- Don't buy a car. If you can avoid it, try hard to live close enough to work that you don't need to drive there every day. Bike, Train, Bus, Walk or Carpool: http://transportationchoices.org/. A car is an instantly and constantly depreciating asset. It's rarely ever an investment, and never an investment if you buy from the wrong salesperson at the wrong dealership.
- Buy a car with more than 3 days' lead time, preferably 30 days. One of the biggest mistakes car buyers make is to force the car purchase to happen the day they shop for it. NOTE: this is only a mistake if you don't already have a trusted salesperson and dealership. You can buy the right car in 20 minutes if you have a high-integrity salesperson at an actually respectful dealership.
- Find the right Salesperson and Dealership. This is a biggie, and people do it wrong every single day, all over the world. They know they need a car, but they dread the process. The stress makes them temporarily but clinically insane. They take all that stress as a given, and resign to pick a day to shop at 3 local dealerships and end up paying too little for a car that doesn't work for them or their family.
- The right salesperson is actually easy to find, you just don't find them the day you stress-shop for a car. Walk in to your favorite brand's local dealership, and ask a lot of questions. Pay attention to the answers and if they check out with your gut and your data. Choose the most "together" salesperson, not just the most honest or best dressed.
- The right dealership is also easy to find. They have a clean lot, a busy showroom, and people are smiling. The people are the best expression of the dealership. Who got hired? What are they like? How happy does the receptionist seem, and how respectful? If you see the physical plant and the employees are being respected, then you will usually be respected too.
- Know yourself and your family's needs. Do you faithfully go skiing more than 6 times a year? Do you have to carry your two 100-lb Mastiffs to the park every weekend? Do you have $300 per month to comfortably spend? Can you get by without built-in navigation, or is navigation a job-requirement? Do you need to chauffeur your 73 year-old grandmother to church every Sunday? Good salespeople ask these kinds of questions so they can help you find the right car.
- Know how much car you can actually afford. I see people step into some amazing vehicles with stars in their eyes. I also see them leave the dealership with tears in their eyes when they realize their income or their credit doesn't work with the vehicle they want to drive home.
- Don't get a free credit report online, get it free by using #2 in this list and have the trusted car salesperson run your credit and show you the results. Get all the bureaus (Experian, Equifax, TransUnion, etc) Go through the results. Take copious notes. Yes, getting a credit report run can affect your credit, but only by a few points and usually only if you do it often in a short timeframe.
- Don't expect to convince the dealership or sales team to make up for your rough credit history or lack of income compared to your debt. It's harsh to hear, but it's for your own good. The right car costs the right money, and the days of instant $3,000 discounts are over. Someone is going to have to pay off your existing loan, and it really should be you. If you owe more than your current car is worth, you will have to either pay that amount in cash, or roll it into the next loan. Which brings us to the trade challenge...
- Assess what your hourly wage is and calculate how much money you might NOT be saving by selling your old car yourself. If it takes more than 10 hours of time, you're probably going to either save money, time, or both by trading the car in. Which bring us to the trade...
- Know how much your trade is worth, or at least a good range of worth. Sure, you can go to AutoTrader, Kelly, and/or Nada to evaluate it roughly, but the dealership is actually a good place to trade in your old car. Accept the truth of instant and constant devaluation, and prepare to get less for your trade than you had hoped for. If you haggle well, perhaps you can get your target value, but in the end, you need to know what your hourly wage is worth and how much time you want to spend trying to get that last $200 out of a car you don't want anymore.
- Know if there's a tax discount for trade-ins where you live. If you're in Washington State like me, you'll get 9.8% of the value of the trade taken off your new car's tax amount. Think of it as a 10% break to make selling your car to a dealership more equitable.
- Don't require the trade-in to be part of the deal in every circumstance. Usually, it's a good deal to trade your car in, and it's handy to do it where you are buying your next car. However, if you are so convinced your car is worth X thousand dollars and the dealership won't buy it for that amount. Sell the car yourself and save the endless haggling and misery going from dealership to dealership trying to off-load your 2002 Chevy Tahoe that gets 9 mpg going downhill. People make some terrible decisions about where they get their new car by mistakenly overvaluing their old car (while undervaluing their time).
- Have all your documentation and notes ready, in an organized folder.
- Bring your shopping notes if you need them, but don't bring them all out with the intent of doing battle. Bring them out only if you don't think you're being treated fairly or respectfully.
- Bring your cleared title. Don't hope the salesperson is going to track down your ex in Arizona to have them sign off on the title to your 1995 Corvette.
- Bring proof of your current full coverage insurance when you come in to purchase. You can't drive a car away until you have proof of insurance. Seriously.
- Bring your current registration to the vehicle. Don't leave it at home.
- Bring in any proof of membership that might be required for a Supplier discount. In the case of Microsoft employees getting a discount at VW or Audi, they need your recent pay stub, not just your key card.
- Bring your checkbook if paying by check. Seems obvious, but....
- Bring in your credit union's actual letter of pre-approval if you are financing with them rather than the dealership's bank.
- Consider buying the car for MSRP. It sounds silly to most, but it's a seriously good idea if you found the right car. There's no reason that you're going to have to have a knock-down negotiation in order to get a "good deal". Yes, buying a car for MSRP can "cost" you a few hundred or even a few thousand dollars, maybe. Remember that it can also "cost" you dearly to get the wrong car altogether as you dig for that last few hundred dollars of discount. Find the right salesperson at the right dealership, and you can immediately save thousands of dollars worth of time, gas, work hours, and aggravation when they right-size the right car for you and your needs.
- For those who are particularly averse to face to face confrontation, you can use the internet sales department to buy a car at almost any dealership. You will need to drive the actual car you're considering buying, but that's all you need to do.
Tuesday, June 12, 2012
Car Buying Best Practices
I see too much misery directly related to car buying. I'm not into misery, so here is a concise list of best car buying practices. CAVEAT EMPTOR INDEED: