Minting Nickels

In case you missed it, see Part 1, in which I divulge everything I learned about buying a new car.

Prior to now, I’ve never felt the need buy a used car.

New cars are just so effortless. They bring the benefits of long warranties and blemish-free histories. They have relatively few surprises, and relatively few questionable smells. You’re guaranteed to get the maximum amount of years out of them, and they are easy to find.

But during my most recent car quest I was determined to find a car within my ideological budget. So for the first time in my life, I considered buying used.

Here’s what I learned in the process.

1. THE BEST TIME TO SEARCH FOR USED CARS ON CRAIGSLIST: Friday afternoon.

The most difficult thing about buying used cars is tracking them down.

With so many dealers out there, it can be tricky to find that one used gem if you don’t have a lot of time to scour online listings.

But in the same way I learned that Friday afternoon is the best time to post something for sale on Craigslist, it’s also the best time to shop. Cars are no exception to this rule.

The few times I’d searched Craigslist for used cars during the week, not many came up. But the one time I searched on a Friday afternoon, I found a whole gaggle of them. And I ultimately ended up buying one of those cars.

The salesman I worked with confirmed this fact. He said whenever they have a car that’s been in their inventory for too long, they lower the price, post it to Craigslist on Friday and attempt to fire sale it over the weekend.

2. THE WEIRDEST PLACE TO FIND A USED CAR: Twitter

One day I tweeted about a bad car salesman experience, and the next day I had three local car dealers conversing with me in 140 characters.

I felt so…modern.

I told the Twitter dealers exactly what I was looking for, and one of them actually came back with a used car that fit my description. Though I ultimately didn’t buy from them, I thought it was a really cool way to work the system.

I’m counting on one of you to strike a car deal through Twitter and come back and report it to me, okay?

3. THE BIGGEST BLESSING AND CURSE ALL IN ONE: CarFax

In the process of buying a used car, CarFax made me feel warm and fuzzy. It told me that the 11-month old car I wanted to purchase had new tires and no record of ever being in an accident.

But when it came to trading in my old car, CarFax was no friend.

Last summer, a 20-year-old hoodlum brushed my bumper while fleeing the scene of an accident he caused. Of course I stayed around and reported it to the police because justice needed to be served. Ultimately the guy was caught (yay!), and I was too lazy to make a claim for the one-inch dent he left in my bumper.

But it came back to haunt me when CarFax reported the incident as an accident on my car’s record, giving the dealer justification to knock $500 off my trade-in value.

Had I been prepared for this, I might have been able to counter it. But instead, I just took the hit.

4. THE BEST ADVICE THAT ACTUALLY WORKED: Get pre-approved for financing.

This is great advice whether you’re buying used or new. That Friday afternoon when I found the used car of my dreams on Craigslist, the first phone call I made was to the dealer to confirm it was no mirage. The second phone call I made was to my bank.

I told them the year of the car and the amount I wanted to finance, and my bank pre-approved me for an interest rate of 3.09%.

I told the salesman this factoid as we were negotiating the purchase of the car. His finance department countered with an offer of 2.9%.

Prior to this, the best offer I’d been given by a car dealer for a used car was 4%.

I loved how easy this part of the negotiating process was.

5. THE SECOND BEST ADVICE THAT ACTUALLY WORKED: Walk away.

Remember that first Sunday we test-drove the 2012 CR-V? Well we looked at a few used models on their lot that day too.

While we were sitting inside, the salesman was heavily encouraging us to buy the new one. He said the prices of the used cars we looked at were pretty competitive, and he couldn’t go any lower.

We walked out that day without making any commitments. And what do you know, the next day the sales manager called us up and said he could get us into one of the used models for the price we wanted.

I didn’t take his offer because I had my heart set on black interiors (I have kids with sticky fingers), but I loved seeing how this negotiating tactic really worked in real life.

I’ll admit, I got lucky in buying my used car. I found a 2011 Honda CR-V with black interiors, 22,000 miles, still within the factory warranty, and it was listed in my price range.  So I didn’t really have much negotiating to do after all, which made this transaction quite easy.

We have a hunch for why it was priced so low. It had some fugly graphics on either side, which we promptly had removed by a private body shop the day after we bought it. It has a front tow hitch, so we’re 99% sure the previous owners towed it behind their RV, and added the graphics so it would match their rig. There’s also a small crack on the underside of the front bumper, but you can’t see it unless you climb underneath the car.

No car buying experience is the same, and the process is generally a pain, especially if you’re trying to find a deal. But if you takeaway anything from these posts, let it be this: go with your gut.

My gut told me to hold out for a car payment of $180 per month. And though there were many people along the way (including myself) telling me it couldn’t be done, it all worked out in the end. I’m so glad I listened, for once.

PS: If I missed any key tips, I’d love to hear your input in the comments. 

PPS: Savvy readers will notice that I bought the same exact car as my husband. As a bonus fact, they are also the same color. Yes, you can mock us.

photo by cogdogblog

Three years ago, my husband needed a new car.

He wanted a crossover for lugging his music gear around and he’s partial to Hondas. So one Sunday afternoon we went down to the Honda dealer and test-drove a new CR-V.

The salesman offered to sell the car to us for $500 over dealer invoice, which sounded like a good deal. So we shrugged and said, “okay.”

He offered us a financing rate of 4.99%, which sounded pretty good, and the monthly payment was within our budget so we said, “sure.”

He told us we could buy an extended warranty for $2000 more. We’d heard those were a good idea, so we said, “yes.”

We walked out that day with a brand new Honda CR-V. It was the easiest car-buying experience ever. 

Well, of course it was easy. Saying yes to everything is not very challenging.

Did we get a good deal on a new car by hardly trying? Fortunately, yes.

Could we have gotten a better deal if we’d tried a little harder? I think so.

Flash forward three years, and we found ourselves in the exact same situation. I was the one who needed a new car this time. I wanted a crossover for lugging my children around and I’m partial to Hondas. So we went down to the same Honda dealer on a Sunday afternoon and test-drove the newest CR-V.

The salesman offered to sell it to us for $500 over dealer invoice, with a 2.9% interest rate, and the monthly payment was within our budget.

I could have said yes that day when the salesman asked “do you want to make this CR-V your own?” (After I finished gagging at his cheesy line, of course.)

I could have walked away with a brand new car, easy-peasy, just like last time.

But my gut was saying, No. You can find a better deal if you try a little harder.

So over the next few weeks, I tried harder.

Being one who hates negotiating, and who is historically not a bargain hunter (or finder for that matter), I had my work cut out for me. But I tried none-the-less.

I started by reading everything I could find about buying a car. I learned there are three points of negotiation – the car price, the financing, and the trade-in – and I studied up on haggling tactics for all three.

I spent hours playing with numbers on spreadsheets, and figured out the exact amount I wanted to finance after trade-in and down payment.

I had my heart set on a five year loan, with the lowest interest rate possible and a monthly payment of $180. This would allow me to snowball $200 of what we were paying on A-Rob’s car loan (recently paid off) towards our other debts.

Then I started hunting for cars. I was open to other makes and models, new or used, whatever would fit into my price range.

I scoured dealer websites for 0% financing offers. I opened up dialogues with car salesmen via email, phone, and in person. I did my best to pretend I was good at playing the negotiating game. I did my homework and tried to prepare for every line they fed me. And boy, there were a lot of lines.

There were times I thought maybe I was chasing an impossible dream. Maybe there’s no such thing as a crossover SUV with black interiors and low mileage for around $18K.

But after two weeks of what seemed like the hardest task and the longest search, sprinkled with that dirty feeling you get after too many interactions with grimy car salesman, I finally found my car.

And what do you know, I learned a whole lot about buying a car during my two weeks of Hell searching. So before I spill the details of what I bought, I’ll share what I discovered, starting with everything I learned about buying a new car. 

1. THE NUMBER ONE THING THAT CAR SALESMEN DON’T WANT YOU TO HEAR: The total price of the car, including taxes and fees.

Why? Because it’s a scary number. They’ll tell you your monthly payment all day long, however, because $260 per month is much more palatable than $25,600. Say you can’t afford $260 per month, well then *poof* by extending your loan by a year, they just magically lowered that payment to $230. Smoke, meet mirrors.

I even had one salesman go so far as to tell me the “total” after deducting my trade-in value.

No, you won’t hear the actual car price until you’re back in the finance department, seconds away from signing the papers. By then you’ve already decided you can’t live without this car, and walking away is basically not an option. When we bought our first CR-V three years ago, the finance guy even said “this is the number that scares everyone.”

So your mission, should you choose to accept it, is to get that salesman to give you a total. It’s the only way you can go in with your eyes wide open, which is pretty much always a good idea.

2. THE BEST ADVICE THAT DIDN’T WORK FOR ME: Negotiate with salesmen by email, and pit multiple dealers against each other.

This is the negotiating method suggested by the Car Negotiation Coach at Find the Best Car Price.com. In theory, negotiating with car dealers by email and getting them to beat the lowest offers of other dealers should work. And with time and effort, it might.

However, I found that car salesmen are just as tricky by email as they are in person. As a result, I lost my patience and didn’t follow this method to the letter.

3. THE MOST LOGICAL ADVICE THAT I DIDN’T USE: Wait to shop until the last week of the month.

Due to time constraints I started my car search at the beginning of the month. But studies show you’re at an advantage if you start shopping near the end of the month, when car salesmen are anxious to meet their sales quotas and more likely to take your low offers.

4. THE MOST USEFUL RESOURCE: TrueCar

The tricky thing about negotiating a good deal on a new car is knowing what price to aim for. I know from prior experience that some dealers are willing to go as low as $500 above dealer invoice (dealer invoice = the cost the dealer pays to the manufacturer), but how do you know what that amount is?

Enter TrueCar.com. Just type in the year, make and model for the new car of your choice, and TrueCar will not only tell you the dealer invoice, but also the average price that buyers in your area have been paying.

You can even go a step further and sign up to have three Certified TrueCar dealers contact you. These dealers are supposed to offer you the price shown on the TrueCar website, but they are car salesmen, so they still have their tricks. It is, however, a good way to make contact with dealers if you’re trying to negotiate by email.

Beware though, you must give them your phone number when you sign up for this service. Even if you check the box that says you prefer to communicate by email, that will not stop them from ringing you up every night. Be prepared to screen your calls or use a phony phone number as a trade off.

5. THE MOST DISAPPOINTING RESOURCE: CarWoo

The purpose of CarWoo is to allow buyers to anonymously negotiate with car dealers through the CarWoo website.

Type in the car you want, and CarWoo guarantees you’ll get offers from at least three dealers within 48 hours. They even have an iPhone app to track your offers.

The only problem, however, is that I only received two offers. The first one came about four days after I signed up for the free service. The second one came 10 days later, after I’d already purchased a car.

CarWoo proved to be a promising service that fell flat in execution.

6. THE MOST SURPRISING FACT ABOUT THE NUMBERS: Zero percent financing is not always the best deal.

Many manufacturers are offering zero percent financing deals right now. It sounds like a no-brainer, right? Can there be anything better than zero interest over the life of a loan?

Well as it turns out, yes, there can.

Go to any dealer website offering 0% financing, and you’ll probably see an either/or offer in effect. Either you take the zero percent financing, OR you take $1000 cash back.

As this article points out, taking the cash back might actually save you more in the long run.

My mind is officially blown.

And this post is officially 1400 words long, so I’ll take a break and let you soak it all in. Tomorrow I’ll be back sharing everything I learned about buying a used car.

Until then, why don’t you tell me about the last car you bought. Did you negotiate? How did it go?