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Buying a new car online
usually means that you end up getting in touch with a local dealership
to finalize the purchase. The online part is where you do research
— gather information to prepare yourself for the purchase
(and save a good deal of money as a result). The dealership part
is where you move from the virtual world of information into the
real world of bumpers, tires and salesmen.
You can use the Internet
to gather information about vehicles, arrange your financing in
advance, and save money on insurance. But you want to actually
test-drive the car, see its color for yourself, feel its leg room,
examine the trunk space, and otherwise physically engage the machine
at a dealership. And you sometimes must negotiate prices —
both for the trade-in and the new car — with a real salesperson.
For these reasons,
online car-buying services are often mainly referral-services
— they put you in touch with a dealer in your area. The difference
between the online approach and traditional car buying is that
you meet the dealer already prepared. You can, therefore, greatly
reduce the amount of time that you spend at the dealership and
the amount of negotiation necessary to secure the deal. And above
all, you can greatly reduce the price that you pay for a vehicle.
Going online to buy a car is really a smart move.
TIP
At the time that you first visit the dealer to test drive the
car, ask for a blank copy of the dealer's standard contract. Now,
however, isn't yet the time for negotiation. You want to go home
and, in the peace and quiet of your bubble bath or whatever, read
the thing and circle any bad or confusing spots. You're then even
better prepared when you return to the dealership for the final
negotiations. This tactic is yet another way to do your homework
before you get down to the real nitty-gritty of negotiation. You're
making two trips to the dealer instead of just one, which gives
you a significant advantage over just checking things out and
making the deal in a single visit.
Sure, a few companies
actually do sell cars online, and you never need meet with a real
human being to complete the transaction with such online dealers.
But these few direct-sales businesses are primarily either credit
unions, fleet-sales outfits, or brokers.
WARNING!
Car sales are probably second only to liquor sales in the number
of laws governing the transaction. What's more, many of these
laws currently rule out auto sales to consumers across state lines.
The companies that
people widely use and know on the Internet, such as Autobytel
and CarPoint, don't actually sell cars themselves. They merely
put you in touch with a dealer. You then finalize the purchase
at the dealership.
Several other chapters
in this site show you how to do your homework — finding financing,
insurance, the car that best suits you, the dealer cost of that
car, the value of your trade-in, and so on.
In this chapter, I
assume that you've done the homework. You've even gone so far
as to take my advice and have already chosen a nearby dealer (for
convenient servicing and maintenance) and a dealer large enough
to make negotiations as flexible as possible. What's more, you've
visited the dealer and taken a test drive — finalizing your
selection by actually experiencing the car in the real world.
This chapter, therefore,
focuses on your actually buying a car — the point where you
finalize the negotiations with the salesperson and pay some money.
Before getting into the details of completing the deal, however,
I'm first going to look at some of the cars that other people
are choosing. If you've already decided on your dream car, the
following lists may reinforce that decision. If you haven't yet
decided, however, perhaps checking out a few top-ten lists may
inspire you.
Joining the Crowd
If you read some of
the other chapters in this book that tell you how to narrow your
selection of a new car, but you still can't make up your mind,
maybe you just need to go with the crowd.
If you're like most people, you sometimes buy a book or a record
simply because it's a bestseller. You figure that sheer numbers
of sales must indicate satisfied customers. Popularity, after
all, counts. If you can't make up your mind, taking a look at
how others made up theirs sometimes helps.
Can the Internet help
you determine which new cars are currently selling the best? (The
answer is yes.) Which cars are the favorites of GenX buyers or
of fat-cat Boomers? Is the Earth round?
To find out which new
cars are the most requested at the CarPoint site for the past
12 months, open your Web browser and go to www.carpoint.msn.com,
CarPoint's home page. Click the Table of Contents link. Then,
in the Featured Articles section, click CarPoint User's Top Ten.
After You Get to
the Dealer
After you finish your
online research and decide on a vehicle to purchase, you're ready
to take up arms and march right in on a dealer — and avoid
getting slammed. With the advice that I offer in this site, along
with all your online research, you can now give the dealer a few
hundred dollars profit on the sale (instead of a few thousand).
A few hundred dollars, after all, is plenty of profit for the
few hours the dealer spends as you test and then negotiate terms
for the new car.
Say that, thanks to
your research, you already know what car, what accessories, and
what options you want. You've already arranged insurance and financing
online. You know the dealer cost of the car you're after, and
you're prepared to ask to see the factory invoice. (See, however,
the following Warning.) Three steps to a successful purchase remain.
The first step is to discuss and finalize the money that you're
to get for your trade-in. For most of us, the trade-in provides
the down payment. That's a very good reason to insist on getting
a fair price. Most new car buyers, however, get the shaft during
the trade-in negotiation.
WARNING!
I'm repeating this warning from previous chapters so that you're
not negotiating in a dreamland. You must get an accurate dealer
cost of the car that you're buying. If you get a new-car dealer-price
quote from an Internet source, it's merely an estimated dealer
cost. This figure can be a low-ball estimate by several hundred
dollars. Why? It can exclude extra options, import fees, gas charges,
possible extra advertising costs, and so on. At the dealership,
ask to see the actual factory invoice for the car that you're
buying. This figure is usually higher than the prices you get
on the Internet for the standard models. Don't decide your final
offer merely on the estimated dealer-invoice price that you find
on the Internet.
Don't give away
you trade-in
All too many people
(most people, in fact) quickly cave in if a dealer offers a really,
really low price for their trade-in. In the typical trade-in example
that I describe in the following section, if you agree to the
salesperson's "considered offer," you lose money by
being either too timid or too uninformed about auto negotiating.
Saving you this ridiculous waste of good money is the topic of
this section.
If you're trading in
your existing car, your first step in negotiating at the dealership
is to agree on the trade-in price. The reasons are two: The salesperson
is unlikely to start the negotiations with this topic, so you
gain immediate control of the negotiation process. More important,
most people, after buying a new car, worry that they got too little
for their trade-in. Why? Because they did get too little.
Most people perhaps
spend a couple of hours haggling over the details of the new car
they're buying, and then almost everything is set for them to
leave the lot in the shiny new car they now love. Only one ittle
detail remains: What do they get for their existing car? At this
point, most people cave and accept the (pitiful) offer that the
salesperson provides — along with a song-and-dance about
how "offering this price is common these days" or "the
moon is in the seventh house" or "our mechanic reports
rusting on the undercarriage" or whatever.
No goose this year
You can find used car prices in the Blue Book. Three prices are
available for used cars. Imagine, for example, that your car lists
for a used retail price at $12,000. It's then likely to list for
around, say, $9,000 wholesale, with an auction price of about
$8,300. A salesperson is likely to offer you around $5,700 and,
if you scream and moan, the salesperson may go up to $6,500, weeping
all the way about what the sales manager is going to do after
this shockingly high price becomes general knowledge. (No Christmas
goose for his son Tiny Tim this year. Thanks to you.)
Find out the Blue Book value and the Black Book value before you
start negotiations. You want to know what the dealer can sell
your car for — and remember that the auction value is a rock-bottom
value. If the dealer offers $5,700 (using the examples that I
give in the preceding paragraph), you counter with $9,000, the
wholesale value. Then you can allow the salesperson to whittle
you down to a couple hundred dollars more than the auction price
of $8,300.
Just add the word firm
Don't accept any amount lower than the auction price for your
trade-in (unless you have a really good reason, such as that the
entire undercarriage is really rusting). If necessary, extract
your current car from the negotiation process. You can almost
always easily get the auction price by putting a classified ad
in the paper — phoning in the ad and including the word "firm"
so that you don't need to haggle with strangers isn't that big
of a deal. At the auction price, moreover, you can be firm. Someone
almost certainly is going to buy it unless you live in some remote
Wyoming outback, in which case your negotiation strategies must
take geographical extremity into account.
After you save yourself two or three thousand dollars on the
trade-in, you can let the sales process move on to Step Two: the
cost of the car that you're buying (including all options and
accessories — everything).
Negotiating the
price
Not everyone pays the
same price buying the same car at the same dealership. Remember
that fact. Unlike most cultures, most Americans simply aren't
accustomed to haggling. From lack of practice, they're not good
at it. And they tend to think that it makes them look cheap, stubborn,
pushy, disagreeable, or impolite — or some combination of
these traits.
Unless, however, you're
willing to learn the rules of negotiating a low price, you want
to pay someone else to negotiate for you (see the section "If
You Simply Can't Negotiate," later in this chapter), or you
really want one of those new no-haggle cars (in other words, a
Saturn) — expect to lose hundreds and maybe even thousands
of dollars on the price of your new car.
People pay different
prices
People pay different prices for the same car. You can pay top
dollar, or you can pay close to dealer cost — or you can
pay somewhere in between. Bad negotiators may give the dealer
$3,000 in profit; great negotiators may give the dealer $300 in
profit. Obviously, salesmen and dealers prefer to get $3,000 from
everyone — but experience shows that they can expect a spectrum
of profit depending on how the customer behaves during the process.
If you're polite, persistent, and prepared — you can usually
drive the price down near the low end of the spectrum.
If you follow the steps
that I outline earlier in this chapter, you're likely to get a
good price from the dealer for your trade-in (or you do after
you sell it yourself through the classifieds). Now to complete
the process of buying the new car. This point is where you discuss
— and finalize — the price of your new car.
The dealer is likely
to begin negotiations with the full list price, acting as if that
amount's understood as the selling price. I repeat: Remember to
proceed with the negotiations at your own pace and remain ready
at all times to walk. But always stay friendly and polite. You
usually get better results if you don't make an enemy.
Stay polite, yet
firm
My favorite tactic is courteous firmness. You do your homework
and you know what price you're willing to pay. Respond to the
dealer's first offer with whatever price you've already decided
you're willing to pay. One tactic is to simply, politely make
your first and final offer. You can sit there and dicker, but
make quite plain to the dealer that, no matter what happens, you've
already researched the price and you've already made your one
and only offer. Other experts suggest making a low offer and then
gradually giving in to the salesperson's attempts to bring you
up to your final offer. Whatever approach you take, make sure
that the dealer's clear that you're a serious buyer and always
remain calm and pleasant.
If you feel pressure
from the salesperson and become uncomfortable, you can always
ask for a different salesperson at that dealership. Or you can
leave and take your business elsewhere.
You don't need to explain
your personal preferences in a car or describe your lifestyle,
your hopes, and your fears. You don't need to make friends with
the salesperson or the supervisor. You've arrived at the dealership
with a precise idea of what you're willing to pay for a particular
car. You know exactly which options and accessories you want (and
don't want). You're paying cash — you have a check in hand
because you've already arranged the financing. You don't need
to worry about insurance because that's finalized. You've already
decided whether you want an extended warranty and what to pay
for that. You've reduced all the variables to one: How long does
the salesperson take to realize that you're not going to change
your offer?
In fact, all you need to tell the salesperson is that you're willing
to pay X dollars for X car with X accessories. It's a simple,
straightforward few hundred dollars for the dealership to make.
Make the dealer aware that he's dealing with an Internet buyer.
In other words, the dealer has a new kind of customer: someone
who knows just what he wants and is already decided on just what
he's willing to pay for it. And if you take that advice that I
give you earlier in this chapter, you've already studied a copy
of the dealer's contract and made a note of any questions that
you want the dealer to clear up before you sign the deal.
If you simply can't
neqotiate
If you absolutely can't
stand negotiation but realize that, by avoiding it, you may cost
yourself as much as $2,000 or more when purchasing a new car,
consider hiring an auto consultant (also known as a buyer's agent)
who can do the dirty work for you. The cost of such a consultant
can prove remarkably reasonable, considering the savings that
you get in cash and the burden the agent lifts from those who
were trained from day one to avoid conflict at all costs. And
the operative word here is costs if you're overly passive about
negotiating.
Can you find such consultants
on the Internet? Well, the Internet hosts almost every possible
topic. If you can imagine a profession, a service or a topic,
you're likely to find it available on the Internet, as the following
sections confirm.
Try the National
Association of Buyers' Associates
One good resource if you want to hire an agent is the National
Association of Buyers' Associates (at www.naba.com
on the Web).
AutoAdvisor can
help you negotiate
Another good online source of auto buyers' agents is AutoAdvisor
(at www.autoadvisor.com
on the Web).
Going, Going, Gone!
Using Online Auto Auctions
Although you don't
currently find new-car auctions on the Web, you can buy a used
car via online auctions. And now and then you can find at an online
auction a used car that's "almost new" (very low mileage).
Some experts claim that if money is your main concern, buying
a low-mileage pre-owned car is the greatest bargain going.
Why can't you find
new-car auctions online yet? Congressional politicians, or lawmakers
as they sometimes prefer us to call them, keep on making laws!
(No surprise there.) They've made laws governing interstate sales
of new autos, and those laws seriously restrict such sales to
individuals — and that includes through online auctions.
This situation may change in the future, however, as these lawmakers
are in the business of making laws, so they sometimes pass new
legislation that rescinds their previous legislation.
WARNING!
You, the consumer, face another little problem with buying cars
through online auctions: The important test-drive portion of a
new-car purchase is usually impossible. Going to eBay to buy a
cookbook is fine — if the description of the cookbook fails
to mention that the index is torn out and grease splatters cover
many of the pages, you're out only a few bucks. But how can you
explain yourself if you spend thousands of dollars on a car with
serious flaws and then must spend thousands more repairing those
flaws? Remember the advice of your grandfather, the farmer: Never
buy a pig in a poke.
Auctions R Us: eBay
sells cars
Speaking of eBay, the
grand old leader of online auctioning added a special vehicle-auction
page to its other auction wares back in August 1999. Some cars
were put up for auction at eBay before this official recognition,
but now eBay offers this section of its site solely for vehicle
auction sales. You can find ordinary vehicles here as well as
a special "Showroom" featuring classic cars.
To access eBay's auto
zone, first go to eBay's home page (at www.ebay.com
on the Web) and then click the Automotive link.
The week that I checked,
eBay was offering 1,545 cars, 549 trucks, and 139 RVs at auction,
as well as hundreds of motorcycles.
If you're not familiar with the eBay auctioning process, you can
easily learn about it by connecting to eBay. They offer excellent
help and tutorials.
Online auctioning at
Microsoft Network
If the possibility of finding a real bargain in a car at an online
auction attracts you, in spite of the potential difficulties that
I describe in the preceding section, check out the Microsoft Network's
auction site (at www.auctions.msn.com/html
/cat17466/pagel.htm on the Web).
If you go to the MSN car auction site, you're probably going
to find its features a little familiar if you've ever bought something
from eBay or other online auction sites.
New-vehicle auctions
Rolling Wheels, a very
interesting online vehicle-auction site, now actually offers new
vehicles and also provides for test driving before you buy. The
site puts you in touch with one of its "member dealers"
in your area so that you can drive the model you want to bid on
to see whether it's what you're after. To discover what the Rolling
Wheels auction site offers, go to www.rollingwheels.com
on the Web.
This site describes itself in the following manner: "Your
new-vehicle auction center. The most hassle-free way to by your
next new car. If you buy a vehicles from Rollingwheels.com,
you set your price and we gurrantee that you're in and out of
the dealership in 60 minutes or less. You set your own price because
and sell all our vehicles using our exclusive auction format."
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