buying a car from a dealer

Never done it, but likely will very soon. Have some questions that I figured maybe people here could help with.

Is it better to get a car loan on your own, from your own bank or wherever, or to take what the dealership offers -- one of those 2 years interest free things or 2.9? I'm sure it probably depends, but is there a standard 'It's better to do this...'?

What exactly is covered in a powertrain warranty? If I buy a car from dealership 'A', will same-brand dealership 'B' honor the warranty or am I stuck returning to 'A' forever?

I want to sell my current car on my own, but can't until I have the new one. Is there such a thing as a reduced insurance rate for the current car once I buy the new one, since at that point the old one will only be used for test drives for potential buyers?

Thanks in advance.

 

Trust me on this one: (sidebar; I sold cars for 7 years, my dad for 22, my grandfather for 40)

If you're going to buy a car from a dealer, DO NOT go into this dealership in a bad mood, and under a pre-conceived notion that the dealer is just there to bend you over the hood of the car and ram it in you.

You'll know right away if a dealer is going to do that to you......ask to see several different kinds/types of cars.....if you get a good salesman, they will be happy to show you anything on the lot......ask to testdrive the car........they will go with you for a couple blocks, then (more than likely) let you take it by yourself for a bit.


As far as the interest, it is (MOST TIMES) a lot cheaper to take the 0 interest for 5 years.......the rebates are usually pretty good, but if you can get 0 interest, you should most likely do it that way.......only way I would do it different is if they offer HUGE rebates (5-7K,) then you can even have them send you the check, finance the car for say 5% for 5 years, take the cash, pay off some high interest stuff.

PM me if you have questions.

 

When I bought my car two years ago, I got pre-approved for a loan and then used that as leverage with dealership to get a better rate. They always want you to finance through them -- it's called back-end profit (the money they make beyond the price of the car). So I was able to get them to beat my pre-approved rate and got a loan for 1.5 percent cheaper than their initial rate (they beat my pre-approved rate by .5 percent).

I also sold my car on my own (and made $1500 more than the trade-in value), but I had paid my insurance six months ahead and just let it run out (it only had about three weeks left on it). I sold it on eBay and the transaction went quite well.

One thing to really watch out for at the dealership if you're buying a new car is the bait-and-switch. You'll see a car, negotiate a price and agree to a deal. Then, when "your" car arrives on the lot, it's a bit different than the one you actually negotiated for. It might have an upgraded stereo system, or better wheels. They'll tell you they're sorry, the wrong one came in, but it's only an extra $600 which is only an extra $1 or $2 per month. No biggie, right? Don't pay for it. Tell them that you negotiated a price, that's the price you're paying. They'll tell you that you have to wait three days to get the new car. Tell them A) You'll take that car if they give it to you at the same cost, B) You don't mind the wait (what's three days to save $600?), or C) You're going to another dealer if they don't have your car by tomorrow (this one's risky, so you have to be willing to follow through).

Also, MAKE SURE YOU ACTUALLY READ THE LOAN AGREEMENT! The dealership I went through not only tried the above scam (I got the premium stereo system and upgraded wheels for free because I argued with them for an hour and a half and then left the lot), but they also tried to fuck me in the loan.

They put an additional $150 in the agreement for something I didn't recognize and when I asked what it was, the guy loan manager went in back, came back a few minutes later and said, "Oh, that must have just been a mistake. I'll take it off." Mistake, my ass.

He also tried to get me to agree to a $600 gap insurance policy, which covers the difference between what you and what the car is actually worth if it is totaled. It's a good idea to have it, but I wanted to get it through my insurance company. He asked me if I saw the value in policy. I said that I did see the value, but I didn't want it. When I looked at the agreement, it was on there. I told him to take it off. He says, "I thought you said you saw the value in it." I said, "Yes, I do see the value. I don't want it. Take it off."

Had I not been paying attention, my car could have potentially cost me an extra $1450. It was a long process because of all the haggling and making the loan officer rip up the contract three times, but it was well worth it. The dealership made some money, I got a great deal and avoided getting screwed out of nearly $1500.

They also feed on tiring you out. They want you to lose patience. They want you to reach the point where you'll agree to small little charges and extras just so you can wrap the whole damn thing up. Those fees and options and such add up. Make sure you eat before you go shopping, because you could potentially be there for a few hours.

Hope that helps a bit.

 

And to build on what Chef said about not going in thinking they are trying to bend you over, understand that they are there to make money. When negotiating you have to find a deal that is good for BOTH parties.

But as I said, beware if you're getting deal that seems too good to be true. If you are, they're definitely going to try to make up for the money they aren't making on the negotiated price on the back end of the deal.

 

Since I don't take out car loans anymore, I don't know if dealers still try this, but if they do . . .

Look over the loan papers carefully for these words:

"credit life insurance"

"credit disability insurance"

aka pure profit for the dealer or whoever is financing the loan.

Back in 1988 it would have added $4,000 to my loan, had I not called the bank and asked them about it. Their response:

"The dealer [or in my case, auto broker] put it there because it is almost 100 percent profit for them. You have three days after signing the loan papers to go back and have it removed."

Which I did.

 

There's some good Web sites to negotiate prices before you even step on a lot. Research cars to the point you know what you want and then use the Web to have multiple dealers (if you live in a metro-area) offer you their prices. Take the lowest one, if its in your range and go from there. It makes things easy when you get on site.

 

Rusty,

What has worked for me is that I go to a car dealer either to check out the models and compare or buy a car.

I never go thinking maybe I will buy a car.

Say you are thinking of getting a new car and are thinking of somthing along the lines of a Camry, Accord, Ford whatever, etc. etc.

Go and check them out and test drive them on the lots. Let the salesmen know that you aren't buying today, you are comparing. You can see how they drive, what features you like etc. What kind of deals they have.

Once you decide, do your homework and find out what the car costs them. Come back with an offer on the car you like with what what you want on it. Then you can deal with them from a knowledgeable position.

Salesmen will not respect someone who is trying to drive a hard bargain but doesn't know what it is costing them. If you ask to see the invoice or something, they'll say no way.

Oh, an the charges that I hate the most are the ones for dealer handling or something that "for the secretaries in the back doing the paperwork."

I have seen it range from $99 to $299. And it is included in the sales form. I always ask them to take it off and they always say they've never done that before and they relent.

Good luck.

 

All good advice here ... the one question I would ask, do you need a new car?

My approach, for some time, is to establish my price range and then look for the best "pre-owned" car that fills the bill.

If you buy a new car, the mere act of driving it off the lot costs you thousands in depreciation.

Why not let some other schmoe take the hit, then you come along and take advantage.

Good user car lots - and especially the lots affiliated with new car dealers - often have low mileage 2005s or 2006s that just didn't fill the bill for whoever bought them. I'm looking at a 2007 with maybe 15,000 miles on it and I think it's a good deal.

Consumers Reports is a good resource for finding the best cars between $5,000 and $8,000 or whatever.

 

I don't know how feasible this is, but I once was taught to never take out a loan for anything that will depreciate. Sure I've always driven clunkers, but I've been able to save enough to buy a place. Plus I'm not a big car guy to begin with. I just need a reliable used Honda or Toyata that's cheap to fix, and I'm happy.

 

As someone said, you can usually get a better rate from the dealer. You don't even have to have a loan in hand with a better rate; when the dealer gives you an 8% rate, just say "well, I'm getting 5% from my credit union." They'll usually beat the rate.

Also, bigpern's right about allowing plenty of time for this. You should expect to get to the dealer early and that you'll be there until dinner. It takes that long to do it right. If you're in a hurry, you'll be leaving money on the table.

Another tip. Don't be afraid to walk away. Right up until you sign the sales contract, YOU are in charge. Get up and head to the parking lot. (A side note is that if they drive your car to evaluate it for trade, be sure to get the keys back right away.) They will likely follow you, or at the least call you the next day or so with something closer to the deal you want. Once I walked three times. The third time, I went home, and they called the next morning with the deal I wanted. After you sign the papers though, you have NO leverage with them.

 

Best car advice I ever got was to buy cars that are a year old.

There are a lot of dipshits out there who buy cars for a year and trade them in a year later. You save a fortune, get a car you might not normally be able to afford, and they're still under warranty...

 

Personally, I think car lots jack up the prices of used cars so much that I'd just as soon buy a new car, if I can get a good deal on it.

The longer I can have it on warranty the better. If it has troubles, I will ditch it. If not, I'll keep it for well over 100,000 miles.

May not be the smartest play, but someone has to support the struggling automakers.