GREAT INFORMATION WHEN BUYING AN AUTOMOBILE ~ WHAT TO WATCH OUT FOR!!

 

Buying a Car

"CAR-SALESMAN" are taught NOT not to give an answer when a potential customer asks the price of a vehicle. They are told to  get them to go into the office because some people will simply accept the sticker price and they need to see if you are one of those people or if you will ask how much they will come down.

The real secret of buying a car is to learn the art of negotiation. You can save $2500 on a $16,500 car.

The accessories are where they pad it. They buy the fancy mag wheels for $130 and sell them for $500. Air-conditioning costs the dealer $400 but you pay close to $1000. A $400 package of automatic windows, tilt steering wheel and cruise control will cost you $1200. And those 5 year extended warranties. They mark them up three times!

Practically any dealership will negotiate.

The salesman is going to ask you all kinds of questions. He will try to get you into the car to smell the new car aroma, to show you the gadgets and get you to drive it. He is going to make you love that car then hit you with "What do we have to do to get you to drive it home today?" (Sound familiar? That is because they all go to the same schools, watch the same salesmen videos and hear the same pitches from sales managers.

The reason there are two stickers on some cars is because the dealer add-ons that boot the price some times over $1,000. When that protective polish that cost $15 is applied by low-wage help, the buyer is charged $185. Pin striping runs about $7 per stripe but you pay $75. Fabric seats are stain protected by a $5 aerosol can and you pay at least $60.

You are made to feel that you've scored a major triumph when you can do away with the add-ons and return to the basic sticker price.

Be vague about your price range.) Ask to see the factory invoice*. (Invoice price is very different from the sticker price! All dealers pay the same factory invoice price* but they mark it up as much as they want on the sticker price.) Always negotiate up from the factory invoice price (not down from the sticker price). Start high enough to include a minimal profit for the dealer. A good initial offer can be $200 to $500 more than the invoice.

Set the target price of 4% to 8% over dealer cost. Visit several dealerships and tell them you'll buy from whoever gives you the best deal.

Find out all the fees up front, including advertising fees, dealer preparation, and the destination charge. make sure that the fees are factored into the dealer's selling prices because they can cost you upwards of $1000 or more. This is why it is good to ask to see the factory invoice, which lists manufacturer-to-dealer incentives and rebates.  

They might show you if the car has been advertised. There's little profit in advertised cars, which are usually cars with nothing on them, but they can give you a good idea of dealer costs. The are usually a bait-and-switch tactic to lure a buyer into the showroom and sell him another car--with all the toys and whistles.

As long as you don't pay more than 5% over dealer invoice, you made a reasonable deal assuming there wasn't a manufacturer's holdback. (Be sure to check that.)  

Remember you can always walk out if the dealer is not willing to meet your price. 

Tips from New Car Sales managers

As a general rule of thumb when you want to negotiate price with a dealer, work from the invoice up--not from the sticker down. Ask to see the dealers invoice on the car you have decided on. (That is what he paid the manufacturer or distributor for the car.) You'll usually get a better deal if you offer to pay a percentage over the invoice.  

About 20% is how much a salesman makes on a new-car sale. That is why they want the customer to pay close to sticker.

Don't ever feel bad no matter how well you negotiate; the dealer doesn't lose money--even if you pay only $1.00 over invoice. There are arrangements with the factory that certain cars bring a factory rebate  that only the factory, dealer and IRS know about.

To get a new car at a used-car price, ask dealers about the availability of factory cars that were "fleet cars" or "buy backs". You get all the advantages of a new car at a $2,000 to $4,000 savings.

Don't fall for the extended warranty or dealer financing.  It is wise to get pre-approved by a bank or credit union rather than the dealer as you often get a better rate. Also, remember these dealership financial people receives incentives by having you go through one of his institutions. compare the lender's financing terms with the dealers terms.

TRADE INS-
The real rip-off is in your trade-in. Negotiate the cost of a trade-in after you have the lowest quote for the car in writing. The dealer might try to pressure you into dealing with the trade-in up front, but don't let him. Never tell them you have one until you feel like the dealing is done on your new car and you are ready to close the deal. This is where you find out the truth about what they will give you for your old vehicle. (Know what your car is worth beforehand by checking Kelley Blue Book or AutoTrader or Edmunds.com. you will need to adjust for the condition of your vehicle, mileage and options.

Don't EVER trade in a car unless you don't mind getting clobbered. Seventy-five percent of trade-ins are sold to a wholesaler, so you'll only get the wholesale value of your car. You can probably sell it yourself for quite a bit more. 

The salesman knows that everyone who comes in is a prospect. If you leave without committing to a purchase, the dealer's chance of getting you back is diminished enormously. That is why you never get a direct answer on price.

If you say you want to think it over they will come back with, "What do you think you need to think over?"  Maybe we can help you. If we don't have the answer, perhaps we can find it.

That is when you need to walk out. (You will probably get a call at home the next day with a lower offer. )

If you want to get the best deal while granting the salesman a fair profit subtract the dealer's prep charge from the list price on the sticker--then offer $3000 less than that. (That was in 1989 so it may be higher today.) The salesman will start playing with figures to show you what a good deal he is giving you. Then the manager will com in. Hold steady, and if the price doesn't come near your figure, raise your offer by $500.

Used Cars-

NEVER buy a car without looking at some used car ads to see how well the car holds its value. If it doesn't as well as another brand you might consider looking at something else. 

The reason for this is if you are making payments on a car that is rapidly depreciating should you be in a wreck  when the insurance adjuster will offer you what the car has depreciated down to--not what you still owe.

Bigger cars or the most expensive ones when new will obviously depreciate the most.  
Look for a car that holds its value. This is like keeping money in  your pocket. 

If a used car has been on the lot for 90 days they will usually sell it for what they have in it.

The best time to buy a car is the last day of the month. Your sale may make or break their quota so sit tight if you can until then.


Mechanics Thoughts on Used Cars

Tricky scams by having you take out longer loans!
 As we stretch to buy more car, we’re putting ourselves in very bad situations.  When you take out extra long loans (6-7 years) , you’re going to be tragically upside down in your car loan. And for most of the time of your note, you owe more than what the car was worth. That can cause a host of problems, including the need for additional auto coverage and gap insurance. You can owe as much as $10,000 more than what the car is worth. If you can’t afford the payments on a four-year or even five-year loan, you are  buying too much car. If that happens, you need to look at a car that is a couple years older.

And when you go to buy your car, remember that the salespeople will try to take you for all you are worth. The group Public Citizen put out a report called "Ripoff Nation" that lists many of the underhanded things car dealerships do to make a sale. The group interviewed disgruntled workers from the car business, and the news is shocking. One of the devious practices is to create a fake sticker for the car that lists items as extras" when they are really standard.

Another is to run credit reports on buyers without your permission in order to judge how much time they should spend trying to sell you.

There is financing for everyone out there but your credit determines the annual percentage rate or interest of your loan.  

Adding phony charges and "add-ons" to the sales ticket after the sale and asking for signatures on blank pages are a couple more.

They can’t get away with these practices if you don’t let them. First of all, get pre-qualified for financing. Then, arrange financing in advance before you set foot on the lot!

Secondly, your enemy is emotion. Knowledge is your friend. Don’t allow yourself to get worked up.

Do your research up front. to figure out your payments got to www.bankrate.com and enter "calculator" into the search box.

Read these other scam reports:

Watch for scams:
info from msnbc
from citizen.org 
More scams!   
Tips from Dateline-

Never buy on your first visit. You will be making an impulsive decision, and will lose negotiating power. GO SLOWLY Speed in the automobile transaction is a very dangerous thing. All dealerships want to sell you the first time you're there because they make more if you don't shop around. Wait a few days before going back. They'll be glad to see you and a lot more agreeable to your terms.


BEFORE YOU SHOP:

• Know what you plan to spend on a car before you begin to shop. (Smart people figure out how much they think they can afford to spend on a payment each month and prove to themselves by setting aside that amount each month before they buy. They end up with a good down payment and/or money for the tag and insurance.)

• Rather than automatically financing at the dealership join a credit union where negotiating skills aren't needed to receive the lowest price you qualify for on automobile loans. Or shop for the best loan rate at different banks. If you want the really best deal go to the internet and look how low you can get the loan bankrate.com I found some great rates which kept my payment way down....and I will use that extra money to buy myself something special each month.


• Sellers can't tell you if the cars they sell are unsafe or mechanically unreliable. Use non-commercial sites like the Center for Auto Safety. Check to see if the car you want to buy is a lemon by going here http://www.kbb.com/


DURING THE PROCESS: 

• Don't deal with dealerships that require you to sign a mandatory arbitration agreement.  

Call dealerships before you visit them.


• Don't fall for it when the salesman suggests that you take it home "on the spot," the first time you've seen the car. (It is a proven fact  that  your emotions, not your pocketbook, will rule the transaction.)

• Stop the transaction if you feel pressured or confused. 


• Remember that the price of the new car isn't where seller make money. Many dealers will sell you a car for "cost" but make still make thousands on you.

Don't get taken by "0 DOWN! 0 INTEREST FOR ONE YEAR"  This costs more in the long run than a conventional loan because at the end of the one year you will owe all of the payments you delayed- sometimes PLUS interest. This makes you having to pay much more than the sticker price on what is now a "used" car.

Some contracts state that the buyer owes the dealer X number of monthly payments at a high interest rate. If one can't afford it and wishes to refinance most likely they now owe more than the depreciated car was worth. If it gets repossessed your credit rating will be shot and you'll still owe money. 

When asked "WHAT CAN YOU AFFORD TO PAY PER MONTH?" Never tell them.  They use your "payment limit" to determine the model they will recommend, as well as the price he'll charge. He can get you that payment but it may be a  6 or 7 year loan! (Negotiate the vehicle price, as if you were paying cash. Then calculate the monthly payment.)

When they offer to pay off your old car loan, they aren't really assuming your old car debt. The debt doesn't simply disappear. Whatever you owe on your old vehicle is rolled into your new loan. If you owe $8,000 on your old one and the new one is $21,000, you'll owe $29,000, minus any trade in value. Often the installments are spread out over six years or more to make it look like your payments are lower.

Know your credit score, before you shop for a car loan because some deceptive dealers will tell you that yours isn't high enough to get the low interest loan they've been advertising. Scores above 700 from the major credit bureaus are usually considered excellent.

They tell you if you finance with them you can "drive it home today". a week later you get a call saying that you didn't qualify for the low rate, afterall. 

The fine print of the contract reads something like "subject to financing approval". They may tell you that you need a larger down payment and owe higher monthly installments or the salesperson may threaten to report the car is stolen. If you want to cancel the deal they may say they've already sold your trade in and  that you did sign a contract that has it right there in the fine print that it was "subject to financing approval".

Sometimes in the fine print on the back of the contract it states that you must agree to arbitrate any future legal problems. This binding arbitration clause used at many dealerships you waive your right to sue, to participate in a a class action lawsuit or to appeal. Instead, should a dispute arise, you agree to present your case to an arbitrator, who weighs the facts on both sides and suggests a resolution.  

You may be told that the dealer won't haggle because of special pricing or financing on the vehicle. In reality rebates and financing offers typically come from the automaker. They do not affect dealer profit. Typically, if you negotiate you can save around $1700.

To get the lowest price, first find out what the dealer paid for it. Check out pricing manuals and websites like consumerreports.org   edmunds.com,  kkb.com

 

carbuyingtips.com

MORE INFORMATION ON BUYING A CAR

epinions.com

caranddriver.com features road tests and reviews.

Cars Pricing Reports and Reviews: cars.com 
New and used car pricing and reviews.

Edmund’s Automobile Buyer’s Guides: edmunds.com
Buyer's advice on cars and trucks.

Highway Safety: http://www.hwysafety.org
Crash test information, statistics, & more.

Kelley Blue Book: kbb.com
Car buyers guide to values. (Also pull up the car and then put in the VIN to check for lemons!)

Lemon Car Page: defect.com
General information on lemon car cases.

LEMON LAW (DEFECTIVE CARS)

N.A.D.A. nadaguides.com Motor vehicle appraisals

If you don't buy your child a "great" car they have to learn to work on it once in awhile they will gain lifelong knowledge so they don't get ripped off when they have to take their car in. Too many kids today are so clueless that soon the mechanic profession will become an even "hotter" job to be in. (Having to learn about cars may inspire them to figure it out themselves; to save money. Even if you don't want your child to be a mechanic he or she will be a lot better off knowing the difference between a spark plug and a distributor cap if they have to take it in to a shop. )   

 

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