Saturday, March 7, 2009

DC's 7 Steps to Purchasing a New Car


The frightening state of the economy and American automakers has scared a lot of people of from purchasing a new vehicle. And rightly so. However, there are some tremendous buying opportunities out there for those that can afford a new car.

Cars are a huge purchase and the worst investment you can make. The minute you drive them off the lot you have already lost thousands of dollars. However, most Americans need one for work and home life and that vehicle will be carrying precious cargo--you, family, and friends--so you need to do your homework. Which brings us to step 1.

STEP 1: DO YOUR HOMEWORK

Go to Edmunds.com—the best car info site on the planet. Edmunds has everything you need—reviews, safety info, price guides, dealer incentives, rebates being offered, holdbacks etc. Other helpful vehicle websites include: Kelly Blue Book, NADA, and Cars.com. If it is the beginning of the new year, go to a bookstore and buy the Consumer Reports magazine “Best & Worst Cars”—it’s a quick read and handy resource. It has ratings on every car out there—new and used.

STEP 2: FIGURE OUT HOW MUCH CAR YOU CAN AFFORD

The Internet sources all have financial calculators which will allow you to determine your monthly payment based on rate (you can get current loan rates at bankrate.com), months of the loan, and cost of the car. If you have a car to trade, you can determine a ballpark figure on what you can expect to get from a dealer. Just make sure you can afford the car you zero in on.

STEP 3: BUILD YOUR LIST

Based on these sources and the amount you can afford to pay or finance, start drawing up a list of acceptable cars. Even if buying used, these sources are invaluable and give you all the info you need.

STEP 4: TEST DRIVE

Once you have a list of acceptable cars in your price range, start thinking about test driving. You HAVE to test drive the car before you purchase it—you simply may hate the way it drives. However, you NEVER buy a vehicle right after a test drive. You are simply there to drive, NOT buy. Don't get suckered into the trap of negotiating after a test drive. You have no obligation to stick around--hand them back the keys and scram.

STEP 5: BUILD YOUR CAR

Once you have finished all your test drives, it will probably be apparent which car you want to purchase. If not, add some possibilities by repeating Step 3. Step 5 is where your homework really pays off. Once you target your new car, you build it from scratch using Edmunds or any of the sites mentioned above. Here you determine out what you must have on it, what color you want, and what extras you might like. Edmunds will then calculate the price of these extras and determine what you might expect to pay for your desired vehicle.

STEP 6: START FISHING

This is the really fun part. Go to the manufacturer's website and look for the link that has “dealer locator” or "find a dealer near you." Click on that link and generate a list of 20 or so dealers within 100 miles of where you live. Then email EVERY one of them with a generic email that reads something like this:

"I am interested in purchasing a 2009 Ford Fusion I-4 SE with automatic transmission and electronic stability control this month and am shopping around for the very best price. My desired color is Silver. I live in Somewhere County, Ohio; however, I am willing to drive for the best deal. I am fully aware of the $2500 in customer rebates and the $1000 in auto show incentive Ford is offering.

What I want from you:

1. Cost of the new vehicle including all taxes and fees
2. Your very best estimate of the monthly cost for a 60 month loan

My name and contact info: Joe Shmoe. I strongly prefer email: joeshmoe@myemailprovider.com. Cell phone: 555-555-5555."

If you have a car to trade, ask them to give you a ballpark figure for your trade, assuming the car is in good shape (you can look up definitions of the condition of your trade on any of the sites already mentioned) and have them figure that in to a separate price.

About half of the dealers will ignore you because they know you 1) use the Internet 2) are an informed consumer who knows what he/she wants 3) their profit margin will be very slim. About half will bite, however, especially in this economy. Out of the dealers you email, about 10%-20% will make you serious offers.

You can negotiate by email or phone, but email is better. If negotiating by phone, tell them they MUST email you their best offer. Why? So it’s in writing & you can print it out when you go to close the deal and sign the papers. Also, your local dealer might just meet or beat the best offer you got so be sure you save a hard copy so you can bring it with you when you get to the next step.

STEP 7: REEL ONE IN AND SEAL THE DEAL

Step 7 is the best step of all: buy a car with the satisfaction you got the very best deal possible. It really is this simple. This process could take a few days or a few months, but you will save thousands of $$$ in the end. It can work for used cars too but it is a more complicated process. Regardless of car, you will get a great deal and not even have to step foot in the showroom.

With the woeful state of the economy, it's a buyers' market. There are tremendous opportunities out there for consumers willing to take the time to do their homework.

3 comments:

Kyle said...

DC, good advice in the post. The only thing I would add is to shop around on the value of your trade in vehicle. When I traded in my old car, I had two dealers give me two different quotes that were $1,500 apart. I was able to get the dealer offering the lower price for the new vehicle to honor the other dealer's higher price for the trade.

Erick said...

I don't have that kind of money...

DC said...

Kyle--excellent advice. The trade is always the toughest part of the deal.

Erick--you will someday...but you have to actually graduate and make money first...

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