Times are tough now, people are saving instead of buying. This could be the worst times for the car industry but the best times for car buyers, so every car dealership is looking for your business. There has never been a time like this for car buyers to use the economic crisis as their leverage in making deals at car dealerships.
But you also need to be careful, dealers still have tricks and sales tactics up their sleeves ready to get you to pay extra for the car that you wanted. Their goal is to rake in as much of your hard earned money as possible to shelter through these hard economic times. You could say that the dealers are out to make a quick buck on you. So if you are in the market for a new car, it is important than ever to be prepare and do a thorough research on the car that you wanted. Here are the seven steps that you need to take before you step into a car dealership:
I. Narrow Down Your Choices
First you need to decide on what type of car are you going get. This seems obvious, but you could wind up an unhappy car owner if you haven’t thought whether a new or used car is best for you. Then look for cars that has good reliability rating by consumers from previous years and safety rating. Check for owner satisfaction on websites such as edmunds.com or consumerreports.org. Also when buying a car, a lot of people do not consider the owner cost factor. It plays a major role on the life of your car and your pockets, which includes maintenance, miles per gallon, and ect…Once you narrow down a few models, visit the automakers’ websites and check out different trims and options. Compare those models and decide what trim best fit your need and pocket. Print those models and take it with you when you visit a dealership.
II. Check for Incentives on the Internet
It is advised that you check for incentives given out from auto manufacturers and government. Usually, there are some kind of rebates which you apply towards your down payment or low your interest rate. Currently, the federal government passed a tax deduction and green bills. So if you buy a new car from Feb. 2009 to March 2010, you can deduct state and local motor vehicle sales excise taxes. With the green-car bill, if you buy a hybrid, diesel, pure electric, or natural gas vehicle, you can get a tax credit on your federal income tax. These incentives have limitations so check out at www.fueleconomy.gov/feg/taxcenter. There are some states that exempt sales taxes on hybrid vehicles also.
III. Trade-in Value of Your Car
You can skip this step if you are planning to trade in your car at a dealership. I do not recommend this method because the dealership will buy your car at a lowest price. Lets say if you car is worth $10,000, a dealership will pay you about $7000 for it. It is a bit like taking your car to a pawnshop. So it is best to sell your car through a newspaper, and make a few extra thousands in a few hours of your time. If you still want to trade in your car, check prices at your local classified ads and Kelly Blue Book to see how much it is actually worth.
IV. Always Do a Test Drive
This is the pressure point where the salesperson will get you hooked on the car. When you do a test drive, you need to tell the salesperson that you are in the market for a new car and have a few models in mind and will make a final decision when you complete the test drives. Whatever you do, do not talk about the price of the car during a test drive; this can lead to your buying decision, which you are not ready yet. This will also reduce the sales pressure during your test drive. During the test drive, check for the quality of the ride. If you don’t feel comfortable in driving the car, walk away.
V. Compare Financing
You can compare interest rates at your local banks and credit unions with the dealers’ rates. Try to get pre-approved from your local bank or credit union will give you leverage during the negotiation phase. Usually, dealerships try to negotiate on how much you can pay per month. Do not go to this route; this gives to much ways for the dealers to play around with the numbers. Also, it is often that dealers will try to increase a few points on the interest rate on which the loan you qualified from their bank; that can equal to a few thousands of the life of the loan. So it is very important that you compare rates before you go to the dealership.
VI. Get a Price Quote
By all means, get price quotes from different dealerships over the phone before you visit it, keeping the focus on the dealer’s invoice price. Usually dealerships will ask you come in to see the vehicle, your best respond is that you already visited another dealership and have test drive the vehicle. With the Internet you can actually get a price quote online from many dealerships. Find the dealer’s estimated cost, so you know how much the salesperson can negotiate. You can estimate the dealer’s cost by subtracting any dealer rebates or holdbacks from the dealer invoice price. You can find these numbers at websites like edmunds.com or consumerreports.org. Like earlier, the easiest way is to email the dealer or by phone, and ask for lowest price they give with the options and trim of your chosen vehicle.
The bottom line question is ask for an out-the-door price that includes everything, but do not discuss trade or financing. With several quotes, you can narrow down your options and give the dealership a call to see if they can beat their competitor’s out-the-door price. It is very important to be patient and don’t rush in this process. This step is critical in determine how much you can save in the end.
Once you and the dealer settled on a price, tell the dealer to send you a detailed breakdown of the price. You will need this detailed pricing list to compare with the actual contract when you close the deal.
VII. Consider Using a Car-shopping Service – Last Option
If you hate haggling prices and do the research, you can consider using car-shopping services such as websites or discount clubs. They usually have pretty good, no-haggle prices that will make your car shopping experience easier. Some consumer services that shop several dealers near you may have even better prices in some instances.