Tips For Buying a New Car

This article is going to relay some things I learned about buying a new car.  First, let's discuss a couple of terms. The dealer's invoice is the price the dealer paid for the car. The  dealer holdback  is a refund that the dealer gets for selling the car from the manufacturer. Obviously, these are two pieces of information that would help you negotiate.. I'm not an expert in those and there are good websites that can help you with it. You can Yahoo or Google for them.  There is a website that will help you with developing bids. 

I will  mildly recommend TrueCar.com. First Consumer Reports has a relationship with the site and it does give you an idea what somebody paid for the car that you are looking for in the area where you live. I just don't trust it completely since dealers contribute to the site.  You have to play with the website and click around to get all the great information. If you shop online, be prepared to be inundated with dealers especially if you give out your phone number. Just "deal" with it.  Sorry for that.

Using the site, you obviously want the "excellent" or "exceptional" price. By the way, you never want to pay MSRP (Manufacturers Suggested Retail Price). Okay,  where I started my opening bid was in the lower range of  the excellent price. And don't worry if you don't get accepted on the first bid. You've got room to go up. 

I will put my tips into rules. These are things I learned with dealing with two Japanese car brands that I will call Car A and Car B  My tips are here to help lessen your suffering because buying a new car stinks.So, here we go.

1. ".Calculate the "out the door pricc."    This is the amount of money you pay to drive the car off the lot. It usually includes dealers fees, the price of the car and taxes. Use the internet to calculate the price. You need this because dealers will play around with the price of the car and you'll need to know exactly how much you need to pay for the car completely. How do I  know this? Because it happened to me.  Which leads to ...

2. Beware of the bait and switch  This is not where they advertise one car and try to get you to buy another. What happened to me was that I emailed and called Car A dealership. Made my offer.. Car A  said okay. One day later, the dealer called me and gave me an out the door price that was higher than my calculation. I said you raised the price of the car after we agreed on the price. And he said I needed to come up. Now, since I had the out the door price, I knew he raised the price of the vehicle.  Yeah, the dealers think you're dumb.

And by the way, I'm a lawyer and this is not how we negotiate. When it comes to numbers for settlements, I may send an offer. And if the other side wants a different number they counter until we eventually reach an agreeable number. The same thing for criminal cases in negotiating prison sentences. 

Dealers for some reason try to trick you. I don't get why we can't throw numbers around but that's the way they act.

3. Read the fine print of any offer especially in emails.  Okay, so I got pissed and told Car A that I would get back and shop around. I went to Car B. Contacted them through their website. They called me.  I made a reasonable offer that was good for me but not insane. The dealer agreed.  We set a date to meet so I could bring the money and buy the car.. We were buying the car with cash.  We even worked out that we could pay for the car with a check. So, I had the out the door price already calculated and that was going to get the car. Except....

When I got to the dealer, I asked to test drive the car. They said okay. I said it was fine. We went inside and then the manager told us there was a problem. To buy the car for the agreed upon price, I would have to take out a loan. They said the fine print in an email said any offer was subject to Car B financing.  I told the dealer, "Hey you told me to bring in this amount of money to buy the car."They informed me that either take out a loan or come up with a higher bid for the price of the car. So what did I do?  See Rule 4.

4. Be ready to walk out and walk out if you have to.  I said to Car B dealer . "I'm going to go. The loan was not what we agreed to. And you led me to believe that if we brought in the money, we could buy the car." At that point, the manager and dealer put a number higher that would buy the car. It was within the range that I was willing to pay and still an excellent price. I agreed. The manager was irate because he thought we were paying too little. I mentioned that he is still making a profit because of holdbacks etc. That got him annoyed even more.

Conclusion..  I will note that I didn't discuss financing. That's another topic beyond my expertise. But note that your bank will give  good advice and maybe a better interest rate.. And frankly, if I was going to finance the car, I would gone through my bank. 

Buying a car should be fun. It's not. Dealers are still playing games when you reach the dealership. You have 2 things going for you. You know the out the door price. Any increases in the price of the car from the dealer will be apparent. And always remember that you have the money. That means "be ready to walk out." You don't need that dealer.  They need you, You can always leave your phone number. They will call you back.. But perhaps you've made a better deal with another car dealership. Good hunting.