Thursday, April 14, 2011

Car Buying 101

This really isn't car buying 101, but considering how so few people seem to know how to buy a new car for the right price, I'll go ahead and call it such.  Now I should disclose that I have never bought or leased a new car for myself, and quite frankly, I may never - cars are one of the fastest depreciating "assets" around - a sinkhole for money if you will.  However, I have done this for other people, and figure I should at least clue the rest of the world in on how to haggle a great deal.

Let's assume that you're just the average Jane or John looking to buy a car and know what car you want and what options you want.  I highly recommend first checking out the Zag Car buying service for strong bottom line pricing, as a baseline maximum price to pay.  That's right, maximum price to pay - for if you're paying more than that, you're clearly overpaying.   AmEx, Costco, USAA and others offer pricing from Zag to its customers as a service.  Here's a link to the AmEx site with car pricing.

If doing a trade in, find out what your car is worth  Don't kid yourself, you're not getting anything above the "good" condition for the trade in value, so keep that in mind if you think your car is awesome.

To figure out what to actually pay, take what the price is from Zag, subtract it from the kbb trade in value.  Pretty simple, right?  But wait, let's now up the ante; start calling some dealerships and ask to speak to their Internet Sales Dept, tell them what you want in terms of the car and trim and trade in, and tell them the price you want to pay - what you just calculated and subtract another $500 off that price and see if they're able to do the deal.

They'll likely tell you to come in and they'll see what they can do.  Don't bother - tell them they have to make you a deal over the phone, and if it's not what you agreed to over the phone, then you'll walk.  You'll see them later - and be prepared to do a deal later, if they have the best price of all offers you receive over the phone that day.

Now some may say they can't match that price - then ask them what the best they can do is - psych them into thinking that price is something some other dealer quoted you to push them to admit their best bottom line; do this for a solid dozen dealers if possible and that should give you a good idea of whether even just $500 off the caculation from before is enough, or you should try to get an even lower price.

Happy car shopping!

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