The automotive industry is making buying a new car more and more appealing for people. With zero percent financing and free maintenance being offered on many new cars, it is hard to stay away. I’ve put together a list of some definite do’s and don’ts of buying a new car from a dealership.
Before we start. Cars are not investments! Don’t think that you will be making money by buying a car. Not unless you plan on parking the thing in a garage and rubbing it with a diaper for 60 to 70 years or you have managed to make it on Ferrari’s list of people they’ll actually sell new cars to for MSRP. Just don’t. I learned that the hard way.
Do your research before hand: There is no reason that you shouldn’t be an educated consumer. An educated consumer is always a salesman’s best customer. There are dozens of websites and magazines that give you more than enough information when buying a new car. They can even give you the invoice (receipt) from the manufacturer telling you what the dealer paid for the car! They can give you a good idea of what the car will be worth in two or three years. Print off what your sources say that the car should be sold for. But use them at a last resort. As a salesman, I was always a little annoyed when people would go straight to these websites because it didn’t give me a chance to GIVE them a good deal, rather than being forced to. Get a few different estimates of these things before you head to the dealership so that you are prepared once negotiations start. Also, make sure you know what the reliability of the vehicle is. Nobody wants a new car that has to go in for work constantly. Even if the car is under warranty, it’s still a hastle.
Financing: Usually you get the best rate through the manufacturer’s finance company, if you have the credit for it. Of course there are exceptions to this. Some credit unions will match rates of the auto companies. And some manufacturers are easier to get financed with than others. When I was selling cars we always seemed to get more people financed through Volkswagen then we would Toyota. They were more willing to give loans to people who had “iffy” credit. When it comes to used cars, if it’s a certified used car, use the manufacturer. Any other kind of used car, bank or credit union is probably your best choice. Consumer Reports will tell you to go to your bank or credit union to get pre approved before you go in to buy a car. This isn’t always the best route to take. Most dealerships have a lot of buying power with the financial institutions that they work with because of the volume of loans that they sell. More than likely they can get you a better rate than you can get yourself. The Toyota store that I worked for was one of the highest volume dealers in the region, so we could get a lot of exceptions made by Toyota financial.
Know what kind of buyer you are: 90% of buyers, buy on payment alone. This isn’t always the best strategy when you’re buying a new car. If you are this kind of buyer (and you aren’t leasing) it is very easy to get roped into a long term loan. Long term loans have no friends. You’re interest rate is usually higher, you’re never sitting well in the real value of the car and honestly ask yourself if you’re ACTUALLY going to keep the car for seven years. You’re not, don’t even try to convince yourself that you are. This is the biggest buying mistake that people make. Then they wonder why are owe twenty grand on a five hundred dollar car. People that go out and buy a Rolls-Royce or a Bentley (that can actually afford them) aren’t making payments for seven years on those cars. So what makes you think that paying for a Corolla for a Focus for seven years is a good idea? Nobody should ever finance for more than four years. It’s tempting to go longer, but isn’t good in the long run. Additionally, don’t let the salesman sell you on the payment. Negotiate the actual price of the car, here’s a surprise for you, by dropping the cost of the car, the monthly payment goes down. Always ask to see the actual selling price of the car.
What’s your problem? You have a problem with your car. Other than that, there really isn’t any reason that you should be looking for a new car. Either the car is too old, the miles are too high, you don’t like the color, you’re tired of it; whatever the reason may be there’s a reason
Figure out what you need in a car: But don’t just think about what you need now, think about what you need in the future. I can’t tell you how many young men came into the dealership, bought an FR-S or tC, and found out three or four months later that they were going to be a daddy. Oops. Now you’re stuck “out of position” or ‘upside-down’ in a car that won’t work for you. Trust me, you don’t want to be taking a carseat in and out of a coupe. Unfortunately for these guys, it’s going to be expensive. Your payment is going to go up, a lot. Unless you put a good chunk of change down as a down payment, it’s going to be painful. So make sure you are planning ahead for at least half of the time that your loan is structured for.
Don’t lie to your salesman: Don’t lie to your salesman, we will always find out the truth. Don’t forget that when we pull your credit, we can see EVERYTHING. We know your spending habits, how diligent you are at paying your student loans and credit cards, and darn near every dollar you have ever borrowed since the day you were born. As well as your previous addresses and employers. People always fudge the truth, especially when it comes to their credit and their trade-in. Obviously you can see why, they’re trying to get the most value for their car. If it’s been wrecked or damaged in any way, I’m going to know. Not only am I going to guarantee that I’ll pull a CarFax, but appraisers do this everyday. They can tell the difference between a wrecked and an unwrecked cars. They pick up on stuff that I would miss if I were looking at the car. Like body panel gaps, color tones, and even how the motor sits in the car. It’s pretty wild what those guys pick up on.
Be Patient: You aren’t going to Wal-Mart to buy a car, it takes time. Legal documents have to be printed out, purchase orders have to be sent out, there are a lot of steps to buying a car. Sometimes if your credit isn’t all that great they have to call the banks and talk to the loan officers to explain to them why you should be approved for the loan. Once you say, “Yes!,” to the car you have probably five or more people scrambling to get the car and all the paperwork ready for you to make things as smooth as possible. So sit down, relax, have a cup of coffee and just think about all the places you are going to be driving to in your new car.
Don’t be a Jerk: Believe me when I say that selling cars is a stressful job. The hours are terrible and most of the time there is a lot of pressure put on by managers to meet monthly quotas. I’ve lost sleep over car deals trying to figure out how I can help people get into new cars. What I’m trying to say is salesmen put up with a lot of crap. So just take it easy. If you are a jerk, the entire dealership is going to know about it. Salesmen talk about customers a lot. They tell stories about the funny test drives and the rude customers. Just remember that these are the people who are going to be setting up loans for you to spend thousands of dollars on. If you’re nice they may feel more inclined to do favors for you. If you’re a jerk, you have a snowball’s chance in Hell of getting any favors pulled. If you run a business, salesmen will usually send people to you if they like you. But if you’re rude, forget about it. And believe me, service, parts and finance will know that you’re a jerk. Your mom and God taught you how to be polite and how to treat others. Just make sure you don’t check your manners at the door when you go in to buy a car.