Running the Gauntlet that is the New Car Dealership

How to Buy a New Car

It’s a long way from here to your new car.

No matter how nice they try to make it seem, I dislike new car dealerships.

Their smiling faces and free popcorn don’t change the fact that the whole system is rigged.

At this point, haven’t cars become a commodity? Why don’t manufacturers just agree to come forward with a simple pricing model and sell cars like lawn mowers? Sure, you can try to haggle over a lawn mower too. But there is no fake, built-in 15% up-charge on the retail price.

It’s not the sales agents that bother me. I know they are just trying to earn a living and they don’t know the prices either. It’s the dealers and finance guys that really make the whole process unbearable. They sit in the back office hovered around their ever-changing secret numbers ready to play this ridiculous back and forth game till someone wears down. Even though I’m fairly good at it at this point in my life, the whole thing just depresses me.

So last night I ran the gauntlet that is the new car dealership. I’m not going to get into the whole new car vs used car thing other than to say we debated it and researched used car pricing for several days and ultimately decided on a new car. Here’s some of the strategy I would suggest if you are going to put yourself through similar torture and buy a new car soon.

1. The only thing that matters (initially) is price. Financing, trade-in, payment, accessories, and other distractions should never be discussed until a price is finalized for the car you are buying. For this reason, and because car salesmen will do everything in their power to get you talking about those other things, you should really check out my next point…

2. Don’t even go to the dealership until you have a price. Use a service like TrueCar to find out what you should be paying (based on actual previous sales and public data). Or try the www.FightingChance.com strategy, which in a nut shell involves emailing 5-10 dealers with details of the exact car you want and asking them for their best price.

www.FightingChance.com will also give you invoice and incentive data for $39.95 so that you are armed with the facts. Make sure the price you request is the walk-out price: sales price + add ons + destination charge + tax + title + license + fees.

3. All that’s left is the trade-in, financing, extras, etc. That’s a lot, right!? Well, like the price of the car, you should already have these things partially settled before you arrive at the dealership. Check Edmunds.com pricing for the car you intend to trade-in. Consider bringing it by Carmax to get a 7-day quote. Knowing what your trade-in is worth gives you confidence to say yes or know to the dealer’s offer.

Next, if you are going to finance your car vs pay cash, get your financing lined up with your bank or local credit union. Just like with the trade-in pricing, knowing what the market will bear gives you leverage when you are on-site negotiating.

Finally, think about what extras you want on your car and price after-market options. For instance, if you want a trailer hitch on your car, ask around at a few auto shops to see what they would charge for installing one.

4. Be patient and get ready to say “no thanks” a lot. No, seriously…you will have to say “no thanks” at least 25 times before you leave with your car. When you finally arrive at the car dealership you’ve got your sales price (unless they try to pull a fast one, in that case leave immediately), but you will still face some pressure to tack on profit for the dealership. Quickly weigh the various options against your research and simply say “no thanks” when the offers for trade-in, add-ons, and financing don’t make sense. After all, because you did your research, you’ve got other options. Sell your car on craigslist, get your financing from the credit union, and buy your auto accessories from the auto shop down the street.

Do you have any tips for someone who is about to buy a new car?

Photo by nimishgogri

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Last Edited: August 29, 2012 @ 2:57 am
About Philip Taylor

Philip Taylor, aka "PT", is a husband and father of two. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or view the Philip Taylor+ Google profile.

Comments

  1. AverageJoeMoney says:

    I have none, PT, except that I love your tips. We just bought a new car and I HATE the dealership….so I negotiated everything via email before we walked in. I guess one thing to know: even if you say “don’t call me” when contacting the dealers, the “idiots” (for lack of a better term) still call. I eliminated the people who called immediately, and let them know they were eliminated for calling me, so they might not do it to the next guy….

  2. Nope.  I’ve only had used cars.

  3. I’d also suggest pulling your credit score before you go in, bring a printed copy of that and use it before letting them pull their own copy.  
     
    If you are paying “cash” (ie, in full), bring in payment for it so you don’t have to leave.  I had my bank authorize me to use my debit card for the full amount beforehand, since they were closed by the time we signed.
     
    If you’ve done your negotiating ahead of time, bring a print-out of the email from them and other competitors with you so you don’t have to re-do it.  Make them stick to what they said in writing.
     
    Finally, don’t get held up on the little things, like color, instead, go for the bigger picture and always present a neutral face, never excitement or disapointment.

  4. Roadhouse Mike says:

    You should also use @RollSale (www.rollsale.com) to have local dealers compete to buy your car from you instead of just trading it in.