7 Insider Steps to Make Car Buying Easier
There are seven steps that should be taken before visiting a dealership and purchasing a new vehicle. You might call it homework, but its time well spent if the end result results in saving thousands of dollars.
The important thing is that if these steps are followed, buyers will have realistic expectations about what they are willing to pay and what they are willing to accept for a trade-in. In addition, the dealer will like dealing with someone who is not asking for the moon and needs to reeled back to reality.
Here’s the 7 steps to make the vehicle buying process less stressful and more productive:
1. Shop online
Check out the KBB.com to determine which model is best for your lifestyle – minivan, SUV, sedan, pickup, something else. You can also determine what equipment is standard and what’s optional. If safety is a high priority, check out the vehicles that offer new technology like 360-degree object detection, lane departure warning and low-speed automatic braking, and intelligent cruise control, for example.
Also, you can find out what you may expect to pay by using the Fair Purchase Price tool for the vehicle of your dreams. This is extremely valuable information to have before you sit down and negotiate a deal. And use can use the site for valuable expert reviews to find out if the vehicle will match up to your expectations for it.
2. Find out what the trade-in is worth before visiting a dealer
“That is always a point of tension. Our new car is always priced too high and their trade is never enough,” said a Northeast dealer. “They want the retail price for their trade-in. I realize that is not everybody but that is pretty much a truism in the new car business.”
KBB.com lists trade-in and private party sale values and when using the tool, be honest in the assessment of your car’s condition and mileage.
“Some people view their trade-in with rose-colored glasses,” said the dealer who asked for anonymity. “Pretty much most trades that come through need tires, a fair amount of reconditioning, plus they have dings, dents and scratches. We look at $1,000 to $1,500 for reconditioning to get the car ready for resale,” he said. “They are not going to receive the retail price for their trade-in.”
3. An Instant Cash Offer is a great bargaining chip
Kelley Blue Book’s Instant Cash Offer lets dealers bid on your vehicle. The seller types in the model name, mileage, condition and then local dealers compete for that car or truck. They will either make an instant cash offer on the vehicle or offer a guaranteed trade-in price contingent on an in-person inspection.
Typically, the price offered is a little bit lower than what might be expected, but there is a convenience factor. The seller is guaranteed to receive at least that much for the vehicle, and that is an offer that can be used by the seller when the dealer determines the trade-in value that will be applied to the new car or truck. The seller decides whether to accept the new car dealer’s trade-in offer, sell the car for the instant cash offer, or try to negotiate a higher price with another dealer for the trade-in. The ICO effectively sets a floor on your car’s value.
4. Take a test drive
While some in the industry are touting online sales as the wave of the future, smart buyers will always check out the vehicle in person. “People will shop quite a bit on the internet, they will do a lot of that research ahead of time, but you still have to see if you fit in the car,” the dealer said. “You have to drive it. The seats have to feel good, it’s got to be tailored to your back, your torso. Sometimes the seating positions don’t work for some people and they have to find a different model. It is such a personal choice.”
5. Get loan preapproval
Tap into as many financial sources as possible to determine the best interest rate. Check out several banks and credit unions as well as online sites offering financing. This will set a cap on the interest you will pay and the dealer is free to beat the deal you have in hand.
“Pre-approval is great because we know we have somebody ready to buy a car, ready, able and willing,” the dealer said. A counter finance offer by the dealer could save the buyer hundreds of dollars in interest payments.
6. Research the dealer’s reputation
“Once you feel that you have a good price or you think you have gotten close, start to look at other things,” dealer source said. “Start to look at do you trust these people? Do you like them? Do you want to do business with them long term. The price might be very attractive but what kind of reputation do they have,” Go online for reviews about the dealer. “When it breaks a month after warranty, which dealership do you think will take care of you?”
7. The final price
“We are in kind of an adversarial relationship by design, the way the distribution model is designed, right? We are in a variable price world so inevitably it is in the consumer’s interest from an economic standpoint to work for the best price he can get,” the dealer said. “They need to fight to get the lowest price and the dealer is trying to keep the price up. If you are going to give someone buying advice, I would say make sure you get a good price but don’t drive yourself nuts trying to get a great price. From a buying standpoint you can pull the trigger in the course of a day or two, but there are diminishing returns by the time you have gone to four dealers and you are trying to whittle down that last $50. Your time is worth something and then which dealer experience do you want?”