Ms. Money’s Tips for Buying a Car
By Tiffany Bass Bukow, Founder of MsMoney.com
Since most of people don’t buy a car very often, it is difficult to become an expert at the car buying process. Many of you still have questions about how to get the best price and how you should prepare for the inevitable trip to the dealer. There are several things you may not know about that could cost you thousands of dollars when negotiating for your new vehicle.
What top tips do you have to give to people out there looking to purchase a new car?
- Don’t rush the process
- Ask owners about their experience
- Test drive a variety of cars
- Pay attention to gas mileage & insurance costs
I have been told that the way to get the best price when buying a car is to go to a number of different dealers and ask for their “best price,” then compare the results. Is this the right tactic? If not, then what is the right tactic?
Nothing in the world is that easy. Remember car sales people are paid top dollar to sell vehicles not just to quote best prices. They love a challenge and want to spend time with you. If you just walk in and ask for the best price, it is very unlikely they will give it to you. You essentially have to work with them, entice them, let them learn about your needs and become involved in the process. They are likely to give you the best price if you take time, respect them, and show you have thoroughly researched everything in advance. Consider buying a car like dating, you need to get to know your salesperson to get a favorable outcome. Then once you have their attention you can work them down on price by slowly going through all the reasons the car should sell for less.
What are the most important things that I can do to ease the aggravation of a buying a car?
- Do your research before you ever step foot in a dealership.
- Find out what features you want in a vehicle and then determine which cars carry them.
- Determine which cars you like and then figure out the one’s that are in high demand – because those cars are much more likely to cost you more.
- Check to see what the invoice price and the manufacturers suggested retail price (MSRP) at websites like www.carsdirect.com and www.kbb.com (Kelly Blue Book). However, don’t let this information stop you from bargaining even lower than the invoice price, because many dealerships pay less than invoice for the car and often get cash back from the dealer when they sell it. For example when dealers sell the Volvo S60 they get $3,500 back from Volvo.
Do all car dealerships pay the same amount for their vehicles or is there a “volume discount?”
Dealerships that move the most cars through the system get special treatment just like any other business that sells a lot of products, especially those businesses that treat their customers well. Even small dealerships get special bonuses. Often they receive a cash reward at the end of the month and the quarter if they hit their quota for selling autos. Sometimes, it might be more advantageous for the consumer to shop for their car at this time period because the dealer may consider dropping the price just a little more to hit their quota. Stop by Edmunds.com to find information about manufacturer-to-dealer incentives
What is this “C.S.I.” that I read so much about and is it important to know when buying a new car? Why?
CSI – stands for Crime Scene Investigators – just kidding. It stands for Consumer Satisfaction Index. Just like AAA gives approved ratings to hotels and newspapers give 4 star rating to movies, manufacturers give these ratings to dealers to assess how they treat their customers. It seems obvious that if you had a choice you would choose to go to the dealer that had the better report card wouldn’t you? They are also likely to be the place you can negotiate the best price because they will receive more discounts from the manufacturer.
What steps does the customer need to take before he even thinks about buying a car? Are there any?
- First of all, people need to consider if they can even afford to buy a car. In order to figure that out they need to have a good sense of their financial health. They can take the Ms.Money Financial Health test and then figure out where they stand financially and how much car they can afford. Bank of America has a great online calculator called “What Car Can I Afford.”
- Consumers definitely want to test drive the different models that they have pinpointed will fit their lifestyle. It would be crazy to buy a car without ever getting behind the wheel. What looks good on paper with a marketing description could be entirely different in reality.
- Ask other people who own the car you want to buy what they think about it. Sometimes you will be surprised at the answer. I own a 1996 Range Rover and would love to tell people the honest truth about how much expensive maintenance it needs.
- Visit websites that provide a bevy of information about the car-buying process.
Is leasing a good idea?
It depends on the person’s goals and their financial picture. Sometimes leasing is a good idea and other times it isn’t. It is common for people to overpay when leasing a car because they don’t know how to negotiate the overall deal. Before considering leasing an auto it a good idea to research the advantages and learn about the leasing fundamentals at websites such as Smart Money, which help answer the question, Should I Buy or Lease? Other websites will explain more of the details of leasing to you and LeaseCompare.com will let you shop good prices on a lease.
Are there certain common mistakes customers usually make that you advise them to avoid in the car purchasing process?
- Be sure to pay attention to what kind of gas mileage it gets because with today’s rising gas prices, filling up at the pump could cost you a small fortune in the long run.
- Shop for insurance before you truly consider looking at the car. You can compare insurance costs at websites like www.insweb.com.
- People often forget that bargaining the price you pay for your new car is just one element of the process. You still may need to negotiate the financial terms of your financing and if you are trading in a car, you will need to treat them as a separate bargaining component.
- Often customers just want to get the process over so they rush through things. This will hurt their bargaining power in the long run. It is best to act like you have all the time in the world and don’t really need to buy a car at this, this will help set the foundation for structuring a stellar cost saving deal!