Sooner or later, just about everyone gets into the market for a new car. It’s a time that can be exciting, confusing, fun, a little frightening and frustrating, all at the same time. Why, it is because buying a car is so out of the ordinary for most people. Let’s face it, according to leading the leading consumer publication, Consumer Reports, buying a car is now a five- to eight-year phenomenon. Because of their expense, many buyers opt for 60- to 84-month loans. That means instead of getting into the new-car market after three years, the old standard, buyers are now out for a much longer time so they are not used to the steps that go into a new-car deal.
Typically, the new-car deal involves lots of research, trips to various dealerships – unless you are lucky enough to know the vehicle you want right away and you stay with it, instead of moving to a different model – negotiating and writing up the car deal and taking delivery. Whether the car is new or used, if you use a car dealer these are the major broad brush strokes of a car deal. And, although there are only essentially five steps to a car deal, if you are out of the market for any length of time, when you get back in you are like a total newbie all over again. Everything is new, even if you have purchased cars before, and everything is likely to be nerve-wracking.
Since everything is likely to feel brand-new, is it any wonder that many buyers find the new car buying experience more than a little daunting? The fact is, according to various observers, most buyers or lessees would just as soon have a tooth pulled without Novacaine® than go into a car dealership for a new vehicle. Likely, this is why most people do not do their“due diligence” when they buy a car. Buyers or lessees want to make their interactions with the dealers as short and painless as possible so many tend to settle for vehicles that really are not good fits and for deals that may leave lots to be desired.
Given this background, is it any wonder that some deals go sideways quite quickly? It’s not that anyone wants this to happen, it just does. How can it be prevented? The answer is really simple take your time and complete each step in the buying process from deciding what you really need to research on the makes and models that meet those needs to negotiating and signing the deal. Yes, it does stretch the process out but that’s the point. If you don’t take each step, you may not be getting the best deal possible.
So, how can you get the best deal possible? You have to do the work and avoid these common pitfalls:
- Finance: At one time, most new-car buyers arranged their own financing. They would go to their savings bank or credit union, talk with one of the bank officers or a customer service person, put in the paperwork and wait for approval of a personal loan or a new car loan. And, then, they would go to a dealership, work up a deal and then, take the deal to the bank for financing. Or, they would have the dealership work with the loan officer to make sure all of the paperwork was correct. Because of this, consumers were able to obtain financing on terms favorable to them. For dealers, though, self-financing is not their finance vehicle of choice. Dealers, instead, want loans whose structure favors them with the biggest possible return. In order to do this, customers have to work with the dealership’s finance manager who usually obtains financing that seems to be reasonable but which is largely favorable to the bank and dealers and not so much for the customer. Dealer-provided financing often has the appearance of favoring the consumer, however, when you look at it closely, you find that while monthly payments are lowered the terms are usually stretched so that, in the long run, you pay more for the loan than might be needed. Finding your own financing is still the best option. Yes, the payments might be higher than you might normally be comfortable with. However, when you look at the length of the loan, you will likely see that it is years shorter than the note you might receive from the dealer, and, even though its payments might be higher, you still save in the long run.
- Make sure the vehicle is the right one: Believe it or not, there are many people today who think they can do everything, including finding the “right car,” just by logging onto a computer and searching. These folks place a huge amount of value on static searching. Why do they do it? It’s possible that dealerships irritate them. Or, it is possible that the negotiation process upsets them. Or, it is possible that they believe everything that they find online. The truth of the matter is that no matter what you find online, the information is only as good as the person who gathered it. Further, it is also an opinion. The only way for you to make sure the car or cars you are thinking of buying is the right one is to visit the dealership or dealerships where they are sold and to look them over. Give them a good walk around and drive them for 15 to 30 minutes, one at a time until you find the vehicle that is right for you. Never fall in love with a vehicle and want only that one. The reason is that you are ruling out other vehicles that may just serve you better.
- Test drive: A study has shown that as many as 20 percent of new-car buyers do not take cars out on test drives. The question that arises is this: how can you determine if you are considering is a good fit? Of course, you can read all of the online reviews and all of the print reviews to see how an author feels about a vehicle, but, how can you make that apply to you? Unless you are the actual reviewer – you are probably not – then you are using second-hand information to make your buying decision. Remember, your tastes may not be the reviewer’s tastes. The test drive serves a real purpose, one that is far more than just exposing you to the flashy, shiny new car. It is your first exposure to the product that you have read about. It is this exposure that should tell you whether the vehicle is a good fit. The test drive is the only way to gain any knowledge about a vehicle before you buy it.
- Negotiations: Some tip sheets advise trying to negotiate via phone or email, but the truth of it is most dealerships still want to see you in the showroom before they become serious about a car deal. This means they will be glad to give you the “Internet discount” on a vehicle that is on their used- or new-car list, however, that is likely all you will get on the phone or via email. Unless you are an auto broker who finds and buys new cars for clients, the chances are very high that you won’t receive anything greater than $1,000, the usual “Internet discount.” If you can live with this discount, then you can do a deal over the phone or via email. Of course, since this preserves the greatest amount of gross margin for the dealer the sales manager will gladly arrange the deal at this higher price. However, if you need a typical auto deal with several thousand off, then you will more than likely have to go to the showroom for the hard-ball negotiations.
- Car check: There’s an old adage that states when you buy a used car you are “buying another person’s headaches and making them your own.” Well, that’s true to some degree, especially if you decide to take a website listing at face value. Here’s a for instance. Let’s say a listing calls a 2006 Ford Focus with 92,000 miles on the clock “One of our best cars; clean and sweet-running; ready to roll for the low price of …..” Can you take that statement at face value? Like as not, no, for a very good reason, the vehicle is nearly 10 years old and though it is based on a very reliable platform (the Mazda3 uses the same basic underpinnings), it still has nearly 100,000 miles on the clock. Things will have to be repaired or replaced. For example, the brakes may need work or the transmission may need maintenance, both of which are costly. If you are considering this vehicle, its price should be adjusted to accommodate the work. In order to determine whether you should invest in buying the vehicle, a trained, certified technician should be over the vehicle careful and issue a mechanical report. The independent report will keep you from making a mistake. And, it will also protect the dealer who may be selling an unreliable vehicle. On the other hand, if the report finds the vehicle is in great shape then you can purchase the vehicle and relax.