Sometimes people want to buy a car that is new. Ish, I’d advise… Because if you use this information you’ll be the most empowered. And so you’ll be saving heaps of cash to use on more important things. While enjoying having a new car, for all intents and purposes.
Part 2. Buying NEW…ish
In Part 1 we’ve looked at narrowing down options, choices and preference. With a healthy degree of respect to fucking reason and logic. Based on what you can safely afford. And what’s ideal for your situation.
Look, I get it: certain folks make very emotional decisions when they buy a car. In most of those cases they end up regretting it soon thereafter.
That particular exercise (Part 1 of this series) narrowed down the sea of choice down to 3 or so vehicles.
Now, there are some options to buy new cars, and unless you opted for a Tesla, you kind of have to go through a dealership mostly, but not always:
a) NEW from dealership
When buying a new car from a dealer, the process has stages, just like anything else. Here are all the must do things for you, as the buyer, if you wish to save the most money and getting the most benefit:
THE SHOPPING AROUND STAGE
- identify all dealers for the 3 cars you wish to test-drive and ultimately purchase (yeah, I know, you’ll only purchase one, eventually, but bear with me)
- they may or may not be super local to you; be ready to drive around up to a full tank, for the best savings, as expected; good things come to those that put in the damn work and don’t complain about having to drive a bit more to a remote dealership that has the best offer
- make a document with all their information, browse their websites, look at what they have in stock that matches any of your picks, write down the VIN numbers of your chosen vehicles, all the information of each vehicle; if by this point you feel this is too much work, then pay me $5k and I’ll do this for you; because you’ll be taken advantage of, guaranteed
- email/call all of them up, individually, scheduling test drives; some may allow walk-ins to do that sort of thing
- make detailed records of each stock for each of the targeted car dealerships;
- try and locate reviews of dealers, mistreated customers and generally real people talking about them.
Never trust the reviews they put on their own sites. Dogs lick their own privates. Just food for thought.
THE HOMEWORK STAGE
- gather all your important documents:
- credit score if you’re going to be seeking financing from a bank (but bring a copy to the dealer just to allow them to make you an offer, which you will kindly decline)
- drivers license
- insurance policy (if applicable)
- consider bringing a friend that knows a couple of things about cars and dealerships if at all possible; if not, any good friend will do
- bonus points if said friend is older than you and can present themselves as your lawyer, or.. business partner
- this friend has one job: be eternally dissatisfied with any offer. Period. This will bring you some more leverage for your negotiations stages.
- also have a ‘spouse’ on the ready to be produced. This is additional leverage, more on this later
THE TEST DRIVE STAGE
- remember, test driving a vehicle is by no means an obligation interaction. On either end, yours or theirs. However, they are compelled to let you test drive cars, because they are in the business of selling them, and it has become standard practice since your grandfather’s hay day.
You are not compelled to buy just because you test drove something.
So don’t ever feel guilty for not buying the first car you test drive. You should NEVER do that anyway. Don’t let them guilt trip you like “oh, but we spent time showing you the car, talking you through it and doing the test drive… you are wasting our time”. Don’t fall for that utter shit. It’s their job. At that point wear ear plugs, because they are trained to manipulate you emotionally. Be cool, Fonzie!
- now, say you’ve chosen a Ford Mustang, an Audi Q7, and a Subaru Forrester for your shortlist. Damn, first of all, cool choices. Now go test drive several Audi Q7s at several dealers.
Even if all the cars are brand-spanking new, they are from different production batches.
As such, it’s often the case that they handle, drive, and feel different from one another. Make detailed notes of each one compared to the other. Same after driving all Mustangs available. And Subarus.
See why I had you compile these separate dossiers for each car? Now you can put them side by side and make a logical, data-driven decision, instead of a shitty emotional one. And you get the best car because of this. You’ll thank me later.
- you want to test drive each car in different situations:
- city (stop and go)
- highway (ramp up to cruise speed and back to city)
- (optional) if off-road vehicle, might wanna get it at least on some gravel roads, parks, whatever
- during each of the test drive situations, use absolutely each feature of the car.
Press the hell out of all the buttons, turn all the knobs, cycle through using all the lights, gizmos and what-have-you.
Make sure everything works correctly, obviously.
- I know it’s probably obvious, but test acceleration and braking both mildly and also hard (with the approval of the dealer’s salesperson riding with you at those times, of course; never do something that they do not permit you to do). If the car keeps true under both acceleration or braking, you can be sure you have a good one.You’d be surprised how often brand new cars are not balanced correctly, or have production problems of all sorts.
Why do you think there are recalls?
And lemon-laws in most US states and other countries. Because these things happen more often than most people think.
- check for leaks under the car and around the engine/motor bay with the engine warm and also cold. If none, it’s good.
THE NEGOTIATION STAGE(S)
- most important for you – TIMING your car buying process process from the dealer.It’s a known fact that most car dealerships in most countries will have soft sales targets/goals at the end of every month, but hard targets upon their bonuses depend on – at the end of every year. Because of this, try to time your process to end upon the end of the month at the very least, but ideally – at the end of the year if at all possible, because it gives you by far the largest negotiation leverage.You can just walk away and take your business elsewhere, and they know it.
You’re not pressed for time. They are.
Also worth to note that lot clearance pricing at some if not most dealerships usually extends throughout the January of the following year, because of this
- pit dealers against each other: get offers from everybody and their mother. I’m not kidding. Go through the process many times, and see what the best offer is.When you have a few offers on the table from multiple dealers, call the more ‘expensive’ ones, letting them know you’ve been offered a better deal and ask them to do better. Not just match it, but do better! Otherwise what’s the point?Cite better customer experience too. Or that the cheaper dealer went above and beyond for you. Got you a date with their hot sister or brother even, just to get you in their car, instead of anyone else’s. I mean,I’ll say whatever the hell I have to say to get a better price. No joke. You should too. It’s free, and you save lotsa $$$. Or avoid debt. Or you could afford shiny-ass new rims for that car. Whichever way you wanna rationalize it. But do it!
- have a ‘higher’ authority you supposedly answer to (like your wife/husband/dog, whatever).
- be open to acquire the actual showroom car, instead of a back ordered one from the manufacturer.Ok, here’s what happens in a dealership. Most of them actually BUY all their car lots in advance from manufacturers, based on market demand and some studies and numbers they find appropriate. So now they’ve got 20-50 cars in the lot that are just sitting there.
You can hear them depreciating in the distance, if you listen closely.
Remember, all paid for, in full, on a big ass credit line that dealership has with a financial institution. Their job is to sell the lot as fast as possible, under almost any favourable conditions to them. They do not give a rat’s ass about you or your financial situation.
Every day a car on the lot isn’t sold, means not only they pay interest on the credit money they used to buy it with, but it also means a parking spot (sometimes inside the building, e.g. more expensive) is taken by it, which, if it were empty, they’d sell another car from it.
Also keep in mind they have quotas. If they don’t sell most of them during the year, they are so much more compelled to sell for cheaper (but still breaking even) at the end of the year, because they run the serious risk of not being able to pay their loans/credits, or interest.
See why I am adamant about doing this actually between Christmas and New Years? (provided all other steps are done before, just the signing of the deal and the handshake should be done at that time, of course).
Back to the point: if you walk in there and the only car of your choice is a silver Audi Q7, you will just put your snout up in disdain and say “oh too bad, wife only wants the burgundy cat-shit stained matte one, not the silver one you guys have, sorry…”. Since color is a very protected characteristic (in that it’s emotional in nature, they can’t argue with wtf you like/prefer), it’s not really negotiable to them. But to you it is! Since you are a smart customer that knows that silver is far less likely to have it stolen, and not stand out like a bling-bling chromed grill with spinning rims and all that other shit. So you’ll say “…but let’s say I can twist my significant-other’s arm to accept this, at great risk to my personal safety, say… for 5% less than the currently negotiated price”… Watch them boil a bit, and see if they take your deal. If not, that’s fine. Walk away! Repeat after me: WALK. AWAY.
Go to other dealers and go through the same motions. If it works (and it most certainly does), you just saved enough cash that you could choke a donkey on.
- same for other features that the showroom car might not have:
- oh, no navigation? fine, another 2% off. You’ll install your own for $25 off of amazon.
- oh, no parking sensors? fine, another 1% off. You’ll get it done aftermarket. Or just live with it. Learn to drive better and not rely so much on them little sonars.
- always ask to include more non-financial benefits. You got a mouth, no? Does it hurt to ask?
- extend the warranty of the drive train and engine in the same price
- gimme free oil changes for one extra year please
- throw in a free 1 year road assistance membership with the largest organization in your country/province/state please
- I’ll take the deal if you give me 4 extra wheels with winter tires on them and free swapping them at your facility. No fancy wheels, just basic steels ones, and shittiest winter tires you can muster, please
- winter underbelly treatment against salt and stuff
- how about some god damn rubber floor mats please? basically anything that you’d want to get anyway, try to make it part of the deal.
The worst that can happen is they could say no. Uuuuu… nasty… big deal.
- if you pay in cash, in full, you are definitely asking for a big discount. Fish in the range of 5-10%. Their risk goes up with every financing. Lots of people are delinquent on their payments. Yeah there’s insurance on their end, but they don’t like going through it, because it costs them anyway. In time, and interest, etc.
(optional, and not advised) THE FINANCING STAGE
- most dealers will offer financing options through their own financial companies. Needless to say, at very disadvantageous terms and interest rates, regardless of your credit score. Hear the offers, get the written papers, politely decline. Don’t sign a god damn thing. I’m serious!
- if you cannot afford the car in cash, I’d humbly suggest backing down from this purchase altogether. Look at something cheaper, or nothing at all. Ultimately it is up to you, but if you do choose to finance, do get some offers from a few banks and credit unions. In my experience, in the overwhelming majority of the cases, these latter institutions offer far better financing deals than car dealers themselves.
- watch for fees and taxes that are maybe not even legal. In Canada for example, some of them cite an AMVIC fee which although legal, it should be included already in the MSRP or sticker price. It’s also just $10 or something in that ballpark. Dealers have been caught on camera asking for hundreds of dollars for this fee. They do this with a lot of bullshit things. Like document signing fee. Delivery fee, etc. Some if not most, can be completely avoided, if you know their tricks and the law.
- careful on how they do their crooked math. They complicate it unnecessarily, just to try and confuse the public. They also tend to not apply taxes correctly (well, it’s in their favor). It’s really NOT complicated. Simple, third grade math.You double check their numbers every time they put something in front of you. Your smartphone’s default calculator app can do god damn trigonometry and advanced calculus. It’s not rocket science.
- remember, financing a vehicle and buying it are also TWO DISTINCT TRANSACTIONS. Financing is normally referred to as signing an agreement for a loan. Be it from a bank or the dealer themselves. Buying that car is another contract altogether. As such, financing terms have nothing to do with buying terms. You best be negotiating like your life depended on it for EACH of these transactions, should you have to go through both.
THE PAPERWORK STAGE
This is where a lot of car dealerships take advantage of customers. Be it ill-intentioned, or just ‘doing their job’. Most times they’ll try to upsell you to a number of things that not only you don’t need, but if you actually happen to need those, you’ll be able to meet those needs aftermarket, at far better prices. For example:
- upsell to upholstery / leather protection. BS. Never accept it. You’ll do a better job yourself with a can of leather protective spray from the first gas station in your path
- upsell to paint or glass protection. Also BS. Never accept it. A body shop will do a far better job for less than half the money to wax it and polish it.
- upsell to different trim level of features on the car. They usually cite shit like “ooops, turns out we don’t have the base model anymore, we have the ‘touring’ edition, which is $3578 more expensive, but I’ll give you a deal – instead of $3578, I’ll let that option go for $2200”. Ka-ching.. dealer makes easy money, you depart with your hard earned fiat currency, like a stooge.Don’t let that happen.Say no, unacceptable, you already have been given the offer for a specific amount already. Once negotiation is over, and you’re at the paperwork stage, don’t let them shove anything down your throat in terms of fees, taxes, and other miscellaneous ripoffs. Say no, if they don’t change their tune, ask to speak with the dealership boss (not their manager, but the boss).If they withdraw the offer, walk away. Plenty of fish in the sea. For both you and them. If they’re not pressed for time, they’ll find their stooge. And in your case, there are plenty of dealerships everywhere. Just drive further for another one. Whoop-tee-doo.
- in the unlikely event that you’re absolutely ready to sign on the dotted line, do me a favor: slap yourself. HARD! Then walk the hell out. Tell them you need to take papers to show your wife/husband/whatever significant other person you may or may not really have. Tell them you need to run it by said person, of course, otherwise you’ll get divorced. Or lose child custody. Use your imagination. Play the emotional manipulation game back on them.See? Two can play that game.Reason for this is that you walk away anyway, just before signing away your soul. Just kidding on that soul part. But, you call them up from home, and then tell them you simply can’t afford it, but actually, instead of telling them, you just shift the burden on them, by asking in your best laste-night-radio-DJ voice: “well, what can I do, if I simply can’t afford this? I mean it’s an amazing car, I want it so much, but I just. can’t. afford it. How can I move forward with this then, huh?”.. Let them come up with better numbers. One in three cases, they’ll drop the price further.All for a nice act that you adopt a soft spoken voice and put your tail between your legs, and let it seem like you submit to them. The big dogs. Or dicks. Whichever way you wish to rationalize it as.
the initial (or full amount of) MONEY EXCHANGE STAGE
- if you buy in full with cash, always bring a friend or two with you, if not for negotiation leverage, at least for damn safety. It’s not cool walking around with that much cash (enough to buy a brand new car, we’re looking at over $10-20k, no?).
- if dealing in checks/cheques – bring less than the value that you owe. Worst case scenario – you’ll have to walk to the first bank and get another certified check for the difference. Best case that will happen to you: “hey dealer, that’s all I got man, wife will kill me if she finds out I spent this much of the kids college fund to get a car”… one in very few say “ok, fine, gimme” and deal is done. Got nothing to lose.Either way, still bring friends. Certified check is as good as cash. You lose it or destroy it, it’s lost. Bank won’t give it back. And normal check nobody accepts, value is too great. People bounce them. And have left with cars. Dealer loses, so they don’t accept anything but certified check and cash these days up here in Canada. And cash is iffy in large quantities for them too. Anything over $10k they report your ass to the tax man. Investigations happen. Gah. Best be dealing with this in the most elegant, non attention-attracting ways possible. Look it up what it is in your neck of the woods.
b) NEW from dealer with a trade-in of your old car
- well, this point is here for the sole purpose of making you realize that the TRADE-IN of your old car to this dealer is a completely SEPARATE transaction from your BUYING of that new car. So treat with respect, as such:
- try selling your old car after you buy the new one. Privately. 99% certain that you will get a better price than what all dealers would offer you for it. Why? Because dealers would not offer you fair price on your car, because they need to make a profit. Even on old beater cars, they still mark it up by $500-$1000, on average. On newer cars – even more. Wouldn’t you like that money in your pocket, rather than theirs? Need I say more?
c) NEWish from private individual
Just don’t be a hero. Let someone else take the biggest depreciation hit for a couple of years. Get a 2-4 year old car, with low mileage, for half the price of a new one, but same life-span and benefits. This is the best option for most people. The Pareto principle, or 80/20 rule: 80% of the results are yielded by 20% of the inputs. Get most of the benefit with the least expenditure of cash.
You know, aside from the above tests and negotiations, one can also do the following:
- check for service records and history, oil changes, general state of the car, suspensions, emissions, etc.
- don’t buy it if it has been used as a taxi. You can easily determine that by the number of miles/kilometers per year. Your average joe drives between 10 and 20 thousand kilometers a year in most countries. That’s like 12000 miles a year. Anything beyond that means the car has been running like a taxi, or whatever. Walk away.
- obvious and non obvious damage (repairs and accident proof, etc.)
- and all the usual else, which I cover in more detail in Part 3.
d) NEWish from repo companies and auctions
Now this takes loads of luck, knowing someone that can keep an eye out for repossessed vehicles in your area, and lots of time spent. Not going into details, just mentioning that it’s there, if appropriate to your situation. Plenty of gems, but rare and far between.
e) NEW from manufacturer (in the case of certain fancy European makers, like BMW)
Some manufacturers, namely BMW, allows for direct buying from them (but also via dealer, where you sign all the paperwork and whatnot). You can pick the car up yourself from the factory, thus saving you the delivery fees, which are substantial. But that’s for another discussion, since most people don’t just want BMW stuff.