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Car Buying Guide – New Cars – Used Cars
Welcome to Car Buying Tips and Car Buying Guide here at BHPHcardealers.net – With useful information on used cars and new cars, customers can be well informed and therefore make the right decisions. Here, you will find articles that will help you on buying brand new or used cars. The posts that you will find here will surely be helpful should your decide to purchase a vehicle now or later. Aside from articles about the guides on buying a car, you will also find other helpful tips about negotiations on price, car warranties and more related to both new cars buying tips and used cars buying tips.
Buying New Car
The Informed Car Buyer
Salespeople identify essentially five different types of buyers. We are :adding a sixth buyer type to the list.
1.Cash buyers. These are people who pay cash for the vehicle. (Dealers would prefer that you not pay cash. They make more money if you finance.)
2.Difference buyers. These are people who are primarily interested in the difference between the amount the dealer will give them for their trade-in and the price of the new car.
3.Allowance Buyers. These people are mostly concerned with what the dealership will allow on their trade. Because the allowance often appears to be a "good price for the trade," buyers never know what their car is really worth or how much, if any, discount they're getting.
4.Payment buyers. These people look at the price of a car only in terms of what it will cost them per month. Far too often they will iump at a 48- or 60-month deal because the payments are low. This may be the only way they'll be able to afford a new car. That notwAthstanding, when all is said and done they Aill have paid hundreds, even thousands, of dollars more for the car.
5.Lease buyers. This is a different category of buyer and one that we will discuss in more detail in "About Leasing."
With possibly the exception of cash buyers, each of these buying methods gives the salesperson an opportunity to confuse the customer and maximize the dealership's profits.
6.The sixth type of buyer-the one you can be-is the Informed Auto Buyer. These are buyers who do their homework before they buy. They understand that each element of the deal must be kept separate. The educated auto buyer always knows the answers to these questions:?
1. What is the true price of the car, van, or truck to the dealer?
2. How much profit am I prepared to give them?
3. What is the fair wholesale value of my trade-in?
4. What is the total cash I can afford to put down?
5. Where can I find the best finance rates?
6. Which monthly finance plan fits best into my budget
If you deal with each of these issues separately, you will go a long way toward avoiding the confusion that some car sellers try to create. You will also set yourself apart from the not so car-smart buyers.
Control Is Me Key
Were you to read the training manuals created for automobile sales¬people, you'd find that a good deal of emphasis is placed on controlling the customer. Traditionally, salespeople are taught to follow a multistep sales plan-or a variation thereof-that are outlined. These steps, plus carefully focused questions, various ploys, confusion tactics, and even facial reactions, grimaces, and expressions are all part of the effort to maintain control. Far too many customers forget that until they sign the check, they have the ultimate control. And that's just fine from the dealership's perspective.
Your objective is to take control of the process. The way to do tlus is to:
1. Have your research done ahead of time. Your research should include:
a. Deciding upon the make, model, and options
b. Determining the dealer's costs
c. Investigating and deciding on your financing options d. Setting a limit on what you'll spende. Being able to recognize dealership ploys and tactics
f. Knowing how to use counter tactics
g. Recognizing that you have the option of shopping many dealers
h. Deciding at what point and under what circumstances you will "walk out."
2. Plan your buying strategy in advance. Since salespeople have a selling plan, there is no reason you shouldn't have a buying plan.
3. Be prepared to slow down the selling process with questions, with requests to review figures a second and third time, and with the determination not to buy until you are totally satisfied that you understand and are ready to agree to all the elements of the deal.
Your Attitude-A Key to Success
Be someone that they can neither hate nor take advantage of." As strange as that might seem, this is a sound piece of advice. Car salespeople expect to deal ,with all kinds of people. At the one end of the spectrum are the bullies, the aggressive personalities, and people who enter a dealership determined to give the salesperson a hard time. They are connced that the dealership is going to try to cheat them on their trade and overcharge them on the new car and "by golly" they are going to "beat up the salesperson" before he or she gets a chance to beat them up.
At the other end of the spectrum are people who dread the prospect of buying a new car. They don't want to endure the hassle. They come in hoping to find someone who will treat them fairly and not take advantage of the situation. These people often agree to almost anything just to get it over with. In fairness, some car salespeople will be "gentle." They are smart enough to know that the prospect can also be the source of future referrals. But remember, no matter how altruistic or kind-hearted salespeople might appear, they did not come to work that morning to do social work. They are there to earn a commission. Money-not you-is the ultimate bottom line.As an informed auto buyer you're totally different. While you will enter a dealership with a strategy, an objective, and, most important, with all the facts, you will also enter with the resolve to remain calm, pleasant, somewhat reserved, but clearly very determined and up schemes to make them pay more. Salespeople don't take kindly to know-it-alls with egos who claim they know cars and the car-selling business. Generally, the ego trip ends as a very expensive ticket. At the same time, many salespeople try to take advantage of the timid and the insecure by confusing them with figures and showering them with assurances that they will see to it that the customer's best interest is always served. Sure they will!
Salespeople will tell you that the unemotional, well-prepared, in-control customer is one of their more formidable challenges. Your objective should be to convey the impression that you are pleasant but very businesslike. That you are someone who asks good questions but offers few answers. That you are someone who has clearly done your homework and knows exactly the deal you are prepared to make. And finally, that you are someone who will not be pressured or swayed: Someone who will buy only when you are ready. Someone who is prepared to shake hands and walk out to shop elsewhere if your deal requirements are not met. Believe you this: Most salespeople are simply not equipped to deal with someone who comes into the dealership prepared.
Pre Buying New Car Preparation
Pre – Shopping Preparation
Assessing needs versus wants
If you want to see a truly sad situation, picture the buyers who fall in love with a car and agree to hefty monthly payments. A year later, they come back to the dealership having realized that the monthly payment is killing them financially and try to sell the car back. What they discover is that their V-8 beauty has depreciated anywhere from 30 to upward of 50 percent and that they owe more on their loan than the car is worth at wholesale. So they end up giving back the car plus a substantial amount of cash just to get out of the payments.Being a smart buyer also means being financially prudent. Never buy more car than you can reasonably afford. If you want a hot car, there are any number of new and used cars that can give you the thrill of ownership without the pain of payment poverty. By the way, this is where the used-car and pickup truck market becomes a very real and attractive -alternative.
Evaluating the Vehicle
Visit a dealership and ask for a test drive. Make it clear that you are not interested in buying a car, van, or pickup that day, but that you will be shortly. The fact that you're a future prospect should get you somecooperation. Of course, you may also find that the salesperson will make an effort to convert you from "looker" to "buyer" before you leave.
Your objective is to spend some time behind the wheel and really get a feel for the car. Below you'll find an evaluation sheet to help you assess how a particular make and model satisfies your needs.
How do the experts rate it?
Take time to do some third-party research on the make and model you'd like to buy. What do the car magazines say about it? What kind of rating does it get from Consumer Reports? What do current owners have to say? If you're concerned about the safety performance of a particular model, you can contact the Insurance Institute for Highway Safety, 1005 N. Glebe Road, Arlington, VA 22201 (703-247-1500). They can provide crash-test reports and cost-of-repair information. Keep in mind that those vehicles with better safety records usually have better insurance rates.
As you begin to consider various makes and models, keep in mind that most American manufacturers offer what the industry calls twins. What this means is that manufacturers will produce two cars, give each a slightly different look, give each a different name, but build them with essentially the same components. For example, Mercury Sable is essentially the same as a Ford Taurus. However, the Sable will generally run anywhere from $500 to $1,000 more for essentially the same car.General Motors also produces twins. If you look closely at the Oldsmobiles and Buicks and compare them to Pontiacs and Chevrolets, ,you'll see that their primary difference can be found in some front and back styling variations and levels of interior trim. A number of years ago somebody at General Motors decided to display the full line of the cars at the General Motors building in New York. And because it was the Christmas season they thought it would be nice to have all the cars in white. What no one realized, until it was too late, is that the basic similarity of the cars made even more similar with the common color pointed out an unassailable fact: The primary difference between a Buick, Oldsmobile, Pontiac, and Chevrolet lies not in the styling, but in the price tags.
When it comes to imports, twins are not as common. Usually Hondas, BMWs, Audis, Jaguars, and Mercedes are one of a land. However, there are a few foreign cars that are marketed under domestic nameplates. You'll find, for example, that a Chevy Nova is basically a Toyota Corolla assembled in California. Plymouth Conquest is the same as a Mitsubishi. From the manufacturers' perspectives building similar cars and marketing them as separate models helps them offer more selection without having to go to the expense of building two different models. Obviously, this concept is not unique to the car industry. The point we want to make is that in some cases it is possible to save money and get the benefits of a more expensive car or truck by buying its less expensive twin.
Options of New Cars
Needdless to say price is a major key in car marketing.for that reason.manufacturers will build and advertise base cars which come with few features in order to provide an attractive price point for their advertising. "New Zapmobiles starting at just $1,2,995" looks a lot better in print than "The New Zapmobile, like the one you will probably end up buying with all the nice features like AM/FM with cassette player, air conditioning, power steering, etc., for $15,995.
By breaking out, the options, dealers can advertise more attractive come-on prices and then "sell up" once they've got you hooked. Plus, options tend to carry a higher percentage of markup than the cars themselves. Even Mercedes-Benz, which for years offered fully equipped cars, has now elected to go the option route in order to make their advertised pricing more competitive. Obviously, there's nothing wrong with this, but it does behoove the potential buyer to realize that in most cases the advertised price is what the industry calls a "Sally Rand." Translated, that means a "stripper" model that has been stripped of all its features and, like Sally Rand, is presented without much on it.
Option Packages
In order to avoid having to build cars with hundreds of different option combinations, manufacturers offer what they hope you'll find to be attractive option packages. As you shop for your car, keep in mind that a higher-and thus more expensive-model in the line may come with more options standard and represent a better value, at less price than it would for you to buy a base model and then begin to add the options you want. At the same time, however, be sure that the option package does not include equipment or trim that you don't want or need. Our advice when it comes to options is to examine the option packages carefully and then consult one of the price guides to determine the dealer cost and the markup. (We'll go into more detail on this in a moment.)
Another factor to consider when you buy a car is how fast it will depreciate. This is particularly important if you think you might be trading it in two or three years from now. Cars lose their value at different rates. Some, for example, may have lost as much as 40 percent of their value after the first year; others with similar features and engines may have lost only 15 or 20 percent. If you'd like a better fix on the projected depreciation of your target car, get the Automotive Lease Guide's Residual Percentage Guide by calling 1-813-791-4955. It comes out every other month and sells for $12.50 plus shipping and handling.
Evaluating the Service Department
One of the reasons to buy from one dealership over another has nothing to do with price or the vehicle. A good, customer-oriented service department that makes a real effort to take care of the dealership's customers can be a legitimate reason to pay more for a vehicle at one dealer than at another. While most manufacturers insist that their dealers will service all customers-no matter where they purchased the vehicle-it is true that you are looked upon with more favor if your car, van, or pickup bears their dealership logo. Be that as it may, it makes good sense for you to ask your salesperson-prior to making your deal-to show you the service department and introduce you to the service manager.
Look at the service department. Does it look like a junk shop or does it appear to reflect someone's pride? Ask about loaners and courtesy buses for their service customers. Ask if you will be assigned a service writer and inquire about roadside service. If you get the impression that the service manager and service writers are truly proud of their operation, make that a plus in the dealership's favor. You might even consider asking some of the service customers in the waiting room how they rate the dealership's service.
Knowing the New Car Cost
Getting Me Retail Numbers
Before you begin to negotiate, you need two sets of numbers or prices.
Me Costs You See
The first are the prices listed on the window sticker-officially called the Vlonroney sticker. This sticker is required by federal law to appear on all cars sold in the U.S. It must show the following:
1. The manufacturer's suggested retail price for the car and the factory-installed options
2. A transportation or destination charge for shipping the car from the factory or the port of importation to the dealership
3. EPA city and highway fuel-economy estimates
At present the law does not require dealers to put a Monroney on vans, four-wheel-drive vehicles, and light trucks. However, most do so voluntarily. If they don't, you might be well advised to steer clear.
Supplementall or "Pack "Stickers
In some cases you'll find a second sticker listing optional accessories added by the dealer or services like rust proofing that he has performed. In far too many cases, dealers use these supplemental stickers as a means of adding more profit. For example, in one lot we visited we found a supplemental sticker reading:
Dealer Delivery and Handling $199
Auto Protection Package (Paint Sealers) $249
Pin Stripe $99
Since the Monroney sticker already showed a transportation charge, "Dealer Delivery and Handling" is labeling sleight-of-hand that the dealer is using to add a few more dollars to his profit. If one of -'today's vehicles needs a paint sealer, you might want to find out why and what kind of sealer they are talking about. Possibly if you live under an acid rain shower and don't intend to wash your car but once a year this might be a worthwhile investment. Only the pin striping appears to be a legitimate charge. By the way, an educated guess suggests that of the $547 of pack prices, the real cost to the dealer probably amounted to something less than $50. Clearly, this is nothing more than another means to squeeze some additional money out of the buyer.
Advertising Fees
Some dealers will add a separate charge for advertising. Their excuse is that the manufacturer charges them a fee on every car to help defray the cost of reaching you with their ads and commercials. You might respond by saying:
"Since I never see any of your ads I guess I won't have to pay the fee. "Or you might suggest that since advertising is a cost of doing business, it should be built into the profit. If they insist on adding the fee to the price, make it clear that since you are shopping, the additional cost could put them at a disadvantage against the other dealerships you plan to visit. A statement to this effect will not be lost on a salesperson. If the dealership will not budge on the advertising fee and you decide that, all other things being equal, this is the dealership where you'd like to do business, try and use your agreement to pay the advertising fee to win a concession on another point.
Destination Charges
All manufacturers charge their dealers a destination or transportation cost, and this number is shown on the Monroney. This is a standard pass-along fee and one that they will not negotiate because there is no profit for them in the charge.
The Cost of the New Car Not Seen
The Cost You Don't See
The second set of numbers is what the manufacturer charges the dealer for the car and the options. This is referred to as the invoice or "tissue" cost. The difference between the MSRP and the invoice is the markup and targeted profit figure.During your test drive, find an opportunity to copy down all of the price information on the window sticker. Or if you prefer, just drop into a dealership and, should you be approached by a salesperson, announce that you are just looking. Usually that's enough to send them back to their desks, figuring that since you're not a buyer "today" you're not worth talking to. The major task here is to be sure that you write down all the key information including the dealer add-ons.You might find it convenient to make a copy of the form on the next page and use it during your visit. (You'll also find a copy in your "Checklists.") Your objective is to leave the dealership with the information in columns 1 and 2 filled in. We'll discuss how to determine the dealer costs (or invoice) in Column 3 in a moment
Determining the invoice cost
Buy the most current copy of a new-car price guide like Edmu-nd's New Car Prices or Consumer Guide Auto Series and find your car. (Consumer Guide also advertises a fax service called Price Fax that, for a fee, will supply you with pricing information.) Compare the list prices with those you've copied from the window sticker. If the figures don't match, you may have an older book. You may also find some minor variation in the options, as manufacturers will change prices rather frequently, making it difficult for a publication to stay truly current. For your purposes, the figures should be close enough to provide you with enough information to complete the chart for analysis purposes.
Using the work sheet on the preceding page, find the items in Column 1 in the price book and list the dealer prices as shown in the book in Colurrul 3. Then subtract 2 from 3 to give you the profit each item represents. When you add up the invoice-dealer cost figures, you'll know what the manufacturer is charging the dealer for the car. The total in Column 4 will show. the dealer's profit before the holdback or any factory incentives are figured in. Then add the supplemental charges or "pack." Usually, the supplemental charge can be and should be challenged and made part of the negotiation.Below, we've filled out a work sheet using figures that we obtained from a dealer offering the Volkswagen Jetta GL.
At this point you know two things:
1. The MSRP represents a profit to the dealer of $1,502.
2. His supplement or add-ons total $547. The actual cost will be hard for you to determine, but you can be sure that most of the supplement represents profit. For purposes of our illustration; we are assuming that the profit is about $500, for a total of $2,002 of profit that we know about.
The Hidden Profit
Now we have to look for the hidden profit. This comes from two potential sources:
1. Factory-to-dealer incentives
2. Dealer hold-backs
Factory-to-dealer incentives
Frequently, the manufacturers-often called "the factory" in car par¬lance-will offer their dealers incentives on certain cars in order to help move inventory. The incentives serve to lower the cost of the car to the dealer and make it possible for the dealer to offer deals, nego¬tiate deeper discounts; and generally provide a customer with the opportunity to buy a car for a lesser price. These incentives can range from several hundred dollars to four or five thousand in the luxury car range. This is information you'd like to have for your negotiation.
One good source for this information is the industry magazine lutorraotive News, a weekly publication from Crain Communications. , You can often find copies in your library, or possibly the car loan department of your bank or credit union will have a copy. In the back uf the magazine you'll usually find a section called "Incentive Watch," w-hich shows current dealer and customer incentives. In one issue we found dealer incentives ranging from $200 up to $5,000. Obviously, the uigher the retail price of the car, the higher the factory incentive. Constumer incentives ranged from $300 to $3,000. Understand that these ncentives are likely to change frequently.In the case of the Volkswagen Jetta, we found that at the time of Wis writing–and by the time you read this it will have changed-the ,ctory was offering dealers an incentive of $500. This is profit and aould be figured into your calculations.
Dealer hold-backs
is common practice today for the manufacturer to hold back 2 to 3 Percent of the dealer's profit and then pay that profit once the car is l. What this does, effectively, is give the dealer an opportunity-if so chooses-to show you an invoice that is from two to three perut higher than his actual cost. If he can talk you into giving him 3 or 4n Percent over "invoice," he could well walk away with 6 to 7 percent fit and maybe a factory incentive to boot. For purposes of your number gathering, assume that the hold-back amounts to at least 2.5 percent. In other words, if the difference between the MSRP and the invoice is 15 percent, you can safely assume that the true markup is between 17 and 18 percent.
In the case of the Jetta, the hold-back is 3 percent-again at the time of this writing-and that represents approximately $477 of additional profit to the dealer. When you total up the dealer's potential profit you find that:
Profit markup in the car and options $1,502
Supplemental Charges-estimated profit $500
Factory-to-dealer incentive $500
Dealer hold-back $477
Based on your research, you know that the Jetta could potentially produce a gross profit of approximately $2,979.
As we noted earlier, from this profit the dealer must pay interest on the car (his floor plan) and pay a commission to the salesperson. The amount of the commission is usually determined as a percent of the gross profit, but it will vary from one dealership to another. Finally, the dealer must make a contribution to the cost of his overhead. The rest is profit. This is "front-end" profit. There is also "backend" profit and profit from your trade-in and profit from the parts and services you'll buy over the period of ownership. You can almost think of the new car as the stopper in a bottle of profits that begins to flow into the dealership once you sign the buyer's order.
The Value of This Information
Consider the value of this information to your buying strategy. Most people walk into the dealership selling the VW–or any car, for that matter-look at the sticker, and assume that the bottom-line price of the car is $15,915 plus the $547 supplement, for a total of $16,462. They will probably assume that by being aggressive they can get a 10 percent discount, so they will start their negotiation by asking for a $1,600 discount off the MSRP. In most cases, after a good deal of "grinding," the dealership-pleading poverty and expressing the fear that this deal could force them out of business-will finally agree to an $800 discount, leaving the dealership with about $2,000 of profit-before they start to sell the back¬end items-e.g., the financing, insurance, extended warranties, etc.
Knowing what you now know, you can elect to begin your negotia¬tion not at the list price but at the actual price. Knowing that the dealer's cost is about $13,936 ($14,413 invoice less 3 percent hold-back of $477), you can start the negotiation by offering 3 percent over the true cost-about $418. You might even elect to agree to another $100.
Chances are, if it's the end of the month, if the dealer is loaded with inventory, and the car or truck you're buying is not in high demand, with persistence you'll make your deal.
Cost Savings When Buying New Cars
Other Sources of Savings
Besides what you can save by knowing the dealer's real cost, there are several other opportunities to lower your cash outlay
Factory- to-Customer Rebates- Your Moxey, Not Theirs
Another of the major marketing devices utilized by manufacturers to help move product is the "consumer rebate." The upside of a rebate from the factory's and dealer's perspective is that it generates more interest and more sales. The downside is that consumers have become so accustomed to rebates that they tend to wait until a rebate is announced before they consider buying. That was not the way it was intended to work.
Essentially there are two kinds of rebates:
1. A cash payment direct to the customer from the manufacturer
2. A cash payment that requires dealer participation
The problem with the second rebate is that it requires individual dealers to put up part of the rebate money if they wish to participate. If they don't, there is no way for you to get a rebate from that dealer.Often when a car is offered with a rebate, the salesperson will try to factor the rebate into the negotiation. Don't let them. The rebate is your money-offered by the factory-and not the dealer's unless they are participating.
Rebates or Low Financing
Some manufacturers offer the option of a rebate or low financing. Depending on how much money you plan to put down against the car and the amount the dealership gives you for your trade-in, you may find that one option is clearly better than the other. It's important to take the time to compare both.
Example: A car has a bottom-line sticker price of $16,000. In order to help promote more sales, the factory offers potential customers a $1,000 cash rebate or 2 percent financing. Further, let's assume that your financial institution is offering 8 percent new-car financing on a 36-month loan. Which is the better deal? Take some time to figure it out or call your bank and ask for their help. They have all the tables. Here's a comparison:
Which is better? The $1,000 cash back and an 8 percent loan, or no cash back and a 2 percent loan?
The amount of your interest payment with a 2 percent loan on $10,000 over a three-year period would be $311.22.
If you were to take the $1,000 and use it to reduce the amount of money needed to finance the car, your 8 percent loan (now on $9,000) would cost you $1,153 in interest over the 36 months. Notice that if you keep the cash you end up paying it back in interest.
Appraising Your Trade-in
If you have a trade-in (and let's assume that it's only two or three years old and is in reasonably good condition), take the car to three different dealers and tell them that you are interested in selling the car and that you'd like their best price. No matter what price they quote, show some pain and tell them that if they want the car, they're going to have to do better than that. When they ask, "How much better?" respond by asking for another ten or fifteen percent. You can be assured that they will probably shake their heads and say that the car isn't worth that much. If they don't make a counter offer, they've either quoted you the fair wholesale or they are interested in the car only if they can buy it below wholesale. That's why you need to visit three different dealer-ships. Repeat this with two other dealers and use the highest offer as ?he basis for what your car is worth on the wholesale market.
Now, what if your car is not in all that good condition? Maybe the :nterior is a little ragged, the paint is scratched, the miles are a little m the high side, and the motor needs work. In this case you're prob¬,ibly going to find that used-car dealers associated with new-car lots anen't going to be interested. Independent used-car dealers might, but -hey will only give you a price below what they know they can reasonably expect to get from a wholesaler or at auction. Keep in mind that no one is going to risk any more than they can absolutely be assured of zTetting back. In fact, in most cases they'll whack another ten to twenty percent off the price to be sure that they're protected.
Book Prices
The industry uses any of several books as price guides: the NADA Offiwial Used Car Guide, National Auto Research Black Book, Kelley Blue Book Auto Market, Report, and Galves Auto Price List. These books purport to reflect the average wholesale prices that various cars are bringing across the country. The only problem is that they don't agree. Compare the suggested wholesale prices for a 1991 Chevrolet four-door Lumina from the same month:
Kelley Blue Book: $7,500 (tends to reflect West Coast prices)
NADA:$6,750 (combination of auction and dealer reports)
Black Book: $5,650 to $8,850 (reports from auction sales)
Your objective is to find out how your local market values your car, and the only way to do that is to have it appraised by the people who are putting up the cash. You may find that certain vehicles will be worth more at certain times of the year. A convertible will probably bring more in the spring. A station wagon will bring more as vacation time approaches and the market for family cars increases. A fourwheel-drive vehicle might do better in the North as winter approaches. The bottom line is that you won't know until you test the market.
The appraisal
Frequently, used-car appraisers find themselves having to deal with a customer who has a totally unrealistic idea of what his or her car is worth. For many, the car has become a member of the family, and the dents, rust, and the ripped upholstery have either become invisible or are regarded as part of the character of the car.To help "disabuse" the customer of his or her inflated impression of the car, they will frequently use a technique called the "negative walk-around." The appraiser will walk around the car inspecting it carefully as the owner looks on. The appraiser will touch all the bad spots, rub his finger over the paint scratches, and generally underscore each defect with an "Ummmm," or a. "Too bad," or a "They don't make cars like they used to," every time he discovers a problem or defect. If you decide to shop for a used car and elect to use this technique, keep in mind that you'll want to point out the defects without demeaning the car or putting any blame on the owner. That could create a negative atmosphere. The sole purpose of this technique is to make sure that the owner knows that the appraiser is fully aware of all those things that impact the car's value. Don't be surprised if the appraiser uses this tactic on your car.There are times when customers will bring in true "cream puffs" with no idea of what they're worth. There are more than a few usedcar buyers who will try to steal the trade. That is, they will offer less than the car is worth, knowing that they can retail it for a significant profit. Again, take the time to get three appraisals to make sure you have determined the car's fair wholesale value.
Selling Your Car Yourself
If you've got a car that's in good condition, most used-car dealers would rather take it in on trade than let you sell it yourself. The reason is simple: Most dealerships make more money with their used-car business than they do with their new cars. And why not? Most new¬car markups fall in a range between 12 and 20 percent, while used-car markups have virtually no top. If a dealer believes your car will sell quickly for a good profit, he will try to convince you that the hassle of selling a car yourself is just not worth it. He might even point out that if you trade your car, you pay sales tax only on the "difference" between the trade-in allowance and the price of the vehicle. True, but keep in mind that it will be you, and not the dealership, who will be pocketing the profit.
New Car Financing
Investigate your financing options. Call several banks, check with your credit union, and get quotes from the dealership you plan to shop first. Find out if they have any special rates. A difference in one or two percentage points can save you hundreds of dollars over the course of the loan. If you decide to finance through the dealership, keep in mind that their rates are usually negotiable. Remember, the dealership makes money on financing, and they would usually rather discount their rate than lose your business to another financing institution.
Shopping for your Loan
Decide how much you can put down as a down payment. As we mentioned earlier, too many buyers accept long rimancing arrangements in order to minimize their down payment. If they decide to trade the car W the first year or so, they often find that they actually owe more on their car than it's worth. Not a pleasant prospect, to say the least. Of course, it is worth remembering that you will often be required to make several other payments shortly after the purchase of a car, like Aviva car insurance or road tax, so it is important that buyers budget for this. However, if you are in a position to make a larger down payment, then it is likely to prove more beneficial in the long run.
A good rule of thumb is never to finance more than 80 percent of the true cost-i.e., the dealer's invoice-of the car. At least 20 percent (some recommend more) should be paid in cash or in the equity of your trade.In other words, if the car has an MSRP of $21,495 and the dealer's cost is $18,800, your total finance package should not be more than $15,040. Remember what we said about deprecia¬tion? The moment you drive the car, van, or truck home, the actual value will have dropped about 40 percent, and the wholesale value of the vehicle will be about $13,000. If you sold it yourself you might be able to cover your payoff and maybe recoup some of your down payment.
Here are some tips that are important for you to keep in mind while
Shopping for your loan.
1.Decide on a price range.
2.Decide how much you can put down as a down payment. As we mentioned earlier, too many buyers accept long rimancing arrangements in order to minimize their down payment. If they decide to trade the car W the first year or so, they often find that they actually owe more on their car than it's worth. Not a pleasant prospect, to say the least. A good rule of thumb is never to finance more than 80 percent of the true cost-i.e., the dealer's invoice-of the car. At least 20 percent (some recommend more) should be paid in cash or in the equity of your trade.In other words, if the car has an MSRP of $21,495 and the dealer's cost is $18,800, your total finance package should not be more than $15,040. Remember what we said about deprecia¬tion? The moment you drive the car, van, or truck home, the actual value will have dropped about 40 percent, and the wholesale value of the vehicle will be about $13,000. If you sold it yourself you might be able to cover your payoff and maybe recoup some of your down payment.
3.Go to your bank or credit union and ask them to figure the monthly payments on the amount you intend to finance for both a 24-month and 36-month loan. Don't let yourself get trapped into a 48- or 60-month loan. Sure, the monthly payments look attractive as compared to those of a 24¬or 36-month loan, but add them up and you'll see just how much more these 48- and 60-month loans cost in actual dollars. Be aware that interest charges vary widely for the same amount of money. So take the time to shop and compare.
4.Once you've shopped for money, found the best rate, and have an estimate of the monthly payments, make a hard-nosed personal decision about whether the payments will fit into your budget. Remember, the thrill of taking delivery of an expensive, sporty new car will become the reality of monthly payments. Keep in mind that today there are nearly 600 different models of car, van, and light truck on the market. With all those choices there has to be at least one that will fit into your budget and still create some pride of ownership.
5.Determine the equity in your trade-in. If your car has a wholesale value of $6,500 and you owe $1,500, your equity is $5,000. On the other hand, if your car has a wholesale value of $6,500 and you still owe $7,500, you've got a $1,000 negative equity, and you might want to consider trying to sell it yourself. While selling privately can be more of a hassle, at least you'll give yourself the chance of getting enough profit over wholesale to pay off your negative equity.
6.Once you have a fix on your finances, start to shop. But stick to your budget. In fact, make it a point to try to buy your car under your budget. By using these books and doing your homework, there is no reason you can't.
Work sheet example
Here's an example of how to figure what you'll need in the way of cash, equity, and financing to buy a new car. For purposes of illustration, let's assume that your current car has a wholesale value of $6,500. In other words, this is what a used-car dealer will pay to buy your car. At the same time, let's also assume that you owe $800 on the car.
Next look at the amount of money-cash-that you plan to take from your savings account, or other sources, to put down on the car. Let's use $1,500. With the trade-in price, less the payoff, plus the cash you can put $7,200 down on the car. Now decide on the car you want to buy. Let's say it has an MSRP sticker price of $20,200. Using a source like Edmund's, you find that the actual cost of the car to the dealer-the invoice or "tissue" price-is $17,750. That's a profit Margin of about 14 percent. Now, let's assume that the strategies we will outline enable you to negotiate a sales price of $500 over the invoice. That would make the total cost of the car $18,250. (And by -he way, you'll find that in a number of cases you can actually buy it for .-Ss. Again, this will be explained.) To the cost of the car you have to .idd transportation charges, taxes, and registration fees.
Of course, there's also the matter of interest
At this point you should visit your bank, credit union, or lending insti¬tution and look at the monthly payments for two- and three-year car loans. Remember, interest should always be factored into the equation hen you're figuring the real cost of buying a car. Even though it lribbles out over a period of two years or more, it ultimately comes out of your pocket.
One of the traps far too many people fall into is spreading the pay¬ments out over four, five, or six years-sometimes even more¬because the monthly payments look sooooo low. And don't think that there aren't a few salespeople who have sold their customers on long finance deals in order to make it easier for them to "get into a new car." (By the way, there are more than a few experts who will tell you that-except in some special circumstance-you should probably never finance for more than 36 months. If for no other reason because you will probably tire of the car and want the option of considering a new one.)Look at what the number of years does to the finance costs and therefore to the actual cost of the car. For purposes of simplification and illustration, we've rounded the loan to $12,000.
Some salespeople like to refer to the purchase of an automobile as an investment. If you'd bought a Mercedes Gull Wing back in the fifties, that would have been true. All but a very few exotic cars today are expenses, not investments, and the next chart illustrates why.
After one year you decide you hate the car and want to sell it. Get out the bath soap!
Let's say you've taken out a 36-month loan and that for some reason you decide that after one year you want to get rid of your new car. Pre¬pare for a financial bath.For the average car, the wholesale value-the amount that someone is likely to pay for your car-will be based on the original MSRP less the depreciation. Typically, a vehicle will suffer between 15 and 40 percent depreciation during the first year to eighteen months. It all depends on the car, the model, and market demand. Here you can see what your decision to sell after one year would mean.
Dealer financing
You also want to look at the financing packages offered by dealers. mind that financing is a profit source for dealers. If they participating in the package or if they are just getting a fee for having delivered vou to a financial institution, money goes into their pocket. At times dealership financing can be very high, and they can use it to all but more money from customers. At other times, especially when they are trying to make room for inventory, they will offer below-market loans from the manufactured return for your buying from their stock. Over the life of the agreement, these loans could save you hundreds of dollars. However, often a catch: The low-rate financing package is available only rs that they want to sell, i.e., the slow movers. Or you may find °.j-hile the rate is low, the price of the car is not. The message here – onsider dealer financing as an option, but to compare it to other es before you agree to anything.
New Car Insurance
Some Not So Hidden Other Costs
Many car companies and lending institutions will offer you insurance on Your loan loan. On the face of it this seems very inexpensive. However, before agreeing to the extra few dollars a month, consider the following: Loan insurance covers only the amount of money you owe the lending institution. In other words, let's say you finance $15,000 and ~ purchase insurance for $10 per month over a three-year life of the tn. If you die the first month, the $10 will pay off the entire $15,000. however, if you die in the last month of the loan the insurance will pay what's owned, i.e., the last month's payment. Consider if instead of buying loan insurance you purchased level rm for the same $10 per month. At rates quoted in 1995 for a _ person 40 years of age, $10 will buy you $15,000 of level term. With v'.,is insurance, whether you die in the first month or after the last _aonth of payments, you get all $15,000. Now, while we recommend -11at for peace of mind you cover your loan with insurance, why not rut your money where it will return the most cash in the event of an mtimely death?
Accident and Health Insurance
If you're in poor health and feel that you can't qualify for other programs because of your age or current; health status, the A&H may be of some value. However, if you're in good health and have enough existing insurance, take a long look at this type of policy. Generally the only ones who benefit are the sellers.While a lending institution can require you to cover your loan with insurance, they cannot, in most, states, require that you buy the insurance from them. What you can do is assign the lending institution a current insurance policy purchased elsewhere to cover the loan. You probably should consult your insurance agent for details and for requirements as they apply in your state.
Conveyance and advertising fees
Some dealers will try to get you to pay a conveyance fee for preparing the paperwork and another for their local advertising. We suggest that you remind them that both of these are a cost of doing business and refuse to pay. If they insist, take your business elsewhere.
What's a fair Profit for the Dealer?
Like beauty, fair profit is all in the eye of the beholder. If a dealer has a really hot car in large demand, the fair profit is going to be a whole lot higher than on a car that's been sitting on the lot for three months with 20 other cars of the same make and model.
Dealers always complain that they aren't getting enough profit on their cars. When you look at a car that has an invoice price of $15,500, a 3 percent profit or $465 would seem to be very small indeed. But remember, most dealers floor-plan their cars, which means that the cars are owned by a financing institution. It's almost as though the cars were given to the dealer on consignment with the understanding that they will pay monthly interest on the cost of the car. Usually that interest is prime plus a point or two. For purposes of illustration, assume that a particular vehicle costs the dealer $120 a month in finance charges for the opportunity to sell the car.
Now, let's say you decide that a 3 percent profit is what you're willing to pay. What you probably didn't; know is that most manufacturers include a two to three percent hold-back in their invoices. Which is to say the invoice price-the price the dealer pays the manufacturer-is actually 2 to 3 percent higher than the real cost. Once the car is sold, the manufacturer sends the dealer the additional 2 to 3 percent. Using the illustration we showed you several pages back, if you were to agree to a 3 percent profit over invoice, and add that to the manufacturer's hold-back, the dealer would have over $900 in profit. In addi¬tion, if he can get you to pay for stripes and some other miscellaneous charges, it's not unlikely that his total profit on the deal will be about $1,250. Subtract one month of interest-$120-and a commission of $100 to the salesperson, and his profit before overhead and expenses will be just over $1,000. Not a bad return on a $120 investment.
Where does their profit come from?
Now in fairness" even with this amount of return on their investment, there no way that a dealership could survive by just selling new cars. even most customers were to pay list price, the dealership would sources of income. You'll find that most successful dealer valiae the bulk of their income and profits- from their used-car operations, service departments, parts sales, and from convincing you – makes sense to buy their financing, their life insurance, their and accident insurance, their striping, their rustproofing, their 1ed warranties, and whatever else they can sell you.We offer this bit of insight so that when the manager appears and about "fair," you will have a slightly different perspective of what really fair.
Deciding on Your Offer
If you are determined to make a good deal, decide how much profit : you want to offer the dealer and then stick to it. If you want to make an v_s1 offer and then come up a bit to help the salesperson save face his or her manager, that's your call. Remember, when your money s out their door, so does theirs. You represent profit that will help lor the interest, the sales commission, and contribute to overhead. your money walks out, so do all the dollars you'll spend in the service department.The other thing that walks out if they don't, make a deal is the pos of your recommending a friend to the dealership. Don't be ayed by sob stories, fairness pleas, and other pressure tactics. As people will tell ,you, the toughest customer in the world is ove %%n comes in, knowing what he or she wants, who has all the figs neatly written down, and who makes it clear that they will P the dealership one, and only one, opportunity to sell them a a %at their price. If the dealership won't deal, thank them nicely and ~ e elsewhere. There are an awful lot of dealerships out there just waiting for a chance to get at your money.On the next page there's a financial work sheet that we think you'll find helpful.
Start Buying Your New Car
Shopping for Your Vehicle
At this point you should have collected all the relevant facts on the vehicle, the options, and the pricing. Now you're ready to plan and execute your buying strategy.Plan your visit to the dealership for one of the times listed below at the dealership where you'd prefer to do business. Make sure you allocate enough time to permit the salesperson to take you through the entire presentation process. Have him or her present the car and take you for a demo drive. Remember, time is the only thing car salespeople have, and the more of it you consume, the more anxious they are to make sure that the time spent results in a commission.
The Best Times to Buy a New Car End of the month
Car dealerships and car manufacturers work on a month-to-month basis. Virtually every car dealership is under end-of-the-month pressure to meet sales forecasts. If you've done your homework and are ready to buy, there's probably no better time than the last day of the rnonth
End of the year
Dealers are under pressure to move out the current year's inventory at the end of each year. Many manufacturers "rill offer dealers year-end or clearance incentives to motivate them to offer bigger discounts and move the cars off the lot. While you can make a good deal at this time, it's important to recognize that if you buy a leftover, you should plan to trade for your next new car at the same time of year. Many year-end leftover buyers fail to recognize that 12 months after they've purchased the car, the used-car market regards it as a two-year-old vehicle and the wholesale price will reflect that fact.
If you buy a car at the end of the model year, negotiate a deal that reflects the first year's depreciation. To determine what that depreciation is expected to be, you might want to consult a resource like Automotive Lease Guide Residual Perceutage Guide by calling 1-800-418-8450. For a fee, they will be able to tell you the projected depreciation after one year.
Rainy days
If the weather has been bad, you can assume that business in the dealership will be a little slow. Slow periods make sales managers very nervous because their general manager and/or dealer is probably pressing them to move some cars. After all, the interest on their floor plan doesn't know it's raining.
When car sales are slow
Another time to buy a new car is when business is bad and dealers have a higher than normal inventory on their lots. Generally, dealers like to have a 50-to-70-day supply of cars. This gives them ample choices for their customers without greatly impacting the cost of financing that inventory. But when that supply begins to climb to over an 80-day supply, dealers get very nervous, and they will generally do whatever they have to do to "move the iron"-including giving large discounts. To learn which car companies are having inventory problems, go to your library and ask for the current issue of Automotive News, the industry's weekly newspaper. In the back you'll find inven¬torv and sales data for each make and model.
Targeting the Best Opportuaities for Deals
We've already talked about the realities of supply and demand. If a vehicle is in high demand by buyers and there is limited supply, the chances for making a good deal are reduced. However, if the dealer has a large inventory and if that inventory has been sitting on the lot for several months, you will be in a position to deal. Keep in mind that every day a car, van, or truck sits on a dealer's lot, the bank is collecting another day of interest. One of the key pieces of information you'd like to have prior to negotiation is how long the car has been sitting on the lot. One clue to the answer is to open the driver's side front door and look for the metal manufacturer's label, which will tell you the date that the car came off the assembly line. If you assume that it took about a month to get the car from the factory to the dealer, you will have an approximate idea of how long the car has been in inventory.
Information Resource "Fighting Chance "
To help simplify your research you might want to consider something called "Fighting Chance." This is a, consumer information service that provides you with all the invoice data and the dealer and consumer incentives and hold-back percentages and amounts. They also supply you with the unit sales figures, which tell you if the car is in high demand or is a slug eating up lot space and interest money. All this information is important to have prior to shopping. One benefit over the published books that you find on the newsstand is that Fighting Chance provides you with current information.
Buying New Car Strategy
Choosing a Pre-Shopping Attitude
One of the elements of your shopping strategy should be the adoption of an attitude designed to help keep the salesperson off balance-and therefore not in control. Here are two attitude strategies that are guaranteed to perplex any salesperson.
1. Indifference or "l Couldn't Care Less"
Salespeople want you to fall in love with their cars. They want you to salivate and confess that if you don't have this car you may develop terminal warts. Don't ever let the salesperson know that you've fallen in love. In fact, make them think that you could not care less. Your attitude should convey the following message:
"Yes, I'm in the market for- a car, and I'll buy it when I find the car and the deal I like. That could be today; that could be a month from today. Now, if I find it here, great. If not, I'll go somewhere else and, in, fact, I think I would really rather shop somewhere else anyway. "
The idea that you might walk at any minute will make the salesperson work very hard to keep you there. Remember, the more salespeople think that they might lose you as a customer, the greater your opportunity for control.
2. Indecision or "I Can't Make Up My Mind "
Salespeople like customers who come in, identify a specific vehicle that they'd like to buy, know the options they want, and are prepared to get right to the deal. If there is one customer type that drives them crazy, it's the customer who can't seem to make up his or her mind. Sometimes referred to as "flakes," they jump from one car to another. One minute they say they are going to buy today and then the next they are going to think about it. Even when they sign the buyer's order, there's the fear that they will cancel the deal. Go ahead. Let them call you a "flake" behind your back, but keep them guessing.
When you're ready to buy, let them see a dramatic shift in your attitude: Make it clear that the only way you'll settle on a vehicle is if the salesperson can prove it's a great deal. And you'll know if it's a great deal because you will have done your homework and know exactly what the car has cost the dealer.
Start the Process
When you go to the dealership, take your notes. There are two reasons for this: First, they will send a signal to the salesperson that you've done some homework. Second, you don't want to have to depend on your memory when you're working out the deal.When you enter the dealership, wait to be greeted. Let the salesperson initiate the conversation and use this opportunity to assess the type of person with whom you're dealing. Does the salesperson seem in a hurry, interested, laid back, or what? When asked what you're looking for, make it clear that you have a good idea of which vehicle you're interested in buying, but let the salesperson "sell it to you." Don't. jump to the close unless you've decided on the tactic in which you announce that you know what you want and you're giving the dealership one and only one opportunity to bid for your business. This tactic is usually more beneficial when you're "shopping the price" given you by the first dealership-the one where you'd prefer to do business.
What Informaion to provide
The only thing that you want the salesperson to know at this point in J is your name, what you're looking for, a price range that is innflated by 15 to 20 percent over what you actually plan to spend, and – fact that you are in the market "now" and plan to buy "soon." This will establish you as a buyer and someone deserving of their attention.Don't reveal anything about how you plan to pay, i.e., cash, inance, or lease. When asked questions relating to the method of payment, respond by saying that you really haven't decided yet. When asked if you plan to trade your car, respond by saying that you're not "I may keep it, or sell it myself … or maybe I'll trade it in. At, %.s point, I'm really only interested in seeing if your car meets my needs. "The message you're delivering is: "Sell me the car first, then we'll ilk about trades and financing." If the salesperson persists with uestions related to how you plan to finance and whether you plan to trade, make it very clear that you first have to decide on the car and – aen decide if you want to buy it at this dealership.
Me Presentation and Demo Drive
Insist on a full presentation and then a demo drive. There are two reasons for demanding these. First, you want to be sure that this is in fact the car or pickup that you want to buy and that it does meet your needs. Second, the more time a salesperson invests in you, the more anxious they're going to be to realize a financial return on the invested time. You should know that while the sales manager insists that the salespeople grind for every nickel of profit, salespeople will, in turn, grind the sales manager to give a little so as not to lose the deal and the commission. If you walk, you're out some time, but the salesperson is out both time and commission.
Buying the New Car Price
Agreeing on a price for Your Trade-in
If you plan to trade in your car for the new one, announce to the salesperson after the presentation and demo drive that you'd like to get an idea of the value of your car should you decide to trade it in. Candidly admit that you've already shopped it around so that you have a very good idea of what it's worth. Make it clear that you don't want to talk about the price of the new car until you have the appraisal (not the allowance). You want to know what the dealership believes is its fair wholesale value. Undoubtedly, the salesperson will ask what other figures you've gotten. Don't reveal them. Rather, respond with something like: "I'm sure your appraisal will be in the same ball park." If the appraisal does not match the highest figure that you received from the three used-car operations, tell the salesperson that you have a higher offer and that if the used-car department can't do better-don't tell them how much better-you may have to look elsewhere. At this point, the salesperson may suggest that you write up the deal. Indicate that you'll be prepared to deal when the appraisal is competitive with those you've already received.
Appraisal, Not allowance
If the salesperson comes back and talks about how much they are prpared to "allow" you on your trade, be pleasant and remind the salesperson that you did not ask for an allowance, but an appraisal. Your objective here is to eliminate-or at least minimize-dealershipinjected confusion by keeping each element of the transaction as a separate issue.
Negotiating the Deal
Assuming that the dealership raises their offer to an acceptable amount on your trade-in, you can turn your attention to the new car. Tell the salesperson, in a nice way, that you'd like to see if you can make a deal and that you hope the two of you can come to some agreement within the next half hour because you have an appointment at another dealership. (Salespeople like to use a time-pressure ploy on their customers. This is one way to turn it back on them.)
Also, inform the salesperson that if you aren't satisfied with the deal, you will shop other dealerships, and the one with the best price on the new car and the best offer on the used car will get your business. Said with conviction, this will strike fear into the salesperson's heart. You will be in control.Maintain that control by telling the salesperson that you have carefully calculated the actual price of the new car and that you are prepared to offer the dealership a price that reflects a profit of X. (If you use the financial work sheet as we suggested, you should determine that figure before you enter the dealership.) As a rule of thumb you might begin with a profit margin that amounts to about 2 percent over the invoice-dealer's cost-and be prepared to raise your offer once¬and only once-to a figure that amounts to 3 percent.
The salesperson will either show great pain and suggest that management won't accept your offer or agree to write up the order and rake it in to see if it can be approved. If the salesperson balks, insist 7,hat your offer be taken to management and suggest that you will leave if it is not. Keep in mind that in most dealerships, management ioes not want a buyer to walk before they've had a chance to counter an offer any offer.
Writing the Buyer's Order
When the salesperson begins to write up the buyer's order, make sure that the difference between your trade-in and the negotiated price of your car matches with the one on your work sheet. Make sure that -hey show you the cash difference before they add in all the additional charges. Your objective is to prevent the salesperson from trying to add some confusion in hopes of getting a few more dollars. By isolating -lie trade-in appraisal, the total amount to be paid, and the total imount of additional charges, the only opportunity for them to extract i few dollars is via the back end of the deal.
Once the buyer's order has been written up, the salesperson will -sk you to okay it . The salesperson will ask for a deposit so that management knows you're serious. Tell them thatyou'll sign a buyer's order confirming your offer, but that you will not give them a deposit until the deal has been approved. Mention that the fact you've just spent the last hour or so in the dealership should be proof enough of your seriousness.
The `Sincerity"Deposit
some dealerships believe that unless you give them a deposit, you're not ready to buy. They know that the psychological commitment that goes with writing a check works in their favor and that if they can get -you to write one check, you're primed to write another. They may tell you that the deposit is their standard operating procedure and that it will show management your offer is sincere. In fact, it's just another way of keeping you in the dealership while they "work you." Never give a dealership a deposit until they have approved your deal. Also, before you sign the check, be sure you know exactly the final amount you'll be paying and that the amount is in writing.
A Message to Management
As the salesperson gets up to take your offer to management, deliver one last message. A message which might go as follows:
"Please make it clear to your management that I am not interested in getting involved in a series of offers and counteroffers. I would like to buy here. I want you to have my business. However, if necessary, I will continue to shop until I make `my' deal. "
And then say no more. Your message will most certainly be delivered
Salesman Rejecting Offer
Rejecting Your Offer
You can almost put money on the probability that the salesperson will return with a long face saying that management has turned down your offer. If you have properly selected the timing of your visit to the dealership, if you are negotiating for a vehicle whose supply is well in excess of demand, it's a good bet that the dealership is just testing you.
How to test Back
Shake your head sadly and begin to busy yourself by gathering up your notes and papers as though you're getting ready to leave. Say something to the effect that you're sorry you couldn't get together. Then don't say anything.Be aware that the salesperson-who comes up empty if you walkis going to try to get you to increase your bid. Your response might be something like:
"I haven't really shopped around enough to know if I really need to up my bid.
But for the sake of discussion, how much are you looking for?"
Again, say nothing. Force the salesperson to respond. Chances are he or she will come down, but not to your figure. Get out your pad and pretend to be doing some heavy figuring. (By the way, salespeople love to do this to customers to create the impression that they are really trying to find some way to further reduce the price. Usually the "heavy figuring" is all part of the show.)Finally, up your offer by whatever amount you're willing to pay to make the deal. Tell the salesperson that this is all you're willing to go And that it is your final offer. Suggest that he or she think about it and dealership is willing to make a deal, fine. If not, you'll be on your way and then say nothing.
Remember the old negotiator's motto: "He who speaks first loses." the salesperson will believe he's convinced you to negotiate and that you can be talked into at least another bump or two. Surprise him. Make it clear that your offer is firm and that you're prepared to look elsewhere . Stand up, offer your hand, and thank him for his time and :eave. Chances are, if you've followed our suggestions for determining the actual list price, if you've timed your visit to fall at the end of the month or the end of the year, and if you're negotiating for a car that is not in heavy demand and one that can be purchased easily from any several dealerships, they will stop you before you leave the dealhership and you'll make your deal.
The T.O
If you've convinced the salesperson that you are absolutely serious n your offer, he or she will probably leave and return with the _ manager, who will give you a whole list of reasons why they can't accept your offer. You can translate those reasons to read: "We think a ra squeeze you for a lot more money before we risk having , walk on us."after the sales manager has told you why they can't accept the -A. respond by saying that you're sorry you were unable to have come ,,it agreement and that you would really have liked to have had the ? this weekend.If they understand that you do not intend to negotiate further and appear to be ready to walk out, the manager, fearing the loss of even your marginal profit plus the opportunity to make a substantial profit your used car (this assumes that your current car does have some rail value) may agree to your price. He may then suggest that you give the dealership a check for the entire amount. Refuse! Tell him that if your offer is approved and he signs the order verifiying the dealership's acceptance, you will give them a one percent deposit and the rest when you take delivery. Be very firm W your determination to pay the balance only after the car has been cleaned, fully preperred and after you have had a chance to make a final inspection.
Signing the Buyer's Order
The buyer's order is a contract that outlines the deal to which you are agreeing. If you are getting your financing through the dealership, the buyer's order will be replaced by a financial contract. When you sign the buyer's order you are committing yourself – the deal as outlined on that order. However, the contract must signed by the dealership management before it becomes valid.Once the salesperson has written up the buyer's order, check the information against that which you've developed before you beg the negotiation. The key is to be sure that the amount you have agree -to pay is indicated and that, if you are trading, the amount of the dollar, difference between the trade and the new car is exactly what you expect it to be. Be sure that a manager has signed the buyer's order indicating that the dealership has agreed to your deal before you give them a deposit. Your buyer's order should contain the following information
New Car Buying Check List
Buyers Order Check Sheet
1. The date of the transaction
2. Make and model of the car your are buying
3. The VIN number of the car You are buying
4. The total amount that you have agreed to pay for the car
5. The amount of money they are giving you for your trade
6. The amount of the payoff on your current car
7. The VIN number of your trade-in
8. The difference in dollars between what you have agreed to accept for ,vom trade and the amount you have agreed to pay for the car
9. The amount to be financed if you are financing through the dealership
10. The number of payments if you are financing through the dealership
11. Annual percentage rate (APR) if you are financing
12. A list of all the fees beyond the price you've agreed to pay
13. A clear statement of the warranty that will come with the car
F&l and the Back end of Me Deat
Virtually every dealership has a finance and insurance (F&I) person who you'll meet once you've agreed on a price for the car. His job is to sell you the back end of the deal. He may appear to be your friend, but he's not. The F&I guy has but one objective: to squeeze more money out of the deal. If you intend to pay cash, he'll try to convince you to finance and save your cash. Is this because he's interested in your financial welfare? Hardly. When you finance, the dealership gets a commission from the financing institution or, if they are participating in the finance package, they get part of the interest.
The F&I person will try to sell you extended warrantees, rust protection, fabric protection, health and accident insurance, and anything else they can tack on the deal. We know of one situation where a woman came into a dealership, paid full price for a $14,000 car, and then let the F&I talk her into an additional $10,000 of options, insurance, financing, and other back-end items. While this is an extreme example, the lesson here is to understand that the F&I person is not there just to fill out the contracts but to sell. In more than a few cases, the dealership makes more money on the back end of the deal than they do on the car itself. This is one more reason for you to have done your homework ahead of time. Keep in mind that most of what the F&I person would like you to buy is really of marginal value. Specifically we refer to rustproofing, fabric sealer, and most extended warranties. Some items like loan insurance, etc., can be purchased outside the dealership for less money.
Taking Delivery
When you return to take delivery of your new car and to give the dealership your used car, be true to your word: inspect your new car. Make sure that it is the same car that you looked at.Backing up for a moment: After you've agreed on a price with the dealership and before you leave the lot, copy down the VIN number of the car. That way you'll know if they've tried to switch cars. Now, why would they do that? Well, one possible reason is because they have two identical cars on the lot. One they may have acquired several months ago before the manufacturer decided to raise the dealer cost by $500. If they can push off the older car-maybe only three or four months older-they will be able to pocket the $500 as profit. Or worse, there have been dealers who try to substitute the car you've chosen for the exact same model with the same options. The only difference is the second car fell off the delivery truck and had to be repaired. Hey, it happens.
Before you Sign
Understand everything you're signing!
Mileage Statement
If you are trading in your car, you will be asked to sign a mileage statement. Before you sign, be sure that the actual mileage of your car has been entered on the appropriate line in ink. Then sign the mileage statement. Don't leave it blank with the promise by the salesperson to fill it in later. Be advised that if the future buyer of your car should discover that the mileage at the time you sold it to the dealer was wrong, you, not the dealer can be sued. So fill in all the blanks before you sign.
New-Vehicle Mileage
The seller is obliged to provide you with a mileage statement. It should be the same as on the odometer.
Used-Vehicle Mileage (Used-Car Purchase Only)
The seller is obliged to give you a copy of the mileage statement signed by the previous owner. If there is no mileage statement, don't buy the car.
Power of attorney
The dealer will need power of attorney in order to change the title on both your new car and the one you're trading in. If you have signed the buyer's order, you can sign these forms without their being filled in. However, if you want to be totally secure, ask that the forms be filled in before you sign.
Finance Contracts
If you decide to finance your car through the dealership, your buyer's order will be replaced with a finance contract. This contract will have so much fine print that it would take a couple of hours to read it. Most of the fine print is boiler plate that is dictated by law. The key things you want to check against your buyer's order are:
1. Is the VIN number the same on the buyer's order and finance contract?
2. Is the figure for the amount you intend to finance the same on both?
3. Look at the finance charges and be sure that they are as agreed. This section will also contain any other charges that you may have agreed to such as insurance.
4. Is the annual percentage rate as agreed?
5. Look at the amount and number of payments. Be sure that they reflect the total number of months you have agreed to pay and that the dealer has not tried to slip in some extra payments.
Warranty Agreements
You will be given a paper detailing the warranty. Read it carefully and be sure that you understand what is and what is not covered. Have the seller write down the exceptions. The warranty should be signed by the dealership's management.
New car Warranties
there are basically two kinds of new car warranties:
1. The manufacturer's warranty specifically states what it covers and the length of time and/or miles that it applies.
2. The other new car warranty is provided by the selling dealer and is an "adjustment warranty." This is designed to cover smaller problems like rattles, leaks, alignment, noise, and other problems that develop within the first 60 to 90 days. You should ask about the length of the adjustment warranty and have the salespersbn confirm, in writing, that these adjustments will be fixed free.
Extended Warraitties
these are warranties or service contracts that purport to cover your after the factory warranty runs out. Generally these warranties resent just another way for the dealership to make money. Some he a 50 percent or greater profit on each extended warranty sale. of publication of this book, dealers are not required to reveal the fit they build into these service contracts. This may change.)If you read the fine print you'll find that most of the things that -ad or will go wrong after the manufacturer's warranty expires are v covered. In addition, many of these warranties have a deductible. Take time to read all the fine print, even if it takes you a half hour. en you've read all the fine print, you might want to ask the salesperson if he or she really feels that their car is so poorly built that it -ds this added coverage. You might even suggest that if the dealerp has so little faith in the reliability of their vehicle, they should throw in the extended warranty free or that maybe you should reconsider the whole deal. Watch them try to squirm out of that one.One other note: If you should decide to buy an extended warranty,make sure it's one that is backed by the factory. Avoid third-party warranties. All too often owners discover that third-party warranties end offering no more value than the paper they're written on.
1.Mileage Statement ◦Has the mileage of your trade-in been entered?
◦ Are all the blanks filled out?
2.New-Vehicle Mileage ◦ Is the mileage statement on the new car the same as on the odometer?
3.Used-Vehicle Mileage (used vehicle purchase only)
4.Power of Attorney
5.Finance Contracts ◦Is the VIN number the same on the buyer's order and finance contract'
◦Is the figure for the amount you intend to finance the same on both?
◦Are the finance charges the same as you agreed"
◦Are there other charges to which you have agreed?
◦Check the other fees normally associated with a new car purchase.
6. Is the APR (annual percentage rate) as agreed?
7. Do the amount and number of payments reflect the total number of months you have agreed to pay?
8. Warranty Agreements ◦ Have you read the warranty'
◦ Do you understand what is and what is not covered?
◦ Are the agreed exceptions in writing?
◦ Has the warranty been signed by management?
9.Have you received the owner's manual and maintenance record books?
•Do you have all registration records?
•Have you arranged for your insurance?
•Is your insurance form in the glove compartment?
Alternative Car Buying Strategy
Tactic1."May have started Too Low
If you feel that for some reason your final offer may actually be less than they can take-for whatever reason-and you're inclined to raise your offer … don't. This tactic is designed to help you stay in control while forcing them to give you their best price. At an appropriate point stand up and say the following:
"I am prepared to buy and take delivery of a car like the one you've showed me within the next two days. And I will buy a car within that tirne,frame. However, I am looking for the best possible deal. Maybe, as you have suggested,, my offer is unrealistic. There before, after I leave, I would appreciate your deciding what is, 2n fact, the lowest price that you'll accept for this car. While you're doing that, I'm going to visit two or maybe three other dealerships and give them the same opportunity. Like you, they will have one and only one opportunity to bid for my business. There will be no negotiation. If your price is competitive with theirs, I'll probably give you the business because of the time you've invested with me.You have my phone number, I hope to hear for you no later than this evening. "And with that, walk out. Chances are they will try to keep you there with more questions, but be resolute. Walk! If you agree to raise your bid at this time, you've opened the door for more "grinding" and sent a signal that says you can be "worked." In this case control is maintained by making them chase you … at home.
Tactic 2. "Using the fax
Let's say that for one reason or another you'd like to do business at a particular dealership. Maybe it's close to home and you feel you'd get better service if you bought your car there. However, you want to be sure that you've gotten the best possible price. Here's one approach you might try:Visit the dealership within three to four days of the end of the month. Decide which car you'd like to buy and make it clear that, you intend to buy before the end of the month. Ask the salesperson to give you the dealership's best price. Write down the number and then using the MSRI' sticker on the window, write down everything-including the options-that is included in the car. Tell the salesperson that you intend to shop the price, but that you'll give him or her the last shot at making you a deal.
Go home and call four or five other .dealers in the area. Ask for a salesperson and tell them that you must buy a car before the end of the month. Tell them it's for tax reasons or anything else you can think of. The key is to convince them that you're a buyer with cash that's burning a hole in your pocket. Tell the salesperson that you're going to fax him or her a description of the car you're looking for. Suggest that you could be flexible on the exterior and interior colors, but that basically the car you're describing in the fax is the car you want. Finally, tell the salesperson that you're giving them one and only one chance to bid for your business. Emphasize that because you're in a hurry to buy the car, you haven't got time for dickering. You just want their best price. Give them your fax number and tell them that you need the price no later than noon tomorrow.
Some dealerships will refuse to send you a price. But others will bid willingly. The prospect of having a live customer who's ready to buy will usually motivate most dealerships to give it a shot, especially if it's the end of the month and sales have been slow. Now, be warned at some dealers may give you a lowball bid. The lowball is designed – et you into the dealership so that a salesperson will have a chance work you into a deal. The fact that a lowball bid will probably not be honored is of no concern in this scenario. The reason is because you're going to use the competitive bids to force down the price quoted by the first dealer.
Once you have the faxed bids-and assuming they're lower than the price you've gotten-take the lowest back to the first dealer, show it to the salesperson, and ask if he can beat the lowest price. Empha size that you want the salesperson and the dealership to have your business and that you're ready to write the check, but that you don't want to pay more than you have to. Always, always be very, very pleasant. While the salesperson may be angry inside, it's very hardand a rather poor bit of salesmanship-to show that anger to a person with a friendly smile on their face.Chances are very good that unless the competitive bid is below their actual costs-including rebates and hold-back-they'll beat the competitive price rather than risk you and your checkbook walking out of the dealership.
Tactlc 3. "I can Wait"
If time is not a factor in your purchase decision, if you're looking for a car with the most common options, and if color is not a major consideration, you might consider this tactic:
Visit three or four dealerships-more if you like-and tell a sales¬person that you know exactly what you're looking for, that you're flexible on options and color, and that you are willing to pay $200 above the invoice price. Explain that while you understand that they may not want to make you that kind of deal at this time, they may, at some time in the future, need one more sale to "make their month." Leave your card and on the back write:"I will pay your true invoice plus $200 for the following model. Call me when you're ready. "Then, every month, call each of the salespeople and remind them that your offer still stands.At this point you might be asking: Why would any car dealer accept this deal at any time? There are several reasons.
As we pointed out earlier, car manufacturers are always pressing their dealers to make their numbers. That is, to move a certain number of cars each month. The pressure to make these numbers is what makes it easier for you to negotiate a better deal at the end of each month. If a dealer knows that he's got a deal hanging out there-even at invoice-and he needs sales to make his quota, you could very well get a call.
A second reason is that if the sales of a particular model begin to slump, the manufacturer will often support it with a factory-to-dealer incentive to help the dealer move the cars. Here's how this works: Let's say a particular car has a factory invoice of $18,000 and the \ISRP reflects an 18 percent markup at $21,240. If the dealer has inventory on the lot-inventory that's costing him interest at the wank-the factory is going to press him to move product. So they find our name in the file and call you up. "Okay, " they say, "we can give you the car at our invoice plus $300. " Expect them to try to "up" you a few dollars. You want the car, so you agree. The dealer claims to be losing money, but the facts show otherwise.
Now, no dealer wants you to think that they are actually making money on your hard-nosed deal, so they will make you feel good by sobbing, gnashing their teeth, and bemoaning that they have just given away the store and have no money to buy shoes for their children. As we said earlier, good car salespeople are good actors.The dealership will probably give the salesperson a $50 commission-after all, he or she only made a $300 profit. If the car has been on the lot for under 30 days, the dealer owes a month's interest that might amount to approximately $120 to $150.When you consider that the dealer has risked only the cost of the interest-remember, the financial institution has paid the manufacturer for the car, and the salesperson only earns a commission after the sale-you realize that the dealer's made a darn good return on his investment. How many other businesss do you know that earn that kind of return on their money? But the profit stream is just beginning. There's more money on the way.
Let's say that you decide to use your current car as a trade-in to help pay for the new car. Let's further assume that the true wholesale value of your car was $7,000, but the dealer convinced you it was only worth $6,750. (In this scenario you have not taken the time to find out its real value and the lure of the new car for just $300 over invoice motivated you to make the deal.) The dealer will then turn around and put the car on his lot for $9,600 and end up selling it for $8,500, which adds another $1,750 to the total profit generated by your purchase. Now add whatever they might sell you on the back end of the deal plus the money (be it warranty work or your own cash) that you spend in the service department over the next several years. As we said earlier, the bottom line is this: There's a reason why car dealers live in verv nice houses.
But Remember.. . You Don't Have to be one of Those Reasons
Because you used this book, you would have been aware of the factory-to-dealer incentive (you would have checked the "Incentive Watch" in Automotive News), and you would have factored in the dealer hold-back. When they called you to say that they were willing to accept your offer, you would have told the salesperson that your offer was made on the tr-ice invoice cost, and since the factory-to-dealer incentive has reduced the cost by $1,000 your offer is on the lesser price. Hopefully, this little ploy on your part would have helped you reopen the negotiation, which, in turn, might have resulted in an additional savings.
New Car Buying by Women
Advantage : Woman
One of the little-known facts about the car business is that, according to several research sources, 50 percent of all cars are purchased by women and that 80 percent of all car purchases are directly impacted by women. Which is to say that married men seldom, if ever, buy a car their wives don't like.Based on these facts, one would assume that car salespeople would go out of their way to cater to women. Not so. In fact, in far too many cases salespeople-particularly rnales, although female salespeople are also guilty of this-make the assumption that the woman, is:
1. Just looking
2. Not the decision maker
3. Will not be the check signer
4. Will have to get approval from a male-e.g., husband, boyfriend
As a result, more than a few women leave dealerships feeling insulted, poorly treated, and determined to spend their money where they are treated with the respect that every buyer is due. But this is reality, and while it's just plain stupid for salespeople to be so myopic, their insensitivity and ignorance does offer women a rather unique opportunity. We call it "jujitsu shopping." As you probably know, the art of jujitsu is based on using the attacker's force to throw him to the ground and gain control. In jujitsu shopping, women have the opportu-nity to use a salesman's insensitivity to gain control and throw his . pofit expectations to the ground.
Tactic 1. You're Talking to the Wrong Person
Having done all your research, you go to the selected dealership companied by your husband, boyfriend, brother-any adult male will do. When the salesperson arrives to greet you, tell him or her, very specifically, that you are in the market for a car. If the salesperson is not of those who assume that the man is in charge even though ~ you've told him that you are buying the car-he will probably direct most of his conversation and presentation to the man. At some point possibly ten minutes into the presentation-the male should interrupt he salesperson and say something to the effect:
"I don't know why you're telling me all this. She's the one buying the car. I'm just along, for the ride. "
At that point, without smiling, you nod in concurrence and say:
"He's right. It's my money. It's going to be my car, and it will be my decision. Now, why don't we start all over again. "
The salesperson will immediately recognize the error. Don't be surprised to see a little sweat break out on his or her forehead. You're now in control, and you should be prepared to use any or all of the counter tactics outlined in the next chapter.
Tactic 2. Make an Appointment
If you just want to reduce the hassle and if you're not interested in aand-to-hand combat with the salesperson-figuratively speaking, of aourse-you might consider calling a dealership and making a specific appointment with a salesperson to show you the car. Be very specific n terms of what you're looking for. Don't ask questions; make requests.
"Hello, my name is Mary Jones, and I'm in the market for a new car . I intend to make a decision within the next week '00 would like to make an appointment to learn more about the car and take a test drive. I have time tomorrow or Thursday at — p. m. "
If for some reason the salesperson refuses to take you seriously or sounds as if he or she is about to brush you off, you can strike a blow for your ego by saying:
"It sounds to me as if selling me a car might be an imposition on, you. Possibly you can transfer me to your sales manager. (And 1!au might want to find out his or her name prior to the call -just in case.) I'm sure that he can find someone in the dealership who might show a little more interest in selliug cars. "
Tactic 3. "Go ahead . . . Make Tkeir Day"
If at any time you feel you are being mistreated or abused-and it should be clearly blatant-get up and walk into the sales manager's office and, in a very firm, unemotional, but determined manner say:
"I have come here to buy a car. Clearly the salesperson I'm dealing with does not take me seriously (or … needs work on his interpersonal skills … or, has other things to do … ) and I would appreciate your assigning someone else to me. If this is not convenient, you can call me at home. Meanwhile, I intend to shop your competitor. "
Again, no manager wants to see a checkbook walk out of the dealership. Chances are they will grovel a bit in hopes of placating you. On the other hand, you may find a sales manager who is just as insensitive. In any event, a letter to the dealer expressing your displeasure and the suggestion that your story will make good conversation with your friends will most certainly make the salesperson's day … miserable.
Counter-tactics Towards Car Dealer Ploys
Dealership Ploys and Your Countertactics The following chapter describes a number of dealership ploys, devices, and games designed to control the sale and extract the maximum amount of profit. Here again, if you know their rules you can play their games. Or more accurately, if you can recognize their ploys, you can counter with your tactics.
Advertising Come-ons When a dealer makes an offer in an ad that seems too good to be true, it probably is. Keep in mind that advertising is designed to do one thing: get you to come into the dealership.
Your Countertactic Read the fine print. See the "About Leasing" segment for examples of what we mean.
l'll Call You Right Back You decide to shop by phone. You ask for a salesperson and tell him or her that you're interested in a certain model and ask what the dealer-ship has in stock and what kind of discount they are giving. The salesperson will usually find a reason he can't talk to you at that moment.
SALESPERSON: Mrs…. I'm sorry, I didn't get your name. CALLER: Mrs. Jones. SALESPERSON: Mrs. Jones, I'm with a customer at the moment, but I'll be wrapped up in five minutes and I'll call you right back. That will also give me a chance to get our inventory cards.
At this point, you give them your number. One of the reasons salespeople want to call you back is to check to see if you're legitimate and not just another salesperson checking competitive prices. Also, once they have your number they can continue to follow up. Some dealerships will quote you prices and offer discounts over the phone. Sometimes the discounts are real; other times they are designed just to get you to come in. Many stores do not permit their salespeople ,o quote prices over the phone because all it does is give the customer information to use in dealing with other dealerships.Furthermore, if you should ask for a certain car, nine out of ten salespeople will tell you they have it, or that it's coming in, or that they can get it. They'll tell you anything you want to hear if that's what it takes to get you to come in. Once you're in the dealership, they hope they can sell you something that really is in stock.
Your Countertactic If for some reason you don't want to give out your telephone number, simply ask the salesperson when would be a good time for you to call.
Me Teat Sale Often dealers will put a tent up on their lot, park a bunch of cars under it, and advertise that they are having a big tent sale. The impression is that these cars are terrific deals and that a buyer can save a bundle.
Your countertactic Don't believe it. All the balloons, clowns, and hoopla are part of an effort to break down your resistance and create the sense that there will never be another deal like this one.
We're Having a sale A dealer may be having a sale, but his objective is to find every way possible to extract as much of your money as possible. Easy-payment plans, no down-payment offers, and other come-ons should be viewed with skepticism.
Your countertactic Understand that for the informed auto buyer, every day is a "sale" day.
control Me Sale, As we've discussed, salespeople and dealerships have developed any number of tactics designed to control the sale.
Your countertactic There are any number of ways you can take control. One is to utilize a diversion created by a "helper." Specifically a second person who appears to be helping the buyer make a purchase decision. When you and the friend walk in, make it clear to the salesperson that the car, van, or truck is for you and that you will make the decision. Prior to your visit, instruct your friend to carry a pad and pencil and make notes. The person should say virtually nothing to the salesperson. However, occasionally they should lean over and whisper in your ear as though imparting some useful strategic information. In reality, it could be the time of day. The presence of the "helper" and the whispers will drive the salesperson crazy and leave you in control.A variation on this is for you to use a pad and make notes throughout the presentation. This will bother the high-pressure salesperson because it suggests that you are not being swept away by his or her sales pitch and intend to analyze every aspect of the deal closely.Still another is the "broken record" routine. This tactic is one in which you lay out the price you're willing to pay and then just keep repeating it until you get your way. Kids have been using this technique with their parents for years.
Are You a Buyer.. . Today? One of the first questions many salespeople will ask is designed to qualify you as a buyer or a looker. "How soon do you plan to buy a pickup?" "Are you looking to buy a car today?" No mystery here. The salesperson wants to know if you're a hot prospect or someone who's just kicking the tires with no real plans to buy. If you're just a "looker," most salespeople will do their best to get away from you as soon as possible. Rather than lay the groundwork for a future sale, they'd rather take their chances with the next up. If you tell the salesperson that you "might" be ready to buy today or within a couple of days, he or she will do their best to get you locked into a car that day. "Today" buyers instantly become a salesperson's new best friend.
First We Need Your Life History In some dealerships, even before you've agreed on a car or a price, the salesperson will want to fill out a credit application. This is a ploy designed to establish your ability to buy, i.e., are you a real buyer or a deadbeat? In addition, the more information they can get from you up front, the greater their advantage.
Your countertactic Don't give them any information other than your name until the deal is made. If they insist that they have to have a credit application before they can negotiate a price, make it clear that until you do have a price, you do not plan to provide them with any additional information. If they balk, you can walk.
The car Switch Some dealers have been known to agree on a deal for a specific car and then switch it with another car-exact same year and model-which has been damaged during transport and then repaired and repainted. If the repair job is marginal, they might even arrange to deliver it to you at dusk or at night, when it will be harder for you to notice any telltale signs.
Your countertactic Always write down the VIN number of any new or used car you decide to buy and then check it against both the title and the car itself when you take delivery. Chances are you'll never run into this ploy, but it doesn't hurt to take precautions, especially if the negotiation has been difficult and you sense that the dealership would somehow like to get even.
Rustproofing Once you've agreed to buy a car, many salespeople will try to add some profit through back-end sales. It's common for them to offer you rustproofing or upholstery protection at a price usually in excess of ~100. The rustproofing spray material and the labor usually cost the dealership about $ 10 or less. This is usually a waste of money and, in some cases, the rustproofing can seal drain holes in the body that were inserted to give moisture a place to run out. When these holes are sealed you can actually induce rust and, worse, invalidate the factory-guaranteed protection against rust-through.
Your counter-tactic You should keep in mind that today most vehicles use galvanized steel in areas subject to potential corrosion. Virtually all vehicle bodies are completely submerged in an electrostatic dip during assembly that coats and seals all the metal surfaces inside and out. In addition, most cars receive a factory undercoating to add further protection. If a salesperson tells you that rustproofing is really a good idea to protect your investment, you might want to question the quality and durability of the car. Tell the salesperson that since the car needs more protection than the factory has given it, you might be better off shopping for a different make. Watch the seller try to squirm out of that one.
New Car Salesman System Selling
Buying New Car Terms
Buying Used Car
Used Car Pricing
How to Determine the Wholesale Price
Whether you buy from a private owner or a dealer, one of the most important pieces of information you can have is the current wholesale price of the car in your area of the country. One source of auto-price information is the car loan department of your bank. They usually have d1 the latest price books and possibly even auction reports that show T, hat various makes are bringing on the auction market.
Book Prices
The industry uses any of several books as price guides: NADA Official –Used Car Guide, National Auto Research Black Book, Kelley Blue Book Auto Market Report, and Galves Auto Price List. These books purport to reflect the average wholesale prices that various cars are bringing across the country. The only problem is that they don't agree. Compare the suggested wholesale prices for a Chevrolet four-door Lurnina from the same month:
Kelley Blue Book: $7,500 (tends to reflect West Coast prices)
NADA: $6,750 (combination of auction and dealer reports)
Black Book: $5,650 to $8,850 (reports from dealer auction sales)
Consumer Price Books
Frequently you will find used-car price books on your newsstand. The figures in these books provide a general range, but because they cannot account for the myriad factors that impact the costs that a dealer has in a car, they may not present a true picture of any given car's "real" price.
Getting the Price That Matters
If you're buying a used car from a dealer, the key to a good deal lies in discovering how much money he has invested in the car. In other words:
• What did he pay the previous owner?
• How much has he spent on repairs and reconditioning?
• Does he have interest and miscellaneous charges that have to be paid?
Obviously, no dealer is going to tell you what he's got in the car. Yes, in some circumstances he might claim to be giving you the number, but rest assured it will be inflated. Here's a ploy that will often help you uncover this important information. Walk onto a lot and tell the salesperson that you'd just like to look around. Most salespeople will leave you alone because you've automatically disqualified yourself as a "buyer today." When you spot a car you like, copy down all of the information you can about that car:
"Offer to Sell Mom Their Car!"
You read that correctly. The ploy is to call the dealer and pretend to be someone who wants to sell a car exactly like the one that they have on the lot. To throw them off, you should change the color and take off 100 miles. Otherwise, the "car" you're offering to sell should be the same. Here's an example of how your conversation might go:
You: Hello, my name is (make up one) and I'm looking to sell my (fill in the year, make, and model of the car). I had planned to try to sell it through the paper, but I haven't got time. I've got to sell it quick. We're moving to and I won't be able to take it with me. (Or I need the money to pay for the move. Or I need the money for .)
BUYER: What are you looking to get? (They will always ask you this to find out if you are over- or underestimating its value.) YoU: I don't know. I don't even know what it's worth. But I've got to sell. I know you'll want to look at it before you commit, but it would sure help if you could give me a ballpark figure. (To encourage them to quote you a figure you might want to add): For all I know it may not even be worth selling.
BUYER: What's it got on it?
You: (In a conversational way you read off all the features that you've noted on your fact sheet.)
BUYER: (At this point he'll consult, his books or quote you a figure based o72 what he assumes is a price below the true wholesale value. Sometimes it can be 15 to 20 percent below … or more.)
You: (No matter what figure he quotes you respond by saying): "That seems low to me. When I bring this car in, you'll see that it's really clean. I mean, this is the kind of car that a lot of people are looking for. You won't have it on your lot for more than two days." (The more naive you sound, the better.) BUYER: (Because you are now in the role of a "seller" and not a "buyer, " the used-car person is going to try to "down sell" the value of your car. He may concede that he would come up a little bit on the price, but might also point out,): Listen, I've got a car almost like yours sitting on my lot that I paid $ for, and it's been sitting there for two months. (Bingo! Now you know where to start your bidding.)
By the way, if you don't get a price from the used-car dealership offering the target car, there is nothing preventing you from calling one or two others. Most astute used-car buyers have a very good sense of the market, and their quote on your make-believe car will help provide a reasonable estimate of the true wholesale value of the car in your area.
Using the Price, lnformation
If this tactic works-and it has for the author-you now have a pretty good idea of what he paid for the car on the lot. Now you're ready to go back to the dealer.
"I'm looking for a year-old (make and model). "
When the salesperson leads you to the target car, make him go through the entire presentation. You should drive it and then subject it to all the inspections and tests outlined in this segment-including the professional mechanic inspection. Once you're satisfied that this is the car you want to buy, offer the salesperson a couple hundred dollars less than the number the dealership's used-car buyer offered you.
Be prepared for a good deal of groaning and "can't sell it for that" reactions. Assuming you want the car and knowing, as you do, that the dealer can probably get your price from a wholesaler or at auction, up your offer to a couple hundred over the price you were quoted and don't budge. (If you're the type of person who really enjoys a negotia¬tion, start below the price they quoted. When you budge, do so very slowly. Keep in mind that, eventually, you will probably have to offer an amount above the wholesale price. Also, keep in mind that if you've got your heart set on a one-of-a-kind car that is really hot, this tactic won't work. Remember, demand drives the price.) Assuming that there are any number of similar cars available at other lots in the area, this tactic should eventually bear results. As they try to "up" your bid, just keep pointing out that:What Car Dealers Won't Tell You Determining the True Wholesale, Value of a Private Seller's Car
If you're buying from a private owner, you'll want to know the true wholesale value of the car. Here's a tactic that has worked for us. After you've performed the inspection outlined in this segment, and before you go to a mechanic, ask the seller if you can take the car for a drive–alone. Leave your car as ransom.
Take the car to the nearest used-car dealer and tell them you'd
1. You are ready to buy today.
2. You have your checkbook with you.
3. You would like to buy from this dealer, but you know there are a lot more cars out there and you will shop other lots if necessary.
Determining the True Wholesale, Value of a Private Seller's Car
If you're buying from a private owner, you'll want to know the true wholesale value of the car. Here's a tactic that has worked for us. After you've performed the inspection outlined in this segment, and before you go to a mechanic, ask the seller if you can take the car for a drive–alone. Leave your car as ransom.
Take the car to the nearest used-car dealer and tell them you'd like to sell the car. Use the same tactic as we outlined for the phone inquiry. If you're nervous about seeming not to know as much as a real owner would about the car, tell the used-car dealer that you're selling the car for your niece and that you agreed to get some idea of what it was worth. If you have time, make at least two stops-one at a dealership that sells the same make. The other stop should be at a non-franchise used-car dealer. His quote will help you establish the local market value. Frequently a used-car dealer will be able to spot frame damage or other problems that you might not have seen or have overlooked.
Recently, a friend of the author's was instructed to do the above and discovered that the wholesale price was actually $4,800 below the asking price because the car had been in an accident and suffered frame damage. Once you know the wholesale value of a private seller's car, you can adjust your negotiation strategy accordingly. More on this later.
Major Mistakes To Avoid
Two Major Mistakes to Avoid
What. are the two most common mistakes people make when buying a used car?
Mistake Number One
Most used-car buyers don't take the time or make the effort to thoreughly check out the car. Neglecting this step often results in costly repair bills or, worse, owning a car that is not worth fixing.In the following pages we will give you a list of items to check during your personal inspection and test drive. We have also included a checklist for a mechanic. Having your potential used-car purchase inspected by a mechanic will probably cost you the equivalent of one hour of labor at a dealership or repair shop. It's worth it. A good, reliable mechanic can potentially save you from making a major purchase mistake. At the same time, the mechanic can also confirm that you're looking at a very good deal.
Mistake Number Two
Far too many consumers fall in love with a particular car and let their desire to own that car cloud their better judgment. Once a car seller especially a professional-knows a person is hooked on a car, the buyer has all but abandoned the opportunity to negotiate a good deal. Buying cars is like playing poker: Never let your opponent-ill this case, the seller-know what you really think. See the section on negotiation strategies.
Exterior Inspection of a Used a Car
Me Exterior Inspection
A Word about Perforntiag Mess, Tests
If you are uncomfortable performing some of these tests-especially those involving the engine and the fluids-or if you don't trust yourself to make an accurate assessment, don't worry, you're not alone. Take the easy way out and simply make note to have those items you skipped checked when you have the car inspected by a mechanic. As we'll explain later, paying a professional mechanic to go over the car is a good investment.
Body Condition
Outside the car, look for signs of rust inside and around the wheel wells, window trim, and at the base of the doors. Look for discolorations or blisters in the paint and check the paint inside the trunk lid and hood. Is the paint all the same color? Are there any cracks or pits in the windshield? (In some states windshield "stars" will not pass inspection.)Look at the finish on the car. If it appears dull, that could mean that the owner has not washed it regularly. (In many parts of the country acid rain and salt will, if not washed off frequently, eat into the paint and ruin its luster.)Open and close doors. If they squeak or groan loudly, if they bind or lift when closing and opening, that might be the sign that the car has had major frame damage. Check to be sure that the door closes easily and fits flush.
When you look at the tires, check to see if they are all the same size and type. A mismatched set of tires can be dangerous and potentially cause problems in the rear axle. For example, you don't want to have radial tires mixed with bias-ply tires. (You'll find that tires are marked on the side to indicate if they are bias-ply or radial.)Look for uneven or irregular tire wear on the outside or inside of the tread. This tells you that the tires were not balanced properly or that there is a front-end alignment problem. If you happen to owna tire-pressure gauge, you might want to check the pressure in the tires. If you find that they are all different, this too is a sign of owner indifference.
If the car sports a brand-new set of tires, that could mean you got lucky and the owner decided to sell the car after purchasing the tires. On the other hand, the seller may have put them on to cover an underfying problem. For example, if a car has had frame damage and is out of alignment, a new set of tires can help hide that fact from the unsuspecting buyer.Generally, a set of tires should last for about 40,000 miles. If the seller does not know how many miles are on the tires, you can deter¬mine if there is a safe amount of tread left on the tire by taking a penny and inserting it so that Lincoln's head goes into the tread. If the tread is deep enough to cover his eyes, there are still some miles left on the tires.
Press down hard several times in rapid succession on the corners of the car. Really get it rocking, then let go. The car should dip once and then settle back. If it continues to bounce, it probably needs new shocks, and that could cost you from $100 to $400 depending on the make and model. Faulty shocks are a serious defect and can cause poor handling and premature tire wear.Pull on the top of each front tire. If you notice any play in the wheel or if there are any chunks, it could mean that you have bad bearings or that the suspension joints are in need of replacement.
Engine Condition
Ask a friend or the seller to start the car. The smoke from the tailpipe should be barely visible. If it comes out black, that probably means too much fuel is being supplied to the cylinders and an adjustment should be made by a mechanic. However, if it comes out blue, that means that the engine is burning oil. If you notice a puff of white smoke on a cold day, that's okay; however, if there continues to be white smoke after the car has warmed up, that could mean that engine coolant is leaking into the cylinder head. Bottom line is that blue and white smoke are frequently indications of major engine problems, and it might be well to cross that car off your list.Listen for a backfire sound when you start the car. It is usually like a muffled popping under the hood. A backfire tells you that the engine or fuel system has a problem.
Engine RPMS
Once the car is started and has reahed operating temperature (this should take only a few minutes even while standing still and assuming the weather is above freezing), the car should idle at a fairly steady rate of RPM (revolutions per minute). If the car seems to run very fast at idle, or if it seems to surge, there is something wrong.For the mechanically minded: Keep in mind that smaller fourcylinder engines should idle somewhere at about 750 to 800 RPM. If the car has a tachometer (this is a gauge instrument that is usually marked RPM x 1000) you can read the RPM here. On an Eight-cylinder engine the tachometer should read around 500 to 600 RPM. The main thing you want to determine is whether or not the car idles at a smooth, consistent rate.
Listening to the Engine
Open the hood and listen to the engine. If you hear a pinging or a loud clicking, thumping, or knocking sound, that could mean trouble
Temperature Gauge
If the car has a temperature gauge, be sure that after a long period of running at idle the gauge does not rise into the red or danger zone. This would suggest that the car is running hot and that there is a problem ranging from a leak to the need for major repairs.
Ammeter or Voltage, Gauge
Some cars have an indicator that lights up to alert you to a charging¬system problem. This light will come on when you turn the key in the ignition and then, if the system is working properly, go out after the car has been started.Many cars have either an ammeter or a voltage gauge on the instrument panel. These gauges monitor the operation of the charging system. The arnrneter has a range from D, for discharge, to C, for charge. The voltage meter shows the state of charge of the battery. For example, in a 12-volt system a fully charged battery will show about 13 on the voltage meter.Changes in the voltage-meter numbers indicate how much voltage is required by the battery to keep it fully charged. The alternator must then channel current to the battery for charging. This gauge serves asa constant monitor of the charging systems and should work properly.
The Exhaust S'ystem
Get down on your hands and knees and look under the car. The exhaust system, i.e., the engine pipe, catalytic convertor, muffler, and tailpipe should be well anchored to the under carriage. The system should be secured with proper hangers and attachment devices. If you find that it all seems to be hanging six inches below the car and has been secured with wire or makeshift hanging devices, you'll want to think twice about buying the car.
The Pressure Test
If the exhaust system looks okay, you may want to perform a pressure test, although this is something that you could have a mechanic do for you.To perform the test yourself, hold a piece of wood or cardboard tightly against the end of the tailpipe-while the car is running-to stop the exhaust from leaving the tailpipe. The engine should begin to labor and sound like it's about to stall. That's good.However, if the engine continues to run at the same rate, does not appear to labor, and you hear noises popping out from different mysterious places, the car probably has one or more leaks in the exhaust system-usually from rust-through. This will have to be repaired to prevent exhaust fumes from filtering into the passenger compartment. While on many cars this is not all that expensive, on others it could be a major bill. This is an item that should be checked by a trained mechanic.
Ckecking under Me Hood
If the car has 10,000 miles or more on it, don't expect to see a clean engine compartment. On the other hand, if it looks too clean for its age, be a little suspicious. The owner might be trying to hide something. If you see signs of oil on the engine, that may mean some gaskets need to be replaced. Depending on which gaskets are causing the problem, this could be an expensive job. After you've taken the car out for a test drive-and a test drive is a must-recheck the engine for any signs of fresh oil leaks under the car.
Fluid Checks
The car should be warmed up before checking fluid levels.
1. Check the coolant
Note: Never remove the radiator c,a,u if the engine is hot. Most cars today have white plastic reservoir for the coolant with an easy-to remove snap-on top. The coolant should be of a uniform color. If you find that it appears to be streaked by a secondary color-like red-it could represent rust and indicate that the coolant hasn't been changed recently. Also, if you see a greenish-white, powderlike residue on the radiator, that could signal a leak.
2. Check the oil dipstick
If the oil seems to have a lot of sludge in it, that means the oil needs changing and it could also be an indication of the previous owner's poor attitude toward car maintenance. It could also indicate a potential expensive repair is not far down the road. If the oil is clear and translucent, it is probably brand-new.If it is grayish or milky in color, it may mean coolant is getting into the engine, and this could signal a blown head gasket or possibly bad rings. In any event, it could mean a very costly repair. A further test is to check the color of the exhaust smoke when you start the engine. As explained above, white smoke-more than you'd expect to see on a cold day-means that coolant is getting into the cylinders.
3. Check the transmission fluid-automatic transmissions
If the car has an automatic transmission, check the fluid after you come back from your test drive and the car is thoroughly warmed up. (If you don't know where to find the automatic transmission dipstick, consult the owner's manual.) The fluid should be pink or reddish in color. If it's orange, that could signal transmission problems. Sniff the fluid on the dipstick. If it smells burned, that's a sign that the car may need a transmission overhaul. Note that front-wheel-drive transmission repairs can be expensive.
4. Look for fluid leaks under the engine compartment
hook under the engine compartment for any signs of fluid or liquid that has leaked from the car. If the fluid is slippery and oily, it's probably coolant, transmission fluid, motor oil, or brake fluid. Keep in mind that the presence of any of these fluids indicates a problem, and a repair shop visit will probably be necessary.
A battery should last from three to five years. The condition of the battery and the terminals might best be evaluated by a mechanic. You'll find "Check Battery" on your professional mechanic checklist.
Looking for Used Car Damage
Looking for Accident Damage
Has the Car Been in an Accident
The majority of used cars have not been in a major accident. However, according to figures quoted by 60 Minutes, of the millions of used cars that enter the market each year, somewhere around one million are, in fact, cars that have been in a major accident-and adjudged to have been "totaled" by the insurance company.
At the same time, don't discount a car because it has been in a minor accident. If a car has been in a "fender bender" and has been repaired properly, it may still represent a good value. In most cases,it's only when there's been structural damage or when the repairs have not been done correctly that you need to be concerned. If you find the car that you're considering has been in an accident severe enough to damage the frame, walk away!
How Can You Tell?
As we suggested earlier, it's not always easy-even for a professional. A good body shop can make even a beat-up car look very good. However, even they will have a hard time hiding their work from a professional mechanic. In the final analysis, it's always best to have your suspicions confirmed or alleviated by a professional. But before you take the car to a professional for evaluation, here are some things you can do which might help you decide for yourself if the car has been in a major accident.
1. Ask the seller point-blank
One of the easiest-and often most effective-ways is to look the seller directly in the eye and ask. You'd be surprised how honest people are when they're caught off guard
2. Paint and paint-over spray
Fake the time to look for the telltale signs of body repair. Check for paint-over spray. Often when a car is repainted you'll find paint-over spray on the door moldings, rubber gaskets, and on the edge of the windows. Open the rear doors and run your fingers over the rear of the door jamb. If you feel a thin line on the paint, that could be a masking tape line. Look at the color. Does the exterior match the color in the luggage compartment, rocker panels, and spare tire well? Look at the paint itself. Does it appear even?
3. Gaps and fit
Look at the gaps between the hood and the body and between the trunk lid and rear body panels. If you find that the gaps in the lines are «-ider on one side than the other, the car may have been in an accicient. Check the fit and alignment of the trunk, hood, and doors to see :f they are really mated. Here too, if the gaps are not the same, you can auspect body damage.
4. Open the doors
Do they creak, moan, or make other abnormal sounds? Do they seem somewhat difficult to open? These may be signs of severe body lamage.
5 Crab test
If you have an opportunity to drive behind the car, notice whether or not it appears to be moving slightly sideways like a crab. If it does, this frequently a sign of frame damage is that it can affect the alignment, and that ultimately could be Major safety problem.
Checking Used Car by Car Fax
Ask to Have the Car Checked by "Car fax "
There is a national service available to dealers in a majority of states ,called "Car Fax." This is a service that car dealers can use to deterine if a car has been designated by an insurance company as a v taled" (totally wrecked, beyond repair) vehicle. All they have to do is call in the Vehicle Identification Number, and Car Fax can make the eck within minutes. In many states when an insurance company decides that a wrecked car is beyond repair or "totaled," the automotif?'s title is marked "salvage," meaning that it may have some parts and components that can be salvaged and used as spare parts.
As a buyer in a state that demands wrecked cars be marked "salve," you should insist that the dealer check any car you might seriously consider buying with Car Fax and show you the report. If it's been marked "salvage," look for another car.seriously consider buying with Car Fax and show you the report. If it's been marked "salvage," look for another car.
Interior Inspection of a Used a Car
Odometer Mileage
According to the National Highway Traffic Safety Administration. as many as one of every four of the used cars that arrive on the marketeach year have had their odometers rolled back. While federeral law prohibits this roll-back and while you can receive up to threre times the actual value of any car that you buy if you can prove that a car has had its odometer tampered with, this illegal practitice continues. While even experts will tell you that it's not always possible to sport an odometer that has been "rolled back," there are signs that suggest the mileage may not be as low as shown.
•Look at the overall condition of the car both inside and out. Does it look its age? Check for wear on the seat, driver's-side door armrest, windowsill, and on the steering wheel.
•Look at the brake pedal pad. Does it seem overly worn? Generally, a pedal pad will last up to 50,000 miles before it shows wear.
•Look at the condition of the carpet under the pedals. If it seems excessively worn or if it has holes, chances are the car has in excess of 50,000 miles. Be aware that new carpeting may have been installed to help conceal signs of the true mileage.
•Look for lubrication or oil change stickers on the front door jamb and under the hood in the engine compartment. It's possible that whoever turned the mileage back might have forgotten to remove a sticker showing the mileage when oil was changed.
•Check the tires. Normally a set of tires should last up to 40,000 miles. If the car shows 20,000 miles and the tires are nearly bald or, if they appear brand-new, find out why.
Previous Maiatenance and Care
Ideally, you want to buy a car that shows signs of the previous owner's pride of ownership. Ask to see the maintenance books. If they aren't available, or if they haven't been filled out, find out why and then be doubly diligent in your inspection.
Checking the Interior
Next, inspect the interior of the car. Check out everything that turns un and everything-like the seats-that was designed to move. At the same time, ask yourself, does the car look like the owner kept it in good condition? Make a note of your first impression. Is the car clean-inside and out? How does it smell inside? If you smell mildew there could be a leak, or worse, the car could have been in a flood. Do you smell gas? – does it seem as if someone has just emptied a bottle of air freshener in the car? Unusual smells might suggest the seller's effort to hide a problem.
Sit in each seat and bounce. Is the seat firm? Check the operation f all the seat belts. Do they extend properly, fasten correctly, and : remain snug against your body? Open the glove box and check for both the owner's manual and the maintenance record book
Electrical System
Electrical problems can be one of the biggest headaches. Check to make sure that all the electrical accessories work-all the time. Turn them on one at a time and then all at the same time and in different series. Do they work? Do the lights dim when you turn everything on? Check all the exterior lights, including high and low beams, parking lights, turn signals, brake lights, back-up lights, and trunk light. Test the tiwipers and the washer system if the car has one.
Instrument Panel lights and Gauges
Check all the lights and gauges on the instrument panel. The most important are the oil-pressure and temperature gauges. If the car has dash lights for these functions, the lights should come on when you turn the ignition key to the first position. If they do not light up, they may have burned out or there may be a problem. In either case, they should be fixed before you buy.
The last "interior" inspection is in the trunk. Be sure that the tire tools lug wrench, jack-are in the trunk. Be sure that the jack fits the jack points as described in the owner's manual and that the lug wrench fits the tire lugs. Lift the rug or mat and check for water and any signs of rust. On the next three pages, you'll find a checklist that you may find helpful when performing your walk-around inspection.
Used Car Test Drive
Drive the Car
During your test drive, notice if the car seems to drift to one side or the other. This could be a wheel-alignment problem or it could be a frame problem. Check to see if the wheel vibrates or shimmies a'highway speeds either when going straight or when turning slightly left or right as when changing lanes.
The Brakes – Straight – Line Stopping
Find an empty road or even a large vacant parking lot. Check to be sure that no one is behind you, then accelerate to 40 miles per hour and apply firm pressure on the brakes. The car should come to a smooth, straight-line stop with no pull to either the left or right. Also, note the feel of the brake. If the car does not have anti-lock brakes, the pedal should feel firm under your foot. If it does have anti-lock brakes it should still feel firm, but if you happen to be in a situation where the ABS engages-i.e., during wheel lockup-expect to feel a rapid but steady vibration, under your foot. This is the ABS system at work.
Parking Brake
Be sure to check the holding power of the parking brake. Ideally, you should find a hill and, with your foot on the brake, put the car into neu¬tral. Then apply the parking brake and lift your foot off the brake pedal. The car should remain stationary.
Check Acceleration
Using the same hill that you used in the above test-even if it's just a slight incline-stop at the bottom, then step on the gas gently. The car should move up the hill smoothly with. no hesitation, surges, or strange sounds.On a flat road, check for traffic to be sure you're clear and then floor the gas pedal and accelerate up to the legal speed limit. If the acceleration is uneven, very slow, and is accompanied by strange sounds, you might want to write the car off your list.
Engine Overheating
Drive the car out on the highway at the speed limit for ten minutes or more. During this time, notice if there are any strange sounds and check the temperature gauge to see if the car is running hot and overheating.Bring the car to a stop in a safe place and let the engine idle with the air conditioner on high-if it has one-for five minutes, as it would were you stopped in traffic. Does it overheat?
Checking the Allignment and Suspeasion
Find a reasonably rough road and drive over it at about 25 miles anhour. Notice how the car feels. Does it seem to hold a straight line'? If it drifts back and forth, it may have an alignment problem. If you notice that there are times, especially over rough road surfaces, when the cars umps or seems to swing back and forth, you may have a problem with your shocks. Be alert for any loud rattles or squeaks.On a smooth road-again, with no traffic-accelerate to about 25 miles an hour, slightly release your grip on the steering wheel, and se if the car tends to veer or drift to the left or right. If it does, it's reasonable to assume that the car needs to be aligned. In some cases it could also point to bad tires, worn steering linkage, or defective suspension components.
Detecting Transmission Problems
As you're driving and the car is changing gears, listen for any unusual sounds. The transmission shifting should be quiet on automatic shifting cars. Again, find someplace without traffic and stop the car. Slowly drive the car forward a few feet, stop, shift into reverse, and back up a few feet. Repeat this several times. The shifting should be smooth without noise, clanks, or thuds. The transmission should never seem to be "slamming" into gear. Then start up again and accelerate slowly. Feel the transmission shift into second, third, and fourth. Then depress the accelerator. Does the transmission down-shift to the next lower gear smoothly and without making any unusual sounds?
Standard Transmission
If the car has a standard transmission, you should find it easy to shift gears. Assuming you are proficient at using a clutch, the process should be smooth. You should not feel the gears grab, slip, or hear them chatter as you move from one gear to the next.Test the transmission on a hill. As you shift through the gears, notice if the clutch appears to slip. If it does, this could mean a problem with the pressure plate or a leak that is affecting the clutch disc itself. Here's another test: While driving on an uncrowded road with a speed limit of 55, accelerate to 35 MPH and put the transmission into high gear-fourth or fifth. After checking to be sure you're clear of all traffic and have an open road ahead of you, push down hard on the accelerator. If the engine "revs" and does not accelerate immediately, the clutch is probably slipping and will need repair
Driving Evaluation
On the test drive, find a major highway and accelerate up to the speed limit and notice how the car behaves. Certain problems will show up only at highway speeds. For example, shimmies in the car and in the steering wheel, vibrations, wind noise, etc., can often only be detected at over 50 miles per hour.
Steering wheel "play" should be within reasonable boundaries. There should not be more than an inch or two of play before the wheel clearly responds to your steering input. If the steering is what the experts call "sloppy," the car will wander or drift, and there may be any number of expensive problems to fix. Check to see how hard it is to turn the wheel when the car is stopped, as if you were getting ready to parallel-park. If the car has power steering and you're having to put extra effort into turning the wheel, there's a problem. Even if the car does not come with power steering, you don't want a steering wheel that is overly difficult to turn when the car is stopped.
Retest the accessories
During the test drive, retest all the accessories. Turn on the air conditioner and see if the car begins to overheat. Then turn on all the lights and electrical equipment to see if the charging system can keep up aJth the drain.
Check the cruise control
If the car has cruise control, accelerate up to the speed you wish to maintain and set the control. Make sure that it holds speed up and down moderate hills. Check the acceleration and deceleration buttons. Then be sure that the system disengages when you touch the brake pedal.
Engine Restart Test
When you arrive back at the seller's lot or home, turn off the engine, wait two minutes, and then restart it. Some recent-model cars with fuel-injection systems have "hot start" problems. This test is a good wav to check for that condition.
Recheck Me fluids
After the test drive, open the hood and check the engine. Is there any sign of fluid leaks in the engine compartment or on the ground under the car?
Inspection a Used Car by a Mechanic
If the car has passed your inspection up to this point, keep in mind that it is still a good, potentially money-saving idea to have the car checked out by a qualified mechanic. What follows is a description of the items you should ask the mechanic to check.
Brake Check
The mechanic should take the wheels off and check the condition of the brake pads and rotors (or brake drums if the car has the drum system). Worn rotors sometimes have to be replaced before new brake pads are installed. The rotors alone can cost more than $200.
Engine Test
Your mechanic can perform a number of engine tests including a com¬pression check. The purpose of this test is to tell you how well the engine is able to hold the air and gas mixture that is ignited by the spark plugs when that mixture is compressed by the engine's pistons. A simple rule of thumb is that all the cylinders should have approximately the same compression-test readings. If they vary by more than 10 percent, the cylinder may have a leak, which means that the engine is losing power and wasting fuel.
Charging System
The mechanic should perform a charging-system test to make sure that the battery is being charged properly. There are also specific bat¬tery-condition tests that will give you an idea of how long the car's bat¬tery will last. With the right equipment, the mechanic can decide if the battery will hold a charge.
Coolinq Systeim
The mechanic should examine all hoses and clamps and inspect them for leaks. Older hoses increase the possibility of rupture, and that is definitely something you'd like to avoid. By using a special pump, the mechanic can pressurize the system and check it for leaks.
Emission level test
Unless the car is very old, it will have some type of emissions-control system. With the right equipment, a mechanic can tell you if the system is working properly and whether or not the car will pass your state's emission test-if it has one. Excessive emissions are also a good indication of the condition of the catalytic converter.
Other checks
Once the car is up on the lift, all visible brake lines, fuel lines, fuel pumps, etc., should be inspected. With the wheels off the ground, the wheel bearings can be checked for wear or excessive play. Most mechanics can just pull on a tire and determine if there is a bearing problem.Also, be sure the mechanic checks:
The Benefit to you
The key to the cost-effective use of a mechanic is to make your own evaluations first and eliminate from consideration those cars with obvious problems and in need of expensive repairs. When you finally settle on a car you like, before you "fall in love," arrange for the professional inspection.
•Exhaust system
•Rear axle
•Underbody rust
•Accident damage
•Odometer accuracy
What Do You Do with the Mechanic's Report?
The information that you get from the report should help you in any one of four ways:
1.It can confirm that you've got your hands on a good car and agood buy.
2.It can make you that the car is unsafe, unfit, or in needs and should be rejected from your awareness of expensive repairs consideration.
3.The information can help you in your negotiation. Depending on what is found, you might be able to use this information to help justify a lower price or, at the very least, to get the owner to agree to make the repairs as a condition of the sale.A complete professional evaluation will almost certainly tell you whether or not the car will pass state inspections. If it won't, you can reasonably require the seller to make the necessary repairs to bring it up to inspection standards or, at the very least, to adjust the asking price accordingly.
In any event, because experts have ,both the knowledge and equipment to make effective evaluations, it's well worth your time and money to enlist their services.
Used Car Negotiating Technique
Used car negotiation level
Used Car Negotiation Phase
Buying Used Car From private Owner
Before Buying the Used Car
If You Need to Walk Away From The Deal!
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