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?