Buying a new car? Read this first or overpay

No single consumer purchase causes more headaches, more irritation and leads to more buyer’s remorse than a car purchase. Nothing even comes close to it.

And with good reason: Car dealerships love fees and extras perhaps more than anyone else in the travel industry. They rarely tell the entire truth about their prices, indiscriminately blurring the lines between the sticker price, invoice price and out-the-door price. They try to upsell you on preposterous extras like “undercarriage protection” and extended warranties. And they play games with you when you just want to buy a car, doing the “I’ll-talk-to-the-boss” two-step while you stew in a cubicle.

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The result can be up to 15 percent net profit margins on some sales for the dealership. But it can leave you feeling ripped off.

I ought to know. I’ve played that game more times than I’d care to admit.

But there’s good news for you: In just a few weeks, a brief window will open where you will have the advantage. And outside of those few weeks, I have a little advice that will ensure you don’t get taken on your next car purchase.

When to buy

If you’re in the market for a new car, the scales tip in your favor on the last day of the month. That’s when car dealerships are under pressure to make their numbers, say insiders. “If you can coincide your purchase with the end of a sales quarter — March, June, September or December — you’re liable to see even greater results,” says Jim Milan, a manager for Auto Accessories Garage, a car accessories website.

The day of the week and time of day is important, too. Swing by your dealership on a Monday or Tuesday, when no one else is there, and you’ll get better service and perhaps even a lower price. Later in the week? Not so much. Also, if you come into the dealership late in the day, you’ll probably be able to negotiate a more favorable price, so it pays to wait until late afternoon to take that test drive.

Pay attention to specials, too. Manufacturer promotions can change monthly. For example, last March, GM offered lessees of Asian brands a $3,000 bonus on select models.

“You could lease a 2017 Cruze LT from just $99 for 24 months with $219 at signing,” says Alex Bernstein, a senior pricing analyst at CarsDirect. “We haven’t seen a deal that good on the Cruze ever since.”

Generally, the best time of year to buy a new car is fall and winter, according to data compiled by TrueCar, an auto buying site. Bonus points if you can hit the retailer at the end of the model year. For example, the car I covet is a 2017 Honda CR-V. The model year ends in December. Maybe I’ll pay a visit to my dealership on a late Monday afternoon at the end of December to see if anyone there is in a sellin’ mood. Betcha they will be.

If you’re considering a new car purchase in 2018, wait until Labor Day, which consumer finance expert Andrea Woroch says is considered the “Black Friday for car shopping.”

“With the release of new models and the holidays coming up, dealerships need to make room for new vehicles and lower prices on older models accordingly,” she says. “You can also expect more competitive financing offers like zero-percent interest for qualified buyers. Such deals will trickle through the following months so keep looking out for discounts through October through December. Just don’t get talked into buying the latest model for more.”

How to buy

The “how” is an interesting — but more complex — question. You can drop by your dealership for a test drive, but that’s exactly what they want you to do. Once you’re behind the wheel of a new car, they think you’ll be hooked and the sale will be theirs. Don’t put yourself in that situation.

“From the color of the ink salespeople use, to the angle of the writing, to the need to ‘check with the boss,’ to the circling of numbers, it’s all thought out and strategically planned to get someone to buy,” says Bill Brierley, a former car salesman from San Diego. “It was fascinating the psychology that they put into everything.”

So, rule #1: Avoid the dealership if possible. Do all of your negotiating before you buy, not when they have you right where they want you.

But where?

Hire a broker

Professional car buyers like AAA or Costco will find the model you want and broker the deal. They usually negotiate with a dealership’s fleet department, which is programmed to sell lots of cars quickly. The broker adds a fee, but you usually pay close to or less than the published invoice price.

Readers have had mixed results with these services. Pam Mandel bought her car through Costco, which offered fixed pricing and “no screwing around.” She adds, “it was painless.” But another reader, David Simundson, tried AAA’s Auto Buying Service. Not only did it fail to find the vehicle he wanted, but it inundated him with phone calls about cars he didn’t want. “Never again,” he says.

My own experience with AAA was similarly disappointing. It found a price on the car I wanted for a few hundred dollars below the sticker price. No one pays the sticker price.

Use an online buying site

These come in many different flavors. Among the most most popular sites: CarsDirect and TrueCar, both of which let you find actual prices on cars and shop real-time inventory. There are also online sites such as Authority Auto, which will look for the model you want, but charge a fee. Or you could check sites like Carvana for a pre-owned vehicle.

Online buying can work, but not always. Audrey Strong used TrueCar to buy a used car earlier this year. “Worked great,” she says. “The car actually existed, was on the lot and they gave it to us for less than the price listed, provided the Carfax [repair report] and were transparent about issues with the car.”

I personally found the inventory selection on TrueCar was good for my desired model, but it required that I enter my personal information, which added me to some dealerships’ spam lists. For the vehicle I wanted, Carvana only listed used, high-mileage vehicles which were of limited appeal. CarsDirect had the most options. And Authority Auto’s approach felt wrong. I’m deeply skeptical of paying money for the opportunity to buy something, so I skipped it.

Direct negotiations

My favorite buying method is being your own broker and buyer. Use a service like TrueCar or Kelley Blue Book to find the invoice price and “fair market range” of the vehicle you want. Then contact the dealerships directly by email. Pro tip: Dig up the fleet manager and contact that person directly, asking for a bid. They typically won’t try to lure you in for a test drive, focusing instead on making a quick sale.

That’s what Ross Werland did when he bought a Subaru last year. “Using a very specific model, I queried every Subaru dealership within an hour’s drive via email about that model,” he recalls. “All of them got back to me with offers. Very easy. We took the lowest one.”

If only it were always that easy. But these expert tips will help you get closer to a painless car purchase.

16 thoughts on “Buying a new car? Read this first or overpay

  1. I love my ’17 CR-V, but you are unlikely to get a spectacular deal on one. Other than a small increase in the list price, and printing “2018” instead of “2017” on the window sticker, there are zero changes to the ’18 model.

  2. Always make sure the price you negotiate includes all fees and taxes so you don’t get surprised with an additional $3-4K when you go to sign. Here in Florida we have the highest ‘dealer fees’ of any state. Most dealers add an additional $800-1000. Always get an ‘out-the-door’ price .

  3. Lesson #1 … Sales person negotiates 1 -2 deals a day. You negotiate once every few years. They’re probably going to come out ahead.
    Lesson #2 … Cell phones are great information tools. Find out what your vehicle (trade – in or purchase) sells for in your area.
    Lesson #3 … Always be ready to walk. There are other dealers and other vehicles. That one isn’t the only one they ever made with those options

  4. Rule #1: Pay cash. Its amazing how much “power” you have when you do
    Rule #2: Be prepared to walk. The entire sales model preys on a consumer’s “I need it now” emotion

    Also, consider buying a used vehicle. Let someone else take the depreciation.

  5. I go into a dealership with the attitude of “I’m not going to be nice.” When they ask what I do for a living, I ignore them. That’s a segway into an upsell. When they tell me “I have to ask my boss if I can take that offer,” I tell them I don’t time for this nonsense and if they can’t authorize the price, to get out of my sight and bring me the person who can. When they try to “cool me off” by making me wait around, I ask for the manager and tell him that his salesperson just lost a sale because I don’t have time to be wasted.

    When I’m told there are fees, I tell them they’re going to pay them or lose the sale.

    Car salesmen hate me, but I never walk away screwed. Don’t be polite. They’re counting on you being too polite. Go and be rude. It works. Sad, but true.

    1. And this all perfectly demonstrates why the model for selling cars is hopelessly broken. Why do we need to act like a-holes to get a fair price on cars? (Not impugning you; you’re just doing what you are forced to)

      1. Because most people ARE wrecked-ems, and it comes easy and naturally to them. Others have to force themselves to be one; they need to enlist an agent to be their personal wrecked-em in dealing with the car dealers.

    2. I’m the same way, Alt. Following social niceities is a sure way to drain your wallet in these negotiations. Being prepared to walk away is crucial.

    3. An example of the pervasive sexism I have experienced at various points in my 60-odd years: It’s 1988 and I am looking to replace my older sedan with an energy efficient, reliable, somewhat sporty model. I am paying cash, having gone without many luxuries on my small non-profit salary in order to save the necessary funds. I decide to compare Toyotas, Mazdas, and Hondas, and go to the Toyota dealer first becasue it’s closest to my house. It is a weekday and no other customers are in evidence.

      I tell the saleman who saunters over to me what I am looking for, that I am paying cash, that I’m not discussing trade-ins until the new car price is settled, and that this is my first stop, so if I decide to buy the Toyota, it will be after I’ve checked out the other two makes. We go for a short test drive. I take notes, ask lots of questions. When we get back to the dealership, the guy tries to get me into an office. I say “not now, thanks,” thanking him for his time (less than an hour) and reminding him that it is my first day of comparison shopping. He goes ballistic, chewing me out, alternately mocking and threatening me, and trying to convince me that his is the best deal going and that I can’t possibly get a better car from Mazda or Honda. He informs me that I’m looking at the wrong models and that I don’t know what I’m doing. I tell him that if I decide to buy the Toyota, someone else will be getting the commission, and I walk away.

      After I get home, I call his boss and tell that guy that I worked hard to earn every dollar I have to spend on a car, and that I am a smart, well-educated woman who knows what she needs. I tell him I used to tune my own Volkswagon bus when I was in grad school, and that I installed the tape deck/radio in my current car myself (soldered connections). I tell him that businesses who treat me like I don’t belong in their showrooms unless accompanied by a man, or unless I comply with a salesman’s advice, are not getting any of my money.

      Later that week I got a written apology from the sales guy. I hope he learned something from our encounter, but it’s just as possible that it just reinforced his misogyny. I ended up buying a Mazda 323 from an African American female salesperson who treated me with respect, and kept that car for 11 years.

      I’ve paid cash for every car since then. I have my own rules for car dealers, contract terms that I add: if they put a new dealership decal on the “bare” car I’m trying to buy, the deal is off. Likewise, if they share my info with their financing partner and I start getting high pressure sales calls, the deal is off. The latter happened in 1999. I asked the caller if he thought it made any sense to borrow $20k at 18% interest when I had the cash to spend without dipping into rainy-day funds, and couldn’t possibly get an 18% rate of return on invested cash (the car loan interest tax deduction was gone by then). He had no real answer, but once again tried to convince me he knew more than I did about financial management. Riiight — that’s why I had zero debt except for a mortgage, two master’s degrees, and a great job, while he was stuck flogging car loans.

      It’s experiences like this that have turned me into the skeptic that I am.

    4. You sound more assertive than rude. It’s not rude to refuse to answer a personal question, to ask for a person in authority or to refuse to put up with time-wasting nonsense.

  6. Pretty good points in negotiating for a vehicle. When people contact four or five dealerships in the area and ask them to bid a price for a certain specific model, I still find that there are some variances in the models as some of the dealers have added an item or items to their vehicle it is quoting and then there is a price difference. Still, it is a good starting point to get these places to bid for your business.

  7. My friend Dusty has his MO:
    Buy in the dead of winter. Cold, snow, nobody in showroom.
    End of month, end of quarter, early in the week, late in the day – yup.

    Found a used car they asked $44,000. Wrote them a check for $39,000 and told them to call him if they accepted the deal. “That isn’t the way we do it!” “That’s the way I DO IT! Take it or leave it!” They bit for $39,000. They had the MONEY in hand; they weren’t gonna tear up that check – the car was as good as sold unless they rejected the offer.

    Dusty looks like a good ole boy [ which he, in fact, is ], with work clothes, etc. The guy is a MILLIONAIRE, but he doesn’t look like one [ the way you might picture one ]. He didn’t get to be one by giving money away to clowns!

  8. My son researched his car, and found a dealer with a good price. Turns out it was their star salesman. End of month. Got us the car we wanted. He saw that we knew the business, and were seriously ready to deal.

    Went to the up-sell room. Tried to get us to buy unneeded stuff. Korean guy. I axed him “are you Korean?” “Yes.” Said to my son in Thai “We don’t want any of this crap.” [ Mai-ow kee-nok! ] “No, we don’t.” [ Mai mai! ] To the Korean guy, if anything at all registered, it was noise. No language. He didn’t understand what we said. Right over his head. Funny!

    Now deal is done. Have half the money in hand; going to credit union next morning for rest. Salesguy says “Take the car now.” “But, we don’t have all the money today.” “Doesn’t matter. Take it out of here.” “Why?” “Because every day it sits here, we pay loan interest, inventory taxes, insurance, etc. Take it out of here NOW!” “OK”. Left with a new car and paid nothing that day. Went back next day and paid them. Funny.

  9. I love new car shopping. It’s like a sport to me, but I have different rules.
    1. Go to the dealer to see the car at least 3 times. Start at the beginning of the month (best month is December), and go each week (letting them know you’re looking at other places too). Make sure whoever goes with you doesn’t gush over the car. My wife does a good “that’s way too much for that car”…!
    2. KNOW the real price of what you’re buying and what your trade-in is really worth. If they tell you they can’t give you what Kelly Blue Book says it’s worth, say “OK, another dealer has already approved that price to me” then leave. When they stop you… you have the drivers seat now.
    3. Be ready to purchase on the last day, or second to last day of the month. Don’t let him go back and forth to the manager, insist he take you to the manager, or bring him out. No games.
    4. Make your best and final offer (but be fair, they do have to make a living too) and be prepared to walk.
    On that last day, I was purchasing a Toyota 4Runner Sport loaded with options, and I told them to find me one the exact same without the towing package ($1900 option I didn’t need). They came down another $1900, and sold me the existing car.

  10. I love Costco for most things, but when we tried their deal to buy a Honda Civic in Memphis a few years back, the dealership had messed with us so badly that it took the Costco specialist over a week to determine whether we had paid the their negotiated price. It Is a rare experience that I get taken in the process, especially when my husband and I reverse rolls on them. Valuable lesson—if it starts to feel slimy—walk away, even with a negotiatiated price. Someone else will likely match it. What I did find to be quite worthwhile was paying Consumer Reports to price out what the car I wanted should cost. I went to one dealer here in Minneapolis and was told no one would sell it to me for that price. He was wrong and I’m still driving it.

  11. I’m on my second Hyundai Azera. I went to the dealership and asked for the oldest untitled car on their lot. In 2016 I bought a 2014 model with 37 miles on it. I used TrueCar as the base for my negotiations and went down from there. I suffered some of the usual car buying pain, but eventually got a car that I’m very happy with. It helped that the dealership was motivated to move that car off of their lot.

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