your choices to 2 or 3 vehicles,
consider repeating the computations for each one you have in mind. Compare
the overall cost of each. Or, you might consider filling out the worksheet once
for
a new car and again for a used car.
As you fill out the worksheet, keep in mind:
--energy needs based on miles per gallon (or miles per charge for
battery-powered
vehicles)
--the impact of your vehicle on the environment
--repairs based on how well other vehicles of the same model and
year have fared according to such publications as Consumer Reports and
what
you hear from mechanics and friends.
--registration renewal fees (check with your motor vehicle
department)
You may find that your auto insurance will be higher on sportier or
newer
vehicles; car repairs will normally be higher on used vehicles.
To see how your car payment and maintenance costs will fit into your
overall budget, use the "Spending Plan" worksheet. If you are a WSFCU member, and you do not have access
to a working printer, we'll be happy to print one out and give or mail it to you. Contact us. If you would
like to become a WSFCU member, click on Easy to Join
Down payment: To avoid being "upside down," save for a good-sized
down payment. You're upside down when the value of your car is lower than the
amount you owe on the car. If, part way through your loan, you end up needing
or wanting to change the type of car you drive, you'll want to be able to sell the
car
for enough money to pay off its loan. Some guidelines:
new car: borrow no more than 80% of the retail value of the car.
If
you buy such non-car items as extended warranties, pay cash for them.
used car: borrow no
more than its wholesale value.
More on how to determine the value of the car later.
II.
APPLY BEFORE YOU BUY – WHY?
To find out much your lender thinks you can afford.
To take advantage of deals on used cars from private parties:
someone else may offer more money but be unable to come up with a loan
quickly enough. If you make an offer on their car over the weekend, they may
want their money by the first of the week. Don't trade fast loan approval for
a higher lending rate that will increase the cost of your car.
To obtain your best price from a dealer: dealers usually give you
only 5 days after your purchase to come up with financing. If you come up
with
your own financing, you may be eligible for a manufacturer's rebate.
Find out.
What about unbelievably low loan rates from dealers? They may be
available only on certain models with hundreds or thousands of dollars
worth of options you don't want. Negotiate the price of the car only, without
negotiating
over dealer financing or trade-ins.
Warning: dealers rarely ask you how much you want to pay for the
total cost of the car. Rather, they ask you how much of a monthly payment
you can afford. It's easy to be fooled into buying a more expensive car than you need. By
filling in worksheets and applying for your loan in advance, you know the
total
cost and the monthly payments you can afford.
III.
NARROW YOUR CHOICE OF CAR
What
type of car suits your lifestyle?
Do you drive alone or transport several people? Need a 2-door,
4-door, wagon, van, pickup? What kind of legroom and headroom do you
need
in the back seat as well as the front?
Do you transport animals? Plants? Bicycles? Wheelchairs? Camping
equipment? Tools for work (or for roadside repairs of your vehicle)? Sporting
gear?
Trailers?
Do you need a hidden or locking storage/cargo area?
or
open truck bed?
I power equipment, such as power seats, important to you? Or, is a car that will require fewer
repairs? (The more electrical gadgets a car has, the greater the number
of
things that can go wrong.)
Do you want a car that has a device you can use to charge computers,
cell
phones, fans, and other electronics?
Do you need or want a car with lots of power?
Good mileage?
What are the safety records of cars you're considering?
Will your car fit you? For instance, can you reach the controls? Pedals? Radio?
Heater? Air conditioner? Will your head--or the heads of your passengers
--touch
the ceiling in the front and back seats? Will
your passengers in front and back seats have room for their legs?
Do you need a vehicle designed for rural roads or city driving?
Stop-and-go street driving or driving on the freeways? Hills and mountains
or
plains and level roads?
Make one list of features you need. Make a separate list of features
you'd
like to have but could live without.
For in-depth info on economy, safety, features, dimensions, and
reliability, read Consumer Reports. Every April, Consumer Reports
comes out with one issue devoted entirely to cars. They give ratings on
new cars and used cars; they list repair records for various vehicles.
They have a list of recommended buys on used cars and a list of used cars
to avoid. If you do not subscribe, you can read it in the credit union office or
go to a public library or ask a friend, relative or co-worker to lend you theirs.
Consumer Reports also has advice on how to buy and negotiate. Narrow your choices to
2 or 3 vehicles and try not to fall in love with one particular make, model, or
color.
(Even if you do, don't let the dealer or private party know it.)
Ask your bookstore or library for recommendations onf other car-buying
publications
to help you.
Don't decide too soon whether to buy new or used. You may
have to change your mind. For instance, you may see plenty of used station wagons
on the road, but find that few of them are for sale. You may think that a new
car will not need repairs but read an article, such as this one, that tells you
that on average, over 17 things will go wrong with a brand new vehicle in the
first
year of ownership!
IV.
IF YOU DECIDE TO BUY A USED CAR
Where
to find them:
In such publications as the Auto Trader, which includes a photo of each
car
that's for sale
Classified ads
Craig's List
Auctions (but only if a mobile mechanic accompanies you and inspects
the
car on the spot)
Car rental agency sales (again, only with a mechanic) who has brought
along
proper diagnostic equipment and tools)
If you buy from a dealer, you will normally pay more than if you buy from
a private party. Consumer Reports recommends that you buy used cars from
a dealer only if that dealer also sells new cars of that same brand. In other words, if you're
buying a used Glidemobile, it is safer to buy it from XYZ Glidemobiles than from ABC Used Cars.
Concerned about their reputation, new car dealers will normally
keep
the better trade-ins they receive--and sell the others to ABC Used Cars.
Bulletin boards
Lending institutions which have repossessed vehicles (again, take along
that
mobile mechanic)
Mechanics sometimes have vehicles for sale. It's often because they
got stuck with the vehicle when the owner failed to pay them for their repairs.
Consider the mechanic's motives when this occurs and have another mechanic,
who
is not a friend of the mechanic who is selling the vehicle, check out the
vehicle.
Ask your friends for other sources.
How
to price them:
Members of our credit union have the use of our NADA Guide It is similar to the
Blue Book, but, as we see it, with lower, more realistic values. (Remember, the Blue Book lists
the average prices dealers charge for vehicles; it doesn't include the prices private parties charge. You may also
want to check for the National Automobile Dealers Association (NADA) guide--and/or a similar book, called the Red Book--at your
public library. You may also want to invest in a subscription so that you can carry it with you
when you are negotiating. It begins with wholesale and retail values for particular models, then adjusts
them according to the options (such as air conditioning) the car has and the
number of miles. If you are a WSFCU member, you may stop by our office, call, fax, or e-mail us.
We’ll look up the vehicle for you, adjusting the value for options
and
mileage.
Check Web sites and ads. See what sellers are asking for the same car
with similar equipment. After a few days, call on some of the ads and find
out what price the seller actually accepted for the car. Most likely, it will be
lower
than the initial asking price.
If you buy from a private party, before you bother to go look at a car,
ask
questions:
How many previous owners did the car have?
Why is the car being sold?
What major repairs have been made? What repairs are still needed?
Did
they keep their receipts?
What kind of maintenance has been performed? How often? Do they
have
the receipts to document the maintenance?
Is the engine the original engine?
How many miles on the engine?
If it’s not the original engine, how many miles on the vehicle itself (or,
how many miles on the chassis)? Has the odometer turned over? How
many
times?
Where has the car been driven and under what conditions of road
and weather? Long trips or stop and go driving? Has it been sitting on the
street,
under a car port or in a garage?
Does it have the options on your "must have" list? How about your
"would
like but could live without" list?
Does it have license plates from the state in which you'll be registering
the
vehicle?
What
to do when you find THE car:
When people buy from a private party, they sometimes
wonder, "What if it's a stolen car?" How can you minimize the risk? Ask
to see the title or registration for the car. [If they have neither, hesitate.]
Look to see if the person named on the title is the person selling the vehicle.
If not, they should have a Power of Attorney from the registered owner, and a
plausible explanation as to why. If they don't, hesitate. Explain that your credit
union has a policy of making the check payable to the legal owner of the
vehicle. If the seller balks and asks you to make it out to someone else, you
may want to skip this particular vehicle. If you find little pieces of broken
glass
inside the vehicle, was it broken into the night before?
[We're not trying to frighten you - just want you to be alert.]
Inform the seller (whether a dealer or private party) that your loan has
been
approved already. This lets them
know you are qualified and serious.
Let the seller know that you want to have the car inspected. If they hesitate,
it may be because they fear you will drive their car off and they'll never see it
again. That's a justifiable fear on their part. You can overcome their anxiety by either asking if they will go with you
to your mechanic's shop or if you can have a mobile mechanic [of your choosing]
come to them. If they refuse to let you have the car inspected under any
circumstances, there may be extensive--and expensive--problems. Or it may have been in a flood.
Let
the car go.
If possible, avoid cars with out-of-state plates or registration.
In
California, the Department of Motor Vehicles (DMV) insists on having one of
their employees physically inspect such vehicles before title can be transferred.
They check the Vehicle ID number on the body and compare it to the Vehicle
ID number on the engine. [We've heard stories about two cars that were in
separate
crashes. The front of one body was
welded onto the back of another.] You
may want to point out the DMV requirement to the seller of an out-of-state
vehicle. Assuming that the car is "legit", an out-of-state vehicle may
need to have a smog device added to it before it can be registered in your
state.
If money is still owed on the vehicle, the lender may still have the
Ownership Certificate; the lender's name will appear on the registration as
the Legal Owner or Lienholder. Find out the names of the borrowers, the loan
number, and the name, address and phone number of the lender. Contact the
lender yourself; ask for a payoff good through a particular date. (You may need to get the
borrower to sign a release to give you the information. If so, cooperate. Be glad the that the lender is protecting the borrower's privacy! Do not
accept the borrower's word for how much she/he owes on the vehicle.
If the seller owes less on the loan than you pay for the car, you (or your lender) will
make out one check to the Lienholder and another to the Registered Owner.
If the seller owes more than the agreed-upon sales price, you (or your lender)
will want to obtain a cashier's check from the seller (payable to the seller's
lender) for the difference between the sales price and the amount that is
owed on the loan. Otherwise, the seller's lender won't release the title to
the
car.
Make an appointment to take the car to a mechanic. Even if you
have a regular mechanic, you may want to go to a diagnostic center. (The
Automobile Club in your area may be able to recommend one.) Don't go to
the seller's mechanic. Do not accept the seller's offer to have the vehicle
inspected for you or find a mechanic for you. You contact the mechanic and
pay the mechanic; you want the mechanic to be on your side. If you can't find
a diagnostic center or you've no regular mechanic, ask friends. Try to find a
mechanic who specializes in the make of car you hope to buy or, at least, in cars that come
from the part of the world in which your car is made. As mentioned above, you
may be able to find a mobile mechanic who will come to the car. If you're
financing your car through Women's Southwest FCU, please note that (1) we do not
require an inspection until after your loan has been approved;
(2) If you are WSFCU member, feel free to print out our "Inspection Form for Used Cars" for the
mechanic to complete.
f you are a WSFCU member, and you do not have access
to a working printer, we'll be happy to print one out and give or mail it to you. Contact us. If you would
like to become a WSFCU member, click on Easy to Join
If you don't use our form, be sure your mechanic itemizes for you the estimated cost of needed repairs.
Note: many mechanics will not estimate body work. The cost of repairing a
dented fender can be incredible. It may also be worth your while to take the car to
a
body shop; most of them will give free estimates.
Note: sellers, especially private parties, almost always ask for
more than they expect to receive. They expect to bargain. They may be
selling under time pressure. Perhaps they're about to move.
car minus needed repairs & body work. If your WSFCU or other loan has been approved
for less than the asking price, point out to the seller the loan amount that was approved.
(The seller
need not know that you have--or can afford--a down payment.)
Most likely the seller will object. Now's your chance to inquire, "What's
the best offer you've had so far?" Even if your second offer will be for less
than their best offer, point out that you have an approved loan behind you. Tell them how
soon you can give them their check. You might make your second offer
wholesale N.A.D.A. or Red Book minus a percentage of the cost of the repairs: 80% of the
cost would be the wholesale "value" of the repairs; 50% would mean splitting
the
cost of repairs with the seller.
For your final offer(s) be prepared to go as high as your book's retail value
minus the cost of repairs. If they ask for high Blue Book, point out that Blue Book values are inflated. Besides, if you have to sell your car before paying off a loan based on Blue Book value, you'll probably be unable to sell your car for enough money
to pay off the loan. Use anything you can think of as a bargaining chip. [When
my mom helped me buy my first car, they wanted $1,100 for a '65 Dodge.
She told the seller Ithat couldn't have a gearshift on the floor and would need to
have it moved next to the steering wheel. I kept saying, "But, Mom!" She
kept shushing me up. She went on to explain to the seller that it would probably cost
$200 to move the gear shift. She told them, too, that she could give them a check for $900 right there on the spot. [They took
it!]
You can say that the color is not your cup of tea; you'll have to have the car re-painted.
Will
they split with you the cost of having it repainted?
Once you agree on a price, ask them to put it in writing. And to show them that you mean business, give them a check for
a
small amount, such as $100. .
If they still owe money on the car, make an appointment to meet
them at their lender. If no money is owed, contact your lender. Find out whether
your lender wants you and the seller to go first to the DMV or first to the
lender's office. You may be able to handle the down payment, exchange of keys,
Bill
of Sale, smog certificate and so forth in your lender's office.
If you buy a used car from a dealer, don't buy it if the contract has
on it the phrase "AS IS". That phrase voids any warranty, express or implied
you might have on the vehicle. Either, walk away from the deal, without signing
the contract, or ask the salesperson to cross out the phrase, initial it, and
write or type on the contract the length of time your warranty will cover, e.g. 30
days or 60 days, and what the warranty will--and won't--cover. Do not rely on
unwritten
agreements. Get it in writing.
V.
ABOUT NEW CARS
How to Walk Away from a car dealership: you'll need to go in
person once in order to:
-
Take a vehicle on a test drive
-
Sit in the front and back
-
Pick up brochures that will give you details on standard equipment and colors.
Warning: salespeople nearly always ask you "What can we do to
get you to buy this car today?" or, "How much of a monthly payment can you
swing?"
DO NOT BUY A CAR ON THIS VISIT.
To
keep yourself from falling under their spell:
Bring a clipboard and notepaper with you.
Take along a friend who promises that they will physically pull you
away
if necessary.
Take along a copy of a consumer magazine; display it prominently
on
top of your clipboard.
When the salesperson asks what they can do to get you to buy that
vehicle today, don't discuss monthly payments. Instead, offer them 70% or less of
the
sticker price. They will usually
laugh (or scowl) and walk away.
How to price new cars: once you've narrowed your desired
vehicles down to 2 or 3 specific models, look up Dealer Invoice and Manufacturer's Suggested Retail Prices (MSRP). online.
Prices are itemized for each different model of the vehicle, options, option
packages, destination charges—be sure to add these in--and smog
devices.
(in California this item is sometimes called "California Emissions").
Rebates: Before buying a new car, contact the manufacturer. Or, look on their Web site. Find out how much of a rebate
they are offering on the particular model of vehicle you plan to buy. Note: when a dealership offers
you 0% financing or a rebate, you are usually better off taking the rebate.
The rebate reduces the cost of the car, the sales tax, and the registration you will
pay for the entire time that you own the car. Ask us for details. We’ll help
you
with the computations.
Objective: Don’t pay sticker price. Buy the vehicle for dealer invoice
minus rebate plus $100 - $500. When dealers tell you that they can’t afford
to sell a vehicle for that price it isn’t true. They have others ways of making
money on cars, including “factory incentives” and “flooring” and other funds
that
are not specific to one car.
Contact a car dealers' Fleet Departments only. What is the Fleet Department?
As you can imagine, they normally sell several vehicles to one buyer, a "fleet"
of cars. Dealers permit the sales people in the Fleet Department to sell cars
for less than regular salespeople can accept. While you may not be in a position
to buy dozens or hundreds of cars, you are eligible to go through the fleet
department
if you belong to a credit union.
Because they normally sell in volume to businesses and government
agencies, Fleet Department staff usually work on weekdays, during normal
business
hours; they are seldom available on evenings or weekends.
from a few hundred to a few thousand dollars. Take advantage of this benefit of belonging to one or more credit unions!
Buy a daily newspaper or go online. Search for car dealers in a city that is within 100 miles or so of
where
you live. For instance, if you
live in
Name of Dealership
Phone number
Name of Fleet Department Salesperson
Price of car and options before tax &
registration.
Have next to you another note pad. On it list the make, exact model,
and codes for the vehicle and options--or option packages--you desire. Obtain these codes dealer brochures and/or Web sites.
List
the totals for dealer invoice and
MSRP.
Contact the first dealership. Ask them how to contact their Fleet Department. If you call, and they say
that they are not in right now but can a regular salesperson help you, find out
when the Fleet Department will be back and phone later. There is no point in
negotiating
with a regular salesperson.
When you contact the fleet department person begin with something such as, "I understand that you
give discounts to members of credit unions. I am a member of Women's Southwest Federal Credit Union. I understand, too, that
you can give me a better price than a broker would by eliminating the person in the middle.
I'm shopping for a [make, model, code #] car with the following options and
option packages. What kind of a price can you offer me?"
If they send you an e-mail, you'll have their name. If they tell you on the phone, jot their name and their price down or your note pad
or add it to your spread sheet. Thank them. Let them know that you are still shopping around and you' may get back to them.
If they are rude or obnoxious--or you have a bad feeling about them, remember: you are in control. Hang up the phone or
don't bother to reply to their e-mail.
If they let you know that that they won't negotiate by e-mail or phone and that you have to visit their dealership in person,
don't fall for it. Let them know that other fleet departments will negotiate without your being there in person so you are going to have
to cross them off your list.
Call the next dealer and talk with someone from the fleet department.
Begin in the same manner as you did with your first fleet department. At the end of your e-mail or conversation, add,
"Jane in the Fleet Department at ABC Wowmobile said she would sell
me this car in the color of my choice for $_______. What kind of
a deal can you offer me?" Write down the price on your note pad or type it into your spread sheet. If Ernesto
at XYZ Wowmobile gives you a lower price, check your model codes and
option codes. Be sure that you are talking about the same vehicle with the same
equipment, and that you are comparing apples with apples.
Get back to Jane at ABC Wowmobile. Give her the price that Ernesto gave you.
Write or say, "I wanted to give you a chance to beat Ernesto's price." If she gives you
a lower price, write it down or type it in. Then contact your 3rd dealer fleet department, and so on. Each
time, let the fleet department know the lowest price you've been offered so far and the name of the dealership and the person in
their fleet department. You can keep this up for hours
in the comfort of your home and save several hundred dollars per hour.
Keep this up until you think you've found the best price you're going to
find
away from where you live.
To test your lowest price, you might want to contact a few auto brokers. They will
usually offer to buy the car for you at $1,000 off MSRP in return for a fee. If a broker gives you a better price, get back to your fleet
departments
to let them know. Explain that you see no reason why they should let the broker
share their profit.
When you've found your best deal outside of your area, start contacting dealers closer to home. Again, work only with the fleet departments. Ask
yourself how much time and transportation expense will be involved if you
do decide to buy a vehicle out of town. If you're willing to make the trip to
save money, let your local dealer know that. You might say or write something such as, "I am willing to pay
$____ more to avoid the expense of taking that out of town trip, but no more. If you charge more than $___ above my out-of-town price, I'll go out of town to get it." Give them a chance
to
keep you from buying out of town.
If you find that the amount of money you will save makes the out-of-town
trip
worthwhile:
Beware of low-balling: "We don't have that vehicle in stock but we can
order that for you" (It may never come in.) Give them a deadline by which the
vehicle has to come in or you won't be able to buy from them. Have them fax or e-mail you
a Purchase Order with a
deadline on it.
Beware of "bait and switch": Have the dealer send you a "Seller's
Agreement" with the Vehicle ID Number listed on the agreement so you know
that you are dealing with a specific vehicle. You do not want to make a long
trip just to find out that your car was sold to another party 5 minutes before
you arrived and that, instead, the dealer wants to sell you one with options you
don't
want for $2,000 more.
Even when you buy from a local dealer, have them put a date on the
printed agreement by which you can get the money to them without having to
go
with their financing.
support the lender who gave you all of this information so that you could save money on your purchase!
Consumer Reports advises: do not mention your trade-in with a dealer,
even if you have one. Get to the rock-bottom price on the new car before you
mention
trade-ins or financing.
Normally, you'll receive a higher price on your used car if you sell it
yourself. If your car looks good, pay to have it detailed before you sell it.
Go online to find out what the low and high Blue Book values are on your vehicle.
(Dealers will normally pay you low book; you should be able to sell it for a little under high
book.) Because Blue Book prices are higher, you want to use Blue Book
when
you sell, Red Book or NADA when you buy.
About Auto Brokers: They make you think that they will do for you
what you can do for yourself by calling various fleet dealers. Actually, they
may check with only 1 or 2 of their pet dealers. Typically, they will find you a
car for $1,000 below sticker price. You pay them a flat fee. Usually, you can
do better on your own. Remember, they, too, have to make a profit. Why pay two
profits
when you can pay only one?
Leasing vs. Buying: Buying a car may cost more per month than
leasing one, but at least it belongs to you and you can sell it. Leasing a car is similar
to
renting a car for several years at a time.
Problem: at the end of the lease you will most likely be "upside down".
(See I, “Downpayment” above.) Example: you lease a Spiffmobile. If you'd
bought it, it would have cost $30,000. After 3 years, you want to buy out your
lease. The leasing company wants $25,000. Depreciation has brought the retail
value of the car down to $20,000. You may be able to finance (borrow from
another lender) $18,000 to $20,000. You will have to come up with the rest. If you
cannot, you may end up taking out an personal loan for the difference at a
much higher rate. By the time you've made a few years of lease payments and
paid off a multi-year car loan and a 36-month personal loan, you'll have paid for
the
car several times over.
You'd have been better off taking out a standard car loan in the first
place.
If you had, you'd have paid off only one loan. Furthermore, you'd have had the use
of
the car for some time after that with no payment at all.
VI.
TRUE STORY TO ILLUSTRATE CAR BUYING TECHNIQUES.
In the Spring of 1990 my friend Rita wanted to buy a used station
wagon or a 5-door lift-back. She saw lots of them on the street. But in the
ads, very few of them were for sale. The ones that were for sale cost nearly
as
much as new cars.
Result: reluctantly, she realized that her best bet would be to buy a new
car.
She and I went to the dealership to pick up brochures, and test drive the
cars. She took a couple of bicycles to see if they would fit in the back of the cars.
If her bikes wouldn't fit, she crossed the car off her list. She narrowed her choices
down
to a Honda, Nissan or
She didn't like the Toyota Camry station wagon. She's only 5'4" tall, and the controls
on
the radio were too far away for her to reach from the driver's seat.
The Honda wagon was too small to hold her bikes.
She couldn't find a dealer with a Nissan wagon to show! They always
tried
to steer her toward a Pathfinder that cost $5,000 more.
That left her with the Toyota Corolla wagon. She had only 4 choices of
color in body and interior. She made her first choice and her second choice.
When discussing the options she wanted, she learned that each model came
with
exactly the same ones. Humorously, she began to
refer to them as "mandatory options".
She looked up the car in the Automobile Invoice Service book (this was before she could have looked it up on a Web site).
With the price
of the car, the options package, destination and a
device:
Dealer Invoice
MSRP (Retail)
$10,850 $12,600
Rita is a shy person who dislikes confrontation and dislikes using the
telephone. In those days, negotiating via e-mail was not an option. I offered to make some calls for her, and that was how I discovered the negotiating techniques described above. I picked a bad time: Friday afternoon. I should
have
made the calls earlier in the week.
We live in
manager of a credit union. What kind of a price can you give me?" The broker
said, "$11,600 for the car if you don't mind a different color; for the color you
want
it will be $200 more. Then you pay
me a fee of $150."
"That's not much of a deal," I said. “The total cost is $11,750 to $11,950.
That's
$900 to $1,100 over Dealer Invoice."
The broker said, "I guarantee you won't find a better price." He shouldn't
have
said that. After he did, I was
determined to show him.
Rita brought me a copy of the Los Angeles Times newspaper. Before
calling dealers in L.A, I wanted to call some dealers in another area. I called
long distance information and asked for a number for Toyota of Riverside.
No listing. I called back and asked for Riverside Toyota. They gave me the
number. I called and asked for the fleet department. I told them that a broker
in
fee.) The man with whom I spoke said he'd sell me the car for $11,550. I said,
"Thanks,
but that hardly makes it worth the round trip for what I'd save."
I called Toyota of Hemet. They said, "We hate Riverside Toyota. We'll
sell you that car for $11,500." I called back Riverside Toyota. The Fleet person
wasn't available. A regular salesperson asked if he could talk to me. "No," I
said, "I'll just wait for your Fleet Department to call me back." Two hours later,
they called me back with an offer of $11,450, but, by then, I'd had a lower offer
from
another dealer, and they didn't want to match it.
I called a few other dealers but I didn't get very far. Some of them
told me that they would have to add onto the price a $200 fee for advertising. I
called
information for the 800 number for
about this. They hedged at first and when I asked them if they required
dealers to charge for advertising--which struck me as a normal cost of doing
business--they said no, but that some of the dealers had agreed with each
other
that they would.
I called Longo Toyota, just south of
largest
at
dealer invoice plus the $200 advertising fee for a total of $11,050.
I called Toyota of Marina del Rey and spoke with a woman named
Barbara Cadkin. She said that she would sell the car for $10,750. I
completely lost the ability to feign calm. I blubbered, "Wow! But how can you
do
that?"
"I'm not here to play games," she said. "I'm here to sell cars. That car
was new in the fall of 1989. Now it's 6 months later. The manufacturer is giving
us
rebates to move the cars. I'll share
part of that rebate with you."
I thought it sounded too good to be true. I wondered, "What's the catch?" I
asked, "Do you have that car in stock?" Yes. Could she get me the Vehicle
Identification Number (VIN)? Yes. Would she be willing to send me something
in
writing? Yes.
I had begun calling at 1 p.m. It was now sometime between 3 and 4.
I called Rita at work to tell her the good news. I asked Rita, "How much over
$10,750 would you be willing to pay to avoid a trip to LA?" She said $200,
or
a total of $10,950.
At that time, Kearny Mesa Toyota was reputed to have the lowest
prices
in
would be willing to pay $10,850 to avoid driving to LA to pick up the car.
The fleet guy hemmed and hawed and said he'd call me back. Eventually,
he did. No dice. "Tell you what I'm gonna do," I said. I'll bring you a check
for
$10,950 now and I'll meet Rita in your office."
Then I asked him how much to add on for tax and registration. He said
he wasn't sure if he could sell it to Rita for that price. I said, "Fine, I understand.
But if your boss allowed you to sell it to her for that price, how much would the
sales tax and registration come to? I checked the figures on my adding
machine.
I nearly blew it by getting into an argument over the $35 documentation
fee. I knew that it was not a government charge. It was just a fee that dealers
charge for preparing the paperwork. I called a few other dealers and learned
that, while some charged less, $35 was the going rate. I controlled my temper
and
added it on.
Rita had obtained loan approval in advance. I was able to cut a check
and meet her at the Fleet Department. The Fleet Department was across the
street
from the regular dealership.
The fleet guy smiled and said, "I can't sell you the car for $100 over
dealer invoice. I've got to sell it to you for $101 over dealer invoice." I reached
into
my pocket and handed him a $1 bill along with the check.
Rita tugged at my sleeve. She
said, "I don't think that's what he means."
The Fleet fella held up a computer printout. "See?" he asked. "Dealer
invoice
is $10,950. We'll sell it to you for
$11,051."
I blew my top. I had made the mistake of not bringing with me a
photocopy of the pages from AIS book. I stood there sputtering about the
book I had back at the office while he kept waving his out-of-date print out
in
the air.
Rita adjusted her glasses in her most scientific manner and said quietly,
"It doesn't matter what dealer invoice is." The fleet guy and I stopped arguing
[by the way, we don't recommend arguing]. Each of us turned, startled, and
looked
at her.
"A dealer in Marina del Rey will sell me the car for $10,750," she went
on.
"I'm willing to pay $200 to avoid a trip to
more.
Period."
The fleet guy said, "I'll have to walk across the street to my
general
sales manager."
"Don't go all the way over there," I said. We'll step outside while you call
him
or her on the phone."
Teryl and Rita stepped outside his office and waited for all of two
minutes.
He walked out, grinning. "I just had to try," he said. Rita took delivery
that evening for $10,950. They had her first choice of color in stock at no extra
charge.
She saved on the price of the car, she saved on her sales tax and
registration (both based on a percentage of selling price). She did have to pay
the
whopping long distance phone bill that came to under $5.
On Monday I got a kick out of calling the broker who'd "guaranteed" that
I wouldn't find a better price anywhere. He explained that the dealer needed to make
a
profit when selling to him and that he needed to make a profit when selling to
me.
I mailed Barbara Cadkin a check for $25 with a thank you letter. She
sent it back with some business cards. I told her that our credit union doesn't
refer members to a particular dealership. She said that that was OK, she was
sure it would work out. Some time later one of our board members read an
article
in a women's magazine that listed Barbara as one of the top
sales people in the country. Within the next few years a couple of people I
knew bought cars from Barbara, who moved on to another dealership. One
couple said that they handled everything by phone and mail ahead of time and
that they were in and out of Barbara's office within an hour. They sounded
pleased.
VII.
SOME USEFUL WEB SITES:
·
Crash
tests, recalls, safety:
·
Fuel
efficiency data: www.fueleconomy.gov
· History of a particular vehicle: www.carfax.com Uncover such things
as salvage, flood, lemon, odometer rollbacks, major accidents, rebuilt, fire,
previous
use as a taxi, police car, leased car, or rental car.
looking at was involved in a hurricane or a broken levee?
· Reviews of vehicles and/or rebates, invoice prices, car values,
more:
o
www.cars.com & autodollars.com
o
www.caranddriver.com
o
www.ConsumerReports.org
o
www,edmunds.com
· How to buy or sell a new or used vehicle via dealers or private
parties:
o
www.autos.msn.com
o
www.checkbook.org/auto/carbarg.cfm
· California’s Car Buyer’s Bill of Rights effective 7/1/06: includes
information such about an optional two-day “cooling off” period you can
purchase when you buy a used car for less than $40,000 from a dealer.
Also includes disclosures dealers must provide when you buy new or used
cars.
Visit www.dmv.ca.gov, then click on
“Publications.”
Please contact us about other useful Web
sites
you discover so that we can add them to the list.
VIII.
YOU CAN DO IT:
Prior to this experience, I had never negotiated a price on anything in
my life. Rita hates confrontation. If we could do it, you can do it. Remember
to
follow these steps:
·
Figure
out how much you can afford
·
Apply
for a loan before you buy the car
·
Decide
on the type of vehicle
·
Decide
whether to buy new or used, but keep an open mind
When
shopping for a used car:
·
Ask
lots of questions of the seller.
· Check the car(s) first in Consumer Reports. Is it on the list of
"Recommended
Buys on Used Cars" or the list of "Used Cars to Avoid"?
·
Price
your car in N.A.D.A. or the Red Book.
·
Inspect
the car yourself.
·
Have
a mechanic inspect the car.
·
Have
a body shop give you an estimate for repairs.
· Make your first offer wholesale minus repairs and your final
offer
retail minus repairs.
· Give any reason you can think of to offer a lower price but always give a
When
shopping for a new car:
·
Visit
a dealer first with your clipboard and your friend
·
See
what Consumer Reports has to say. They
buy new cars and test them. .
· Shop for cars by phone or e-mail, contacting only Fleet Departments
using
techniques described here. Or,
invent some of your own.
·
Whether
you buy new or used, call the CU office or send us an e-mail, whether you
have questions or you need a pep talk.
You're on
your way.
How to Buy a Car is yet another benefit of membership in
Women's Southwest FCU. It's Easy to Join.
Questions or broken links? Contact Us.