Car Purchase Information

[AresXD40]

Feel free to ask any questions you want, whether it is for clarification or just want further information on the subject.

My credentials are this I up until very recently was a Sales Associate at a Toyota dealership. I have since moved on to go back to school and finish my studies.

Now car deals can go two ways, Yours (The preferred way for the buyer) or the dealers (The preferred way for the dealer).

Below is a simplified version of the process you will go through along with some tips and hints.

Very simply put. California State Law states this. There is NO cooling off period after purchasing a vehicle. You MAY NOT cancel the contract if you think it is now to expensive, if you wished you had purchased another vehicle or if you found a better deal. A contract may ONLY be canceled if there is fraud involved. That is the simplified version of it. This is a notice that will be posted in all of the booths at every car dealership in California. Now there is one exception to the cooling off rule. It came into effect July 1st, 2006. You may purchase a used vehicle from a dealership and along with that vehicle you may purchase the ability to cancel the contract. The fee ranges depending on the cost of the vehicle. You may only purchase a contract to cancel if the vehicle cost less than $40,000. You purchase the ability to cancel; average fee for this is $250. You must ALSO pay to return the vehicle. That fee typically matches the fee to purchase the cancellation contract. Now here is the catch. Yes you can return the vehicle BUT it must be done within 48 hours or the cancellation contract is VOID. For other STATES THIS MAY BE VERY DIFFERENT, KNOW YOUR STATES LAWS. Ok moving on.

Now EVERYONE wants to get a great deal on a new car or used car when they go to a dealer. If you are so inclined to purchase said new vehicle so be it. But be forewarned. Prepare yourself with lots of information.

1st. Do some research before you go out shopping. Edmunds is an excellent source of information. Use it to find out invoice price on the vehicles and configure a car close to your liking. Also VERY important, save some money for a down payment please. It will make it MUCH easier on your pocketbook in the long run to shell out early on. Also research your trade if you have one, have current KBB and Edmunds TRADE IN values printed out and in hand with your invoice print outs of the car you wish to purchase.

2nd. Do Not EVER expect to purchase the EXACT vehicle you want. You might get close on the options and close on the color but over 75% of all car buyers buy something else that what they originally decided on whether it be color or option or even make and model.

3rd. Check your credit rating. Be prepared ahead of time with that, know where you stand. Before you head out to the dealer, gather some information. At least two references, with addresses and phone numbers. If it is just you on there you will need the two references plus one closest relative’s information. If there is two people on the credit application, you'll need the same two references information, BUT two closest relative; one for each of you.

4th. When you go into the dealership it PAYS to be polite and friendly up front. That goes to both the buyer and the salesperson.

5th. If you get a salesperson you DO NOT LIKE. You can MOST DEFINETELY ASK FOR ANOTHER ONE. It will make your buying experience much more pleasurable.

6th. Look around the entire lot for the cars, don't be afraid to ask to test drive. However if you plan to test drive multiple cars, go during a Monday through mid-day Friday. Trust me, if you waste a salespersons time on the weekend, you will be dropped and left to fend for yourself unless they are incredibly dead.

7th. After you select your vehicle to purchase. (Don't act too interested to the salesperson or they'll believe they have what is known as a laydown in the business). You'll be walked inside to the booth, and presented with a few pieces of paper. Don't be intimidated they are just paper, however they represent the entire car deal for the most part BEFORE it goes to finance(assuming the deal works in your favor and you purchase the car)

7a. The first piece of paper traditionally is the Credit Application. Yes it is necessary even if you already know your credit score. Fill it out and sign it. Sometimes there is a Credit Disclosure form along with it. This will state your current automotive credit score.

7b. Next will be the trade information if there is one. If not you'll move directly to the next one.

7c. Which is known as a Four Square, or Five Square. Typically you'll find it looks a bit like this. Top "square" is your information, the date, the salesperson or persons and the cars information, including VIN number, mileage, year, make and model. The next square is the middle left; this is the price of the car. Usually the salesperson will write the vehicles price than under it will say +fees. On average the plus fees is approximately 10% of the cost of the car. This includes taxes, license, registration, documentation fees and the like. The next square is the middle right. This is the trade information. The next is the bottom left; this is your down payment square. Or also known as "Initial Investment", it sounds less evil, it is preferred by the banks you put down approximately one third the initial cost of the vehicle. Next is the monthly payment square or also known as the "monthly investment". The way they calculate is this super easy, it is also how they hit you with a really high payment. They take the first three digits in the vehicles price and multiply by three. IE 200 x 3 = $600/month. It is usually high, but can be fairly accurate depending on your down payment and interest rates.

8th. Negotiation. This is fairly simple, be firm and be straight shooting with what you want, pun intended. You WANT the best price, which is invoice, or below. Most dealers will fight you tooth and nail on this price, but in the end will let you have your way to have your business.
I normally start off by explaining all the information on the four square to the customer. Starting with the trade. This is where the dealer will make a lot of their money. Stick to your guns and ask for all the money. They WILL pay it or they WILL lose your business. If you car is worth to KBB $10,000 they will say it is worth $5,000 or maybe even less. They will try to take your car for way less than it is worth on fair trade in values. Fight for that trade in value keep it high and in your favor.
Next they hit you on down payment. Now be prepared, you know what you have and what you can put down. You may not want to put it all down, but do it. Again it will save you money in the long run, and I am sorry but if you are buying a $30,000 car, YOU WILL NOT HAVE $250/month payments. Period it doesn't happen, not with finance charges, taxes and the like and your small down payment. Go as big as you can. Save yourself the money. INTEREST IS BAD.
Next is the monthly payment. Negotiate down of course, but leave this open, don't agree to anything until it is low low low. You can bump yourself up because you know it may have to be that way. Now comes the fun part, ask for there to be NO added warranties in the first pencil, and use the word pencil when you ask. Know the slang, you will come across more knowledgably and respected (feared) because you know what is going on. If they listen they will bring you a reasonable number, but argue it anyway, there is still more money to be saved. IE They have a few points saved in the back in the form of higher interest. This is the way of suckering you into buying that expensive warranty in finance. Oh well you can keep the same payment if I do this and this and bam they have you on the same price of the car added warranty with a smidgen less interest but the dealer makes boatloads.
Keep fighting that payment until the final offer comes out; it will say Final in caps and underlined. Than ask your interest rate, and fight that until it is down and as low as it will go, you'll know what the lowest interest rates are because you RESEARCHED before hand. Once they agree and give you a good interest rate and YOU are happy with the results of your hard negotiation, agree to purchase the car. Sit back and relax now, it is time for that, you earned it.

Wait a second you say... Wait happened to the price. This is what the dealer will do to you. Never was price mentioned. That is right the dealer gets you to concentrate on those other squares hoping you will forget about the price. Ask for below invoice. Start $500 to $1000 below invoice and work from there.

More in next post.

[AresXD40]

9th. Now comes finance. This is ANOTHER round of negotiations. You CAN negotiate on warranty prices, you CAN negotiate on that paint protection, and you CAN on that alarm or low jack. Or whatever the finance manager offers you. Fight those too. If you want them that is. If you do NOT wish to purchase any of those items tell them no. I do NOT want any extras. Just the car. From this point he or she will print out the contract and paperwork. Read it carefully. Make sure the interest rate you agreed on is correct, make sure that price is correct, and make sure you monthly payment is the same. They will try to do a switch on you if they are shady enough. Sign the paperwork and take delivery of your new car. Now if you want those extras or specifics ask for them, and ask the price. Than ask for the best price, keep fighting it down, it will go down. That paint protection doesn't cost the dealer $2000 it costs them $50 to $100 for the protectant and the time to apply it. Same goes with that warranty. $2495 is standard asking price for a 7 year, 100,000 mile bumper to bumper warranty, but you can get it down another $1000 or more. So do it if you want it. Threaten to walk out if they don't lower it. The dealer sets the price on these NOT Toyota, NOT Honda, NOT the manufacture. After that is all set and agreed upon. Contracts will start printing, read them, take the time to, check those interest rates, warranty costs, vehicle price, and all that. Make sure they are correct, if they are sign away and drive home in your new vehicle.

Enjoy! I am sure there is a bit I missed. If you have any questions, feel free to ask. Also check out. http://www.carbuyingtips.com/scams.htm

[dave421]

as an ex-Honda salesperson, I'd like to add a couple of things.

Don't be that guy. If you came into my dealership and told me you knew how to get a great price on a car, you walked out after spending a lot more money than you planned on while I got a great commission. It IS possible to sell someone a car for more than sticker. While most salespeople/dealerships won't do it normally, if someone comes in that's a complete know-it-all arse, they're going to get thrown over a barrell.

Definitely do your research. There was nothing that bugged me more and made me less likely to help you than you telling me that you wanted $5k off sticker on a new Accord because you got that on your insert other brand. Guess what, not all manufacturers are the same. On a Honda, you're looking at about 2000-4000 markup depending on the car. They actually have one of the lowest profits out there. Invoice prices can be found on the net and will make you look that much smarter (or dumber) when you walk in.

Your trade-in isn't as nice as you think it is. Look up the value and DON'T go for Retail or Private Party. Trade-in is the only thing close. Also consider that your Ford is worth less to a Honda dealer than a Ford dealer. You will often get more for your vehicle at the corresponding dealer. That doesn't mean it's worth 25% less elsewhere either though.

If you talk to a salesperson, KEEP TALKING TO THAT SALESPERSON. If you drop one for no reason (this doesn't include a jerk) then it's likely you'll be dropped if it's a busy day. Someone that won't show the mindset to stay with one person is typically a shopper and gets moved to the back burner.

Stay patient. It's a game. If you want to win the game, you have to play the game. You're going to make an offer and they're going to counter. Unless you offer them sticker (or more), expect a negotiation. You can stick to your number but realize that the dealership can as well. In other words, don't make your first offer your final offer. You'll likely be walking out without a car.

Don't be afraid to tell them what you want. Check the sheet, is there a price for floormats? Keyless entry? Add this stuff into your negotiations. If you don't, that will be the first thing dropped to meet your price and you won't realize it until the deal is done.

Just remember, nice but firm, smart but not a know-it-all, educated, & willing to negotiate. That was always my favorite customer.

I know a lot of this was said above but figured I'd reiterate some of it.

[rodnocker1]

As has been said, put in some time and do some research before you go to buy. Car Dealers (and all businesses, whether wholesale or retail) are in business to make money. They aren't out to take a loss and anyone who thinks they are actually getting the car for less than what it cost the Dealer is fooling themselves.

My Wife's Ex-Sister-in-Law worked for a Dealership in Houston and her job was to sit at a computer all day and type out the "Invoices" on their cars. She said her job was to take the invoice that came with the cars, enter the information with higher amounts, and print the new marked up ones that they showed the customers. The customers saw the new "Dealer Invoice" and thought they were getting a deal.

I think the biggest mistake most Buyers make, whether it is cars, appliances, or whatever is thinking they have to get it right then that day. It's sort of like a quest or trophy hunt and they feel like if they don't come back with a car then they have failed.

[XD in SC]

OK great input from some knowledgablesales guys. Now I will throw in my part. The aftermarket!

DO NOT BUY ANY ADD ONS AT THE DEALER LEVEL! Do I need to repeat that?? Unless you have money to waste. Which obvioulsy you don't. If you waste it here, you can't buy that new XD you wanted!!!

If you find car or truck XYZ and you just gotta have it w/ remote start, rims, step bars, stereo, spoiler, cell phone holder, the next greatest doodad to come along, or that banging 8-track, ask the dealer who they send it to. MOST of them do not do these accessories in house. You WILL get a better deal if you go to the shop itself. Yes they do paint protection, rust proofing, and fabric protection in the back of the dealership somewhere, but you've already been warned about that. The dealer I used to work at used to offer the fabric protection for a couple hundred, and it cost them $12.00/car. The paint protection was less than $9.00/car. Only a handful have a staff that is qualified to do the rest.

I DO THIS STUFF ALL DAY! Don't let the dealer talk you into any upgrades unless they are FACTORY parts.
Video systems, wheels/tires, lift/lowering kits, stereo, remote start/alarms/keyless entry, LoJack, tint, spoliers, radar detectors, truck accessories........... all are negotiable too, at the right shop. Don't depend on Best Buy, Tweeters, Circuit City, Nebraska Furniture Mart, Future Shops, H.H. Gregg, or any other major chain store to give you the best service or best deal. This is why I say ask the dealer who they use. If you talk to or stop by the shop, and you don't like the way it looks, smells, or the way you get treated/talked to, then it also says something about the dealer you are buying from.

We have told most of our local dealerships to NOT call us for anything. They don't pay on time, everything has to be right now, and our price is never low enough. All I hear is "man help me out, I am tight on this deal". Well, now you're tighter, I am not selling anything to you, send your customer to me.


There are some shady shops out there too, but you guys/gals are gun buyers, so you know how to deal.

[AresXD40]

XDinSC has a good point. Aftermarkets with the exception of warranties are best left to someone else besides the Dealer. Whether it be a stereo, wheels, tires, whatever the heck y'all like to put on your cars. Don't do it when you purchase the car. It will cost you more in the long run, in both initial cost and the fact the cost of the item is put on your loan so you MUST PAY INTEREST ON IT.

[db99wj]

Great stuff, made a word doc with this info for the future.

Is there better times to buy during the month, year etc?

[AresXD40]

end of the month is good. try to get those last few out make a good quota for the month.

[Chvelle]

Originally Posted by rodnocker1

My Wife's Ex-Sister-in-Law worked for a Dealership in Houston and her job was to sit at a computer all day and type out the "Invoices" on their cars. She said her job was to take the invoice that came with the cars, enter the information with higher amounts, and print the new marked up ones that they showed the customers. The customers saw the new "Dealer Invoice" and thought they were getting a deal.
.

She didn't work at the (in)famous LandShark Chevrolet was it? When I was living in Houston, every once in a while I'd see a POS newer car with a sign on the back window stating "Landmark Chevy ripped me off...ask me how"

[Jettubby]

I have the sure-fire way of buying a new car. At least it's worked like a charm with the last 5 cars I've bought. Figure out what you want then make a list of dealers you are willing to go to to get the car. Call each and say something like, "I'm ready to purchase xxx vehicle. I'm going to buy it from whomever gives me the best deal. What is your best price?". If they say, "We don't quote over the phone" then say, "Goodbye". You will get a price from someone and then start calling the others with that price and see if they can beat it. Some will say, "We can't beat that" and that is fine. Eventually you'll get the best price. Just don't fall for the, "We'll beat that. Just come on down and talk about it". Nope. Tell them you want a faxed quote on the actual car before you come down. Works like a charm. I have free flight benefits so I'm willing to go to just about any state to buy. That really drives them crazy. Don't get me wrong; I'm not out to rip off the dealer as no one is going to quote me a price that they are not going to make a profit from and I expect them to make a profit. I just shop over the phone until I get the best deal. I don't waste my time at the dealer listening to sales tactics.