*10 Sure-Fire Ways To Save Big $$$
*How To Buy Stress Free
*What’s Hidden in the Window Sticker’s Fine Print?
*Best Internet Resources
*Special Cost-Comparison Worksheet
For most people, buying a new car or truck is a daunting experience. But with a little patience and preparation, you can feel like the victor instead of the victim. The real secret is to be knowledgeable and stay in control of the proceedings from start to finish. That ability is directly related to the quality of research you do up front. These 10 tips will help make the process less intimidating-and less costly. While these rules are focused on buying, most are also applicable to leasing.-by the Editors of Motor Trend
Ways To Save Big On Your Next New Vehicle
1.Understand the game
A dealership exists to sell as many vehicles as possible for as much profit as possible. A well-trained sales staff will do everything in its power to help the dealership succeed in that quest and fill their own pockets. Conversely, your job is to protect your interests-financial and automotive-at all times. While it’s foolish to think you’ll buy anything below dealer cost, a logical game plan and proper follow-through greatly increase your chances of driving away more and owing less than someone who walks in off the street unprepared.
2.Determine Your Budget and Financing Possibilities
Priority one is to ascertain the funds at your disposal and the amount, sources, and cost of any monies you need to borrow. Paying cash may ensure a bit more bargaining clout (and eliminate all interest fees), but remember to factor in the resulting opportunity costs. The guiding principle for borrowers: Finance as little as necessary at the lowest rate for the shortest possible time period. Aside from savings, consider tapping other resources, such as credit unions, home equity loans (interest expenses are deductible from your income taxes), banks, a manufacturer’s captive finance arm, and finally, dealer-supplied funds. Compare the total costs involved for each-both on a monthly basis as well as over the term of the loan agreement. And finally, don’t overlook ancillary costs. Sales tax, registration fees, and perhaps most significant, insurance premiums, all factor into any realistic total outlay equation.
3.Clearly Define Your Target
Compile a short list of candidates that meet your price/functionality needs using a Pierre Money Mart Buyer’s Guide. Also write out the kinds and costs of options you want. Next, visit a number of dealerships on a fact-finding mission. In a notebook, jot down sticker prices and good/bad points of each vehicle. Ask any product questions you may have, but don’t engage in purchase discussions at this time. Closely examine the build quality, ergonomics, driving position, and seat comfort (all seats) of any vehicle you’re interested in. Pick up brochures whenever possible for at-home reference. Budget just too tight for the vehicle you want/need? Then consider these alternatives: a low-mileage dealer demonstrator (especially one with an “as-new” warranty) or a “new” vehicle left over from the previous model year (particularly if it’s a virtual clone of the current offering).
4.Research The Dealer Cost
To determine a realistic sale price, you must know what the dealer actually paid as well as rebates, discounts, or any other money factors that come into play. Sources for invoice costs include the Kelley Blue Book “New Car Price Manual” and Edmund’s “New Car Prices” (both available at better bookstores and libraries or via the Internet). The trade weekly Automotive News lists national dealer and customer incentives/rebates. In some cases, state or regional spiffs also may apply (Edmund’s Web site shows both). And then there’s the dealer holdback. Literally 2 to 3 percent of the invoice price that a manufacturer “refunds” to the dealer-as pure profit-when a vehicle gets sold. But remember, a dealership is a business. As such it needs to earn a profit. Your goal is to make sure it’s a fair one.
5.Test Drive On Your Terms
A test drive provides vital knowledge about a vehicle’s general feel and dynamic characteristics. Let the salesperson demonstrate all of its features prior to starting, but if possible, leave the sales staff curbside when you head out. Pick a route you’re familiar with, containing a wide variety of terrain, pavement, and traffic conditions. Turn off the radio and devote full attention to the way your candidate responds to throttle, brake, steering, and accelerator inputs. Also listen for inherent noises (driveline, tires, etc.) that are likely to become annoying over time.
6.Don’t Be Intimidated
When it’s finally time to start negotiating, remember that you are the ultimate deal maker-or deal breaker. Stay cool. Be prepared to discuss all aspects of the transaction in good faith with a reasonable salesperson; but be equally ready to call time out or simply walk away if things start to get out of hand. Bring along a spouse or knowledgeable friend if it makes you feel more at ease; and don’t hesitate to show proper disdain for tired lines like “This deal is only good for the next hour.” If it’s good today, it’ll be just as good-and possibly better-tomorrow.
7.Remember That Everything Isnegotiable-To A Point
It’s your solemn duty to play “Let’s Make a Deal” on every facet of the purchase process-the vehicle price, the options, the financing, and most assuredly, the cost of any dealer add-ons, including extended warranties. Negotiate with several stores to get the best price on a given package before making a final decision, but remember, the law of supply and demand ultimately rules the day. The more popular a vehicle is, the less maneuvering room exists. A “fair price” can, in fact, vary from a percent or two over invoice on average to full sticker plus on a hard-to-get hot seller. While fixed “value pricing”-a la Saturn-eliminates one kind of haggling, you may be subjected to pitches for all sorts of other extras (like undercoating and upholstery stainproofing) that are gold mines for the dealer but of limited value to you. Be wary of these items, and never buy a dealer-brokered credit, life, or disability insurance policy.
8.Negotiate In The Proper Order.
There is only one correct sequence with three distinct steps. First, agree on the negotiated vehicle price. Next, work out a fair trade-in value for your current car or truck (when applicable) to derive a final transaction price. Finally, address specific financial arrangements, considering available dealer, manufacturer, bank, or other money sources.
9.Shop When The Time Is Right
Your maximum leverage exists when pressure to move product is highest and/or when floor traffic is lowest. Historically, those times occur: (1) At the end of a given model year. (2) During the last week of the month, particularly the last day of that week. (3) In the mid-portion of any week (or any other time you see an empty showroom). (4) The final hour or two before a dealership closes for the day. (5) Immediately before or after most national holidays. (6) Immediately before or after the April 15 tax deadline. When any one of these periods also coincides with the rollout of a special manufacturer incentive program, your chances of making a sweet deal get even better.
10.Always Read Everything Before Signing
Sales contracts can be fraught with hidden unpleasantry, most of it lurking in the fine print. Before putting your signature on any legal document, carefully review each line to make sure it delivers what the salesman promised. If something is confusing, demand a plain-English translation. If anything still sounds bogus, demand it be rewritten or threaten to take a walk.
How To Read The Fine Print On A Window Sticker
Many people take this sticky document for granted. You shouldn’t. Here’s how to decipher the hidden information you should know before buying or leasing a new vehicle.
The window sticker, also known as a “Monroney” (named after Sen. Almer Stilwell “Mike” Monroney who wrote it into our collective car-buying experience in the Federal Automobile Disclosure Act in 1958), contains invaluable information about that exact new vehicle-standard equipment, optional equipment costs, estimated fuel economy, warranty data, vehicle build location, country of parts origin, and of course, the final “sticker price.” Although our example is not an actual sticker, most of the elements seen here correspond to those on any window sticker you may see at a dealer.
Standard Equipment: Equipment identified as “standard” is included at no extra charge on all vehicles in that model line unless it is replaced with optional equipment. For instance, all Litespeed XRs are equipped with a standard suspension package, but the performance suspension package is optional. Important items that sometimes appear here are engine specifications, airbags, power steering, manual/auto transmission, warranty length, and type of brakes.
Fuel Economy: Very conservative EPA fuel economy estimates for this vehicle and a yearly estimated fuel cost are provided. Be sure to read the “Actual Mileage…” paragraph to get a better idea of the economy range you could observe in everyday driving. Also, be careful interpreting the “For Comparison Shopping…” portion of this information. A Jaguar XJR sedan is rated by the EPA as a “compact,” as is the Plymouth Neon-but their relative fuel economies are very different.
Shipping Info: Where the vehicle was first imported or delivered and how it arrived at the dealer can be interesting, but rarely useful. In this case, the Litespeed arrived in Long Beach, California, where it was probably driven to the nearby Universal Motors Torrance facility and finally delivered via railroad to the Universal dealer in Box Springs, California.
Vehicle ID: Most window stickers compile all of the vehicle’s vital statistics into one, concise area-the model, number of doors, trim level, vehicle identification number (VIN), model year, interior and exterior colors, and sometimes vehicle configuration.
Optional Equipment: Here is where things can really add up. By law, the manufacturer must show all of the options and add-ons included with this vehicle (sometimes listed with the corresponding code number) and the suggested retail cost to you. Also included in this column is the destination charge-the cost the dealer incurred to get the vehicle to his lot. Be wary of low-cost/high-profit items that could be avoided such as carpeted floor mats or add-on spoilers. Often, the warranty information is also found in this area. Many carmakers now include lengthy limited warranties (3 year/30,000 mile is typical) covering normal wear and 24-hour roadside assistance (a call to an 800 number gets you to the nearest repair shop). Optional warranties that cover a longer period of time (some are as long as 10 years and overlap the standard warranty) and optional roadside assistance (like AAA service) can often cost a great deal. Carefully decide if this added peace of mind is worth the extra outlay of cash.
Parts Content: Many vehicles we used to consider imports are no longer so, and a traditionally domestic nameplate doesn’t necessarily mean a vehicle was built in the U.S. or even North America. Things are getting confusing in the car business, even for those of us who make it our business. Case in point, Honda and Cadillac: The EPA considers the Honda Civic a domestic car (about 90 percent North American parts content) and the Cadillac Catera an import (a German-made Opel with about 90 percent foreign content). For those with a preference, this could be the most important information on a window sticker.
A final bit of advice concerning window stickers: There are often smaller, dealer-applied stickers adjacent to the manufacturer’s own sticker. These are called ADM (additional dealer mark-up) stickers or sometimes called “dealer prep.” These costs and add-ons are applied at the dealers’ discretion and sometimes include paint treatments like pin striping, interior dressings, and something called ADP (additional dealer profit) or MVA (market value adjustment). Again, this arbitrary cost is added to the sticker price due to what the dealer will tell you is market demand. In other words, the dealer is effectively raising the price of a popular car because he assumes that it can be sold for a higher-than-MSRP price. It’s worth noting that most manufacturers don’t approve of these added fees and discourage the practice. These costs should be brought to the dealer’s attention and discussed before a final price is settled. Shop around and ask dealers if they apply such fees to their new-car fleet.
