Tips on Buying a New or Pre-Owned Vehicle

[PoppyToyota]

There were a few people asking me on another site about how to purchase a car and what to expect. So I thought I would post it over here as well. Hopefully this information will help out anyone who is thinking about purchasing a new or used vehicle.

A dealer makes money on a car a number of ways. There are the Dealer Add Ons, The Price of The Car, Your Trade, Selling of warranties, & In House Financing.

Dealer Add Ons are self explanatory. They are additional features that most customers like on a vehicle over priced to maximize the bottom line or gross profit. EX. Window Tint for 299.00 Etching for 299.00 Wheel Locks for 100.00 The Environment Protection Package anywhere from 299.00 up to 1,000.00 Nice Wheel and Tire Packages Sky is the limit. All of those options are grossly over priced and is just another way for the dealer to make money.

Most People know to negotiate the price of a car. There are a number of great websites out to help the consumer. A few of them are Edmunds.com and KBB.com. Taking the time to navigate through and research the vehicle you want is very important. The invoice price is easily accessible and while the price can vary by what region you live in, it is a helpful tool to know just how much to pay for a vehicle.

If you are purchasing a pre-owned vehicle, the best thing to do is offer less than trade in value of the vehicle you want to acquire. So you go onto one of the two websites listed above and find out what the trade in value of a vehicle is going to be. Then shop online if possible for the vehicle of choice and ask for an internet salesman. The internet prices are almost always lower than the prices on the window sticker or the asking price. Be honest let them know you are calling around and checking prices. This lets the salesman know that if he wants to meet you then he needs to give you a lower price. No matter what price they offer you over the phone 90% of the dealers will take off another $1,000.00 to $1,500.00 of the price if you negotiate with them. THE MOST IMPORTANT PART OF PURCHASING A CAR IS TO NOT BE SCARED TO WALK AWAY. If things do not go your way then don’t waste your time and walk away.

Your Trade is always a topic of controversy between customer and dealer. A lot of times the dealer will have you go over the trade with them and touch and nit pick your car. They do it to show you what is wrong with your trade in hopes you will be more likely to take the low ball offer on it later on. The best thing to do to help you is to go to the websites listed above and see what your vehicle is worth. Then go to Car Max and have them do an Appraisal on your vehicle. This is something they do for free and is just something else you can show the dealer when they try to low ball you on your trade.

Then there are the protection packages they sell you in finance or Warranties. IMHO the only thing you should purchase from the finance guy is GAP insurance. GAP is relatively inexpensive and if you are rolling in any left over amount of your old car to your new car (Negative Equity) you definitely want this. What this does is say you total your car or have it stolen. Your insurance adjuster will appraise your vehicle and tell you it is worth for example 25,000 dollars. Your payoff on the car is 32,000 dollars. Without gap insurance you the consumer is responsible for the difference. So in this case you would be stuck without a car and having to pay a 7,000 balance.

In house financing is always pushed on a customer. The dealer gets a flat fee from a bank if you have good credit. Usually a dealership will try to hold two points interest so if they say your rate is 9% there’s a good chance that the rate the bank told them is up to two percentage points less. So, how do you stop this from happening? If you have decent credit then you can go to your bank and credit union and ask for them to tell you what rate you would pay if you financed a new vehicle with them. The short version is you need to shop your rate. If your credit is below average or even poor your financing options are limited. A lot of times the bank will charge the dealer a fee to take the loan. Some dealers are better than others to go to if you have bad credit. High Volume dealers will work better for you. Because they can package a loan a bank might not normally take with two, three, or four better loans and make the bank take yours if they want the others.

This should help most of you who are interested in learning more about purchasing your vehicle. If you would like some help with something or have additional questions just let me know.

[pmdelites]

PoppyToyota,

great post.

here's another tip when you're contemplating buying a new car.

if you are a member of a credit union, when you get to the dealership, ask for the credit union salesperson. usually, credit unions strike some sort of a deal w/ the dealerships for simple, no haggle, no hassle pricing.

for instance, i'm a member of texans credit union [cos i worked at TI years ago]. they have a great set of pages on cars - go to http://www.texanscu.org, click on Personal Banking then on Car Shop under the Lending section.

say you want a brand new VW beetle convertible. you can either...

a) Build your own car [search area on the left of the main carshop page]. after i put in 2009 VW New Beetle, i got...
MSRP: $25,990
Invoice Price: $24,686
Options: $0
Exterior Color: Not Specified
Interior Color: Not Specified
Total MSRP: (Includes Destination Charge: $700) $26,690
i added a few options and then it showed me MSRP vs. invoice prices.
National Base Price $25,990 $24,686
Destination Charge $700 $700
Optional Equipment -- --
Convertible Top Storage Cover (NCC) $299 $199
Cream (CT) $0 $0
Cream Leatherette (LL) $0 $0
Total with options $26,989 $25,585

or

b) use the "Look for a CUDL AutoSMART Dealership" search area to find a list of the VW dealers in your search area - in my case, Metro in Irving and Boardwalk in Richardson [closer to me]. i looked at Boardwalk's cars and their web prices [MSRP?] range from 26,240 to 28,040.

at the vw.com website, i "built" a convertible w/ the same options - their price was 25,990 [not including destination charge].

so, before you go to the dealership, call you CU and find out what their special deal pricing is relative to invoice. then when you get to the dealership, you can make sure that's what they offer you.

i've bought my last three cars this way. my previous car was a VW beetle diesel fm rusty wallis when it was on e. nw hwy [the same year i started hobbying in earnest]. i got the vw beetle for either 200 under or 200 over invoice cost [about 1400 less that the MSRP that year]. all in about 30 mins after i test drove a regular beetle and a diesel beetle!! [financing and paying for it took longer].

i just checked and credit union of texas [old dallas teachers credit union] has a similar car site and priced it the same.

also, before you go check w/ your credit union for loan rates. many dealerships will match or beat credit union's rates.


in short, extremely simple no haggle shopping. "hi - i'd like to talk w/ a credit union sales rep. i'd like a vw beetle. here's my deposit. thanks for the keys" [well, maybe not that simple].

and think of the fun you can have w/ the money you save!

[~Ze~]

Anyone want to add info about "high risk financing" that the tote-a-note places offer? Where you wind up paying 12k for a rebuilt junk yard motor and a rental car body not even worth 3k?

Personal exp with my ex-roomate... NEVER go there...

[pmdelites]

Originally Posted by pmdelites

PoppyToyota,

great post.

here's another tip when you're contemplating buying a new car.

...snipped majority of post...

i contacted one dealership about the example vw beetle convertible. the sales rep said credit union customers can buy the car for invoice minus 200. so, the model i asked for a quote on was MSRP: 26,989 INVOICE: 25,992 sales price = 25,792 for a savings of almost 12 ben's.

like i said, let' see, that's about 6 2-ben sessions, 5 2.5-ben sessions, 4 3-ben sessions, or 8.5 L3 AMP sessions!!!

if it got better gas mileage [20 in town; i get mid-to-upper 30's w/ my current car], i'd run out and get one.


p.s. trivial facts about the hundred...
http://en.wikipedia.org/wiki/United_...ed-dollar_bill

[TBONE]

Here's how I've purchased a car:

1.See shiny new car in showroom
2.Fall in love with it
3.Ask dealer "what's the price"?
4.Pay the price asked.

Guess I need to take one of you with me next time!

[PoppyToyota]

High Risk Customers or Customers with bad credit or no credit have a little bit of a challenge infront of them. A tote the note lot or small dealerships like Drive Time and Driver Select are the last place someone you should go. The best thing to do is go to a dealership that also has inhouse financing. There are a lot more of them now then people think with the economy being messed up. You can call them up and ask them specifically if they have a program called Credit Acceptance.

A tote the note car lot or place like Drive or Driver Select can be really bad news for someone who does not know anything about purchasing a vehicle. OR If someone is really desperate and isn't willing to shop around for a deal. If you are this person I can not stress enough that you have to shop around more than ever.

Ultimately you are going to have a high interest rate. There is not a secret to help keep you from paying a higher rate. You will have to research the cars and look at the prices online of them. Focus on vehicles that are Special Buys or Older Age Units. They are more willing to help you and will sell the car for a little less if the vehicle has been on the lot for more than a two or three months.

The Credit Acceptance plan finances every customer no matter what your situation is. You just have to be able to provide references, something to show how much you make (Since most ladies on here do not have check stubs. You can bring bank statements, or the last years tax return. They will tell you what you need.) and, some kind of utility bill. The best thing is this program reports to the credit bureaus and will go a long way to getting you back on track. The finance term or life of the contract is usually 27 to 42 months depending on how much the car is.

There will always be places and people who take advantage of people. There are some states depending on where you live that will let a tote the note lot charge rates as high as 30% interest. There are states that will let you finance a car for upto 10 years. (Which no matter how nice the BMW or Lexus looks I would never recommend this.) Try to be informed and do your research to make sure you are not being taken advantage of. Many salesman are high pressure and if you encounter one you don't have to work with them. You can go inside and pick anyone you feel comfortable with. You don't have to rely on luck of the draw.

Good Luck Everyone!!

[PoppyToyota]

TBone if you are not joking around you need to pm me the next time you buy a car. Depending on what car you buy, I can save you thousands of dollars. It is always good to know someone who has been or is in the car business.

[TBONE]

Thanks Poppy! The last two corvettes I bought I fell in love with so of course I paid more than I should have.Finally got a little smarter on my last car, but next time I WILL be seeking your knowledge!