How to buy a car and get the best value for your money (Part 1)

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Image source: http://www.wikihow.com/Buy-a-Car

If you watch your mail closely, you have probably noticed something interesting recently — there has been a big increase in the number of letters and/or emails from your local Rolls-Kanardly dealership or the local Poppaflat mini-car headquarters telling you of the great deals available and asking you to “come on down.”

While the number of letters has not increased exponentially, i.e. a whole bunch, you should still have seen more letters from dealerships offering the best deals in years, but you have to act before the end of the weekend, month, holiday, or quarter.

Reasons for Timing

With the horror show that General Motors is facing over its mishandled recalls — a situation comparable to that faced by Toyota a year or so ago — dealers are under severe financial pressure. Buyers have long memories. They remember what happened at Toyota and other manufacturers. So, right now, they are either checking out other, smaller companies, or they are staying away in droves, leaving dealerships with large inventories unsold.

The result? You can work the numbers to gain a great deal now because dealers are willing to do whatever it takes to get vehicles off their lots. Yes, the recall fiasco is one reason, but another, equally compelling reason is that the 2015 models will be here soon and the dealers need room for the new inventory.

It’s fortunate from your point of view. The dealers have a huge incentive to move their inventory now. It will release cash to pay off the lines of credit they had to take to buy their 2013 and 2014 inventory. You see, contrary to common belief, unless the car store is owned by the automaker as a captive, dealers have to lay out money to purchase the vehicles they order. It is called floor-planning and determines how much capital they have invested in vehicles. So, the more vehicles they can move now where they can recoup money already invested, the more they have available to buy 2015 models.

But if you can wait a little longer, dealerships will offer better deals. The closer they get to the arrival of the 2015s, the greater the pressure to sell.

What is the Best Day to Shop Around?

Because dealerships do much of their business on Saturdays, pick that as the day you walk onto the lot to begin dickering with the dealer. When you arrive, you will be hit with all kinds of pitches in the hope you will bite at the “great deals” on offer. You are going to hear phrases such as:

“I just got off the phone with another customer who is coming in to look at the very car you are looking at, so if you want to ensure that you get it, I’m going to need some show of good faith from you, say $1,000. Do you have a credit card? I’ll just run the slip to hold the car so you won’t lose it.” The translation: I’m trying to pressure you into buying right now.
“The Internet department has had half-a-dozen calls on the car you are looking at because it has a lot of popular options and I can’t be sure that the car will be here later. If you are interested, I need a show of good will and, while we are at it, let’s move the deal along by filling out the Purchase and Sales agreement. So, if I can see your credit card. . .”
“The owner has told me a friend of his is coming in to look at the very car you just test drove, so I’ll need something to hold it for you. We can swipe your credit card, write up a temporary Purchase and Sales agreement so we can make sure the car stays here for you. And, don’t worry, this is all temporary, we’ll just tear everything up when you come back in and start again…” Translation: “I’m trying a different tactic to pressure you into buying right now.”

Notice how each conversation ends up with you being asked for your credit card and with a promise the dealership will only run a slip and tear it up before you get down to serious bargaining. Don’t believe it! When you come back to the dealership, you will find that the person who can reverse a credit card deal is on vacation or maternity/paternity leave, or the manager who can reverse things is at lunch and can reverse it when he gets back.

If the credit transaction is cancelled, you are ahead of the game because, most of the time, you will be given the runaround. Somehow the credit reversal is forgotten and “besides,” you will be told “you already have $1,000 or $1,500 invested in the car, so you may as well complete the deal.”

Is Someone in the Dealership Fibbing?

Face the facts. Most sales techniques involve some dishonesty. After all, during the weekend, dealerships have potential buyers look at the same vehicle. They work potential deals on the vehicle. They encourage people to buy. Don’t worry, though, because if you are serious, you will get the vehicle you want. Suddenly, the customers who were “locked in” on the vehicle have purchased something else.

When to Buy Part I

Don’t be stampeded! Let’s fast-forward a couple of weeks to the end of the month. And, let’s assume vehicles ordered last quarter that were expected to sell in droves, are still sitting on the lot. Where may you find the biggest savings? Remember the SUV is, by its nature, a more expensive vehicle than a sedan. This price difference continues into the dealer side of the equation. But since the dealer pays a discounted price, it is a lower price than the consumer pays. Nevertheless, the owner is concerned. The SUVs tie up more capital, even discounted, due to their equipment and size – special electronic, navigation, and entertainment systems, and larger-than-average motors and real four-wheel-drive. All these features make them more expensive than standard cars. However, due to various circumstances – recalls, pricing, gas pricing, and other economic issues – top-of-the-line SUVs have not moved well. It’s time for the owner to become concerned and to reconsider his sales strategy.

Why is the Dealership Concerned?

When it filled out the order form last quarter, it guaranteed the dealership would move all the special SUVs ordered. The sales team figured it could be done. There had been high sales figures. It was not unreasonable to project continuing success. If the sales keep trending down, there will be consequences, so the owner has to start cutting prices and adding further incentives to sell the slow-movers.

More in Part 2

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