What You Should Really Do When Shopping For A New Car

"LTK" (wkoblinsky) 10/02/2014 at 07:58 • Filed to: None

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As a car salesman, I can't help but cringe at some of the advice offered to car shoppers. It's mostly harmless overgeneralization, but some of it just makes the process so much more difficult for everyone involved. I'm here to bring some sanity to the discussion.

"Know Your Trade Value Beforehand"

Check KBB, Edmunds, NADA, and others before going to a dealership to get a rough idea of trade in, but don't stop there. Check what those vehicles are selling for in your area on ebay, craigslist, or Autotrader. Still, what you may not see may have the biggest effect on your trade allowance. Wholesale auctions are a huge driver of trade values. If the dealer can buy a similar vehicle from the auctions, why should they pay much more for yours? If the dealer offers you far less than you expected, ask for justification of their valuation. If they can't and you're still not satisfied with the trade valuation, consider selling it yourself or going somewhere else.

The books can be off. A good example was my old Bindersnatch Turdbucket that I traded in last year. It was in good condition with decent miles for the year and Edmunds.com told me it was worth around $4,600, but the dealership I work at offered me $2,500. Offended, I quickly printed a copy of the Edmunds appraisal and took it to my manager, who was all too happy to provide his own printout. Cars similar to mine with fewer miles were available for purchase by the dealership at regional auctions for a hair over $1000.

Also, one dealership may offer you some ludicrous offer as you walk out the door knowing you will probably shop around. This number is probably not an "actual cash value", the value used for accounting purposes, but instead is a "trade allowance", or made up number to wow the customer and usually comes in the place of further vehicle discounts.

"Get Your Own Financing; Don't Finance With The Dealer"

You should absolutely check what kind of rates you qualify for, but many dealerships offer financing through multiple sources. My dealership offers 30 banks and participate in Credit Union Direct Lending with bank reps available directly by phone. The finance managers usually have similar incentives to what a loan officer at a bank would and sometimes have clout to offer better rates than you yourself can get. You should absolutely be informed and come in armed, but let dealers work for and potentially save you money.

"Shop Every Last Dealer In Your Area"

Look, you can keep hopping from dealer to dealer, investing your time, energy, and money (lunches out, gas money, credit pulls, pain medication for the headaches) to save $50, $100, or even $1000, but at some point you have to decide what your time is worth. I'm not even asking you to consider the salesperson's time (who is usually only paid commissions on successful sales). I'm talking about putting yourself through the process of awkwardly greeting a new salesperson who may or may not be a sleazeball, driving so many cars they all blend together, and trying to keep all the numbers straight. Every new dealership you go to is going to be able to beat the last offer, even if only by a dollar. Most managers will lose a couple hundred dollars of profit to spite the competitor down the street, but the bottom line is we all pay the same price for the cars. Invoice and holdback are nearly identical among dealers of the same brand and deals are mostly dependent on factory incentives.

If you value your time, the best thing you can do is use resources like *shudder* Truecar and Edmunds to understand what a fair deal is on a vehicle and not waste a whole weekend grinding out a couple hundred dollars. Typically, if you do your homework online and call in in advance to secure a basic deal structure, you can be in and out of a dealership in a couple of hours with a great deal and a new car. With that kind of planning, your decision point should be on how much you like the dealer and not whichever weasels can make you the best "deal."

"Don't Follow Your Heart"

While this rule can be generally helpful to some of the more impulsive people out there, it can actually hurt both your finances and quality of life. While it is prudent not to buy something snazzy at a payment that will leave you in a huge bind later, buying something you hate for the sake of practicality has it's own downside. I can't tell you how many three thousand mile, year-old hybrids and subcompact commuters I take in from former truck owners who wanted better gas mileage. They get in their little Bindersnatch EcoPretense with a cringe every morning and cry the whole way to work. Inevitably, they flock back to truck lots with negative equity lowered expectations, which are prime factors in me making a killer deal. "I'm sorry, Mr. Bundy, but I have no market for EcoPretenses. Now, I know you'll take this deal because you REALLY missed that truck feel, right?" Don't be Mr. Bundy. Set a budget range and pick out a vehicle within it that you really love and can happily drive for years to come. That's the best way to a financially solvent vehicle purchase. I always tell my customers that if they don't love a vehicle, I don't want to sell it to them.

So, in closing, do your homework, don't be afraid to buy something you like, and lighten up a little, will ya?

petebmwm > LTK 10/02/2014 at 22:58

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amen! If I had a dollar for every customer that wanted Kbb for their trade ... Why can't I get Kbb for the car they want to buy... And why won't Kbb just cut them a check for their trade if they say it's worth so much?

rikb53 > petebmwm 11/06/2014 at 14:05

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I guess i'm a bit more practical. I expect to be low-balled on a trade by at least 1000-2500 of what it blue book's for. I mean they do have to resell it. the only bad thing is if you try to trade some thing where u are upside down. case in point my wife not paying on a car long enough and then not understanding why she's paying 30k for a 20k car. but there are some programs I don't mind buying into w/ the dealer. but some of them.........naa. key insurance? pass.