A Car Buying Odyssey: part 4

Recap:

K and her husband needed to buy a new car that fit their young family. After 6 long days, 5 dealerships, 7 car lots and two close calls they finally bought a car from a dealership. The negotiations look long into the night and couple felt they one every major point they wanted. The car had higher mileage than desired and no navigation or backup camera, but met all the other criteria they were looking for. They got the interest rate they wanted, the price they wanted, the trade in for their vehicle they wanted, and the monthly payment they needed. However, they felt that they’d compromised by agreeing to buy under the pressure of time constraint and because they didn’t have time to get it inspected.

Because they were taking a big gamble they couple is now awaiting the result of their inspection.

Part 1 link

Part 2 link

Part 3 link

Part 4 link

The fallout:

The next morning, K’s husband flexed his schedule to allow him to take the car for inspection. He enjoyed the drive over, but sat nervously in the inspector’s office while they went through the car from top to bottom.

The inspector noted evidence that the car had been a fender bender of some kind. The repairs made it difficult to spot which made it not a real concern. There was condensation in the mirror lights indicating the seals had dried out. There wasn’t any way to know how if that was an easy fix or not, but that wasn’t a really big deal to the couple. The engine, interior, and performance testing came back with very good scores.

The vehicle history made no mention of an accident, but the inspector indicated that accidents go unreported often. The only prior owner of the car had been a rental company which is why the car had such high mileage. The inspector echoed what K and her husband had been told by several people in the auto industry, that rental agencies maintain their fleets well and that shouldn’t really detract from the overall value of the car.

The inspector did find a one inch cut in the sidewall of a tire, which may or may not be a safety concern. Because the depth of the gouge was uncertain that impacted the value estimate by the cost of one tire. However, the car checked out great and received a “Very Good” rating.

Final analysis:

When K received the news via text from her husband she was visibly relieved. They value range on the car was somewhere between $17,600 and $18,300. Since the couple had negotiated the price to $17,999 and gotten the trade-in value and financing they wanted, they felt like they’d received a fair deal.

Taken as a whole they rated their experience as an A for results, and an F for experience. In short, they were exhausted and stressed. Getting a Sedan was a second choice since it didn’t have the amount of cargo space and baby seat room they hoped for, but it did have great fuel economy. All and all the couple felt they’d learned a lot about what to do next time, but they still wanted a better way to car shop.

From the staff here at the Kicker, we agree. We took on following this couple’s car shopping experience with the stated goal of taking the mystery and worry out of car shopping. Instead we found validation for the typical car shopper’s anxiety. Especially if you compare car shopping to house shopping.

If you’re thinking about buying a car soon, here’s some tips (inspired by ABCnews.go.com) to help you succeed.

  1. Never, ever, buy a used car without an inspection. Most private party sellers don’t really know if there’s something going mechanically wrong with their car and car dealerships inspect cars upon intake to determine if they want to sell the car at their lot or wholesale it at an auction. The vehicle history is often out of date. You need the current condition verified by someone who works for you.
  2. Calculate what you can afford to spend on a car including payment, insurance, gas and maintenance. It should be less than 20% of your total monthly spending.
  3. The age old debate between buying new and used is harder to call than in the past. After cash for clunkers, used cars have been running high and auto makers have reduced cost to compete for the increased need. Used cars still give more bang for your buck, but new cars have better warranty and can have lower interest.
  4. Don’t start at the dealership, research the cars you might want online. Pay attention to reviews, as well as features, and use MSRP as the price until you’ve settled on the car you want.
  5. Take the monthly amount you can spend and subtract 5%, then multiply by 60 or 72 to figure out what you can afford. When you’ve narrowed down the list use a site like Edmonds.com to establish the maintenance cost of that type of vehicle, and factor that in. You can also get more accurate numbers by figuring miles you already drive a week and calling your insurance agent for a quote.
  6. com offers calculators to help you figure interest. Shop around for the best interest rate so that you have something to compare a dealership off against. A dealership will consider your trade-in value or down payment, the interest rate on their financing and the final price of the car fluidly, so you can reduce the number of variables you’re dealing with at the time of purchase by arranging for your own financing in advance. Credit unions most often beat banks when financing cars.
  7. Use an interest rate vs rebate calculator to help you decide which option is best in your situation. A Trick to be on guard for is a dealership that offers a great interest rate (if approved) only to come back with a higher interest rate claiming you didn’t qualify for the lower rate.
  8. The prices to have in hand when shopping are Invoice price and MSRP on new cars, and wholesale price and dealer’s asking price on used vehicles. Begin negotiation by establishing the price for the vehicle you want before any discounts or rebates are applied. The dealer needs to make money, but both parties should be able to agree on the fair price for that car in that condition.
  9. Ask the dealer if you are eligible for military, student, or credit union membership discounts. KBB.com or Edmonds may have information about Dealer incentives manufacturers are offering dealers on the new car you’ve selected you can ask the dealer to split that incentive with you. Another place dealerships make money is selling you a service contract. The minimum markup on a service contract is $1,000 dollars and some dealerships don’t know that they can force that number lower. Refuse to pay the full price for a service contract. You don’t need to pay interest on $1,500 of pure profit for the dealer.
  10. Be very wary of “Internet” prices when researching. These are loss leader prices that dealerships use to get you onto the lot. The price in the window will be a couple thousand dollars more. If you found the car advertised for less—that’s the price of the car.
  11. Car dealerships will start talking about your trade in right away, especially if you drive it into the lot. After establishing the price of the new car, and all rebates, you can talk about your trade in. Do your research in advance and know what your car is worth. Don’t settle for a wholesale price on your trade in, KBB and Edmonds will help you establish your trade-ins value. You should also consider having your current car inspected to verify the current condition. It may be better to private sale your car and use cash for a down payment.
  12. Say no to any extras your dealership offers. You can research them online, apart from the pressure of car buying, and then go back later. Most dealerships are happy to let you buy things afterward.
  13. Plan on keeping your car for at least 5 years. K and her husband lugged their baby seat with them to all six days of shopping because it needed to fit into the back seat of any car they considered. They also installed it several times, as some cars are difficult to install.

However, the Kicker would like to challenge the automotive industry, which hasn’t really revolutionized car shopping since Henry Ford used the assembly line to make car affordable. We challenge you to come up with a better experience for your customers. We’re not talking about friendlier sales people, or letting customers take cars home for a day. We’re talking about something radical, like paperwork that can be finished in 15 minutes or complete customization even on used cars. Who knows what you could come up with if you really thought about customer experience instead of pushing sales. That’s our challenge to the automotive industry. We can do better.

Leave a Reply