Buying Tips
10 Steps to Buying a New
Car
Step 2: Using incentives and rebates.
Step 4: Finding the exact car you want to buy.
Step 5: Test driving the car salesman.
Step 6: If you are trading in your old car...
Step 7: Negotiating for your lowest price.
Step 9: Reviewing and signing the paperwork.
Step 10: Inspecting and taking possession of your new
car.
10 Steps
to Buying a New Car
The following
steps will tell you how to locate, price and negotiate to buy the car you want.
If you still don't know what car to buy, read 10 Steps to Finding the Right Car
for You and then come back after you have decided.
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These steps will
help you to locate the specific car you want, and at a price that is fair to
both you and the dealer. By now, you should have done plenty of research to
determine which is the best car to suit your needs.
And, you should have a good idea of what to pay for the car you want. Now you
need to narrow the research even more. You will soon be finding the exact car
you want to buy — with the options you have chosen — and then you will be
determining a target price to pay. If you have done your homework, this will be
a fairly easy process with no unexpected surprises.
Buying a car is a big investment, but it can be exciting and rewarding,
especially if you feel like you got the right car at a fair price.
Step 2: Using
incentives and rebates.
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Today's new car
market is crowded and competitive. Many new cars are offered for sale with
attractive incentives to make you choose a particular model. In some cases, the
cars with the best incentives are those that aren't selling very well on their
own.
An incentive is anything that gives you an added reason to buy a particular car.
Often, however, it comes in the form of a cash rebate or low-interest financing.
A car might be selling for $22,000 but the manufacturer is offering $3,000 in
customer cash for a final price of $19,000. In another example, a $22,000 car
financed for five years at six percent would have a monthly payment of about
$550. But with zero-percent financing, the payment is roughly $480. That's a
huge savings to you.
Check the Edmunds.com Web site for the latest incentives and rebates available
for the car you want to buy. You can also watch for TV and newspaper promotions
but, remember, the incentives don't apply to all models
and are not offered in all regions of the country. Furthermore, your credit must
be very good to get the low-interest financing. And finally, keep in mind that
there are some hidden incentives paid directly to dealers to push certain cars.
Edmunds.com tracks this so-called "dealer cash" as well, and posts the
information in the incentives and rebates section of our Web site.
Research what incentives, if any, are offered for the car you want to buy. Print
out this information and keep it in your car-buying folder as you move to the
next step.
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Car salesmen
will usually point to a car's "sticker price" as the amount you have to pay.
However, the price the dealership is willing to sell a car for is often well
below the sticker price. How do you know what to pay? Edmunds.com has created a
valuable tool for car buyers called True Market Value (TMV®) pricing. Based on
actual sales figures, TMV is the average price buyers are paying
(also known as the "transaction price") for a certain type of car in your area.
The TMV figures, found on Edmunds.com, are adjusted for many factors including
options, geographic region and color.
To calculate TMV, begin by looking up the car you want to buy on Edmunds.com.
Follow the prompts to arrive at a final TMV price with options for the exact car
you are buying. Keep in mind that this price includes the destination charge,
which is levied by all manufacturers. (However, the invoice price might vary in
certain regions where advertising costs and other fees are included. Edmunds
recommends paying the fees listed on the invoice, but questioning any
advertising fees that appear on the purchase contract.)
Now it's time to factor in the incentives and rebates you researched and printed
in the previous step. Take the final TMV price and deduct the amount of the cash
rebate. In other words, you create your best deal based on TMV, and then lower
it by whatever the rebate is. If you are going to use low-interest financing,
calculate your final buying price, then use our
payment calculator to find your monthly payment.
Print these figures — the TMV, the incentives and the monthly payment — and
carry them with you for reference as you continue the car-buying process.
Step 4: Finding the
exact car you want to buy.
You should now
have a very specific idea of the car you want to buy. This means you know the
make, model, trim level, options and color. The more flexible you can be about
these specifics, the wider the range of the cars you'll find available for sale.
Ultimately, the ability to consider several versions of the same model can give
you additional bargaining power. For example, a shopper might be very firm about
the make, model and trim level, but could accept a variety of options and
colors. If you're a shopper who definitely wants hard-to-find options and a
specific color, it will be more difficult to make a great deal. Why? You have no
leverage as a negotiator. You have to pay the dealer's price or try to locate
another identical vehicle. Obviously, if you do find the exact car you're
looking for, there's no need to volunteer this information to the dealership.
In any case, locate the exact car you want by sending e-mails to the Internet
managers of dealers in your area. On Edmunds.com, you can simultaneously solicit
quotes from multiple dealers. In many cases, you will have to follow up with a
phone call. Say something like: "I'm looking for a 2003 Matsura Accell. I'm not too fussy
about the color but I don't want black or white. I want ABS and side airbags.
What do you have on your lot?" Often the salesperson will have to check his
inventory and call you back. After a few phone calls you will have a good idea
of how widely available the car is. If there are several dealerships offering
the same car, you will be in a better position to make a good deal.
As you make phone calls and exchange e-mails, take careful notes. You should
record information about each car you locate, including the color, options, and
the dealership name. This will save time as you continue through the shopping
process.
Step 5: Test driving
the car salesman.
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As you call
dealerships to locate the exact car you want to buy, you can also test drive the
car salesman. In other words, you can determine if this is a person you want to
do business with. It's a good idea to consider this issue ahead of time, before
you get to the deal-making phase of the process.
The first way to evaluate a good salesperson is to ask yourself if you feel
comfortable dealing with them. Are they impatient and pushy? Or are they relaxed
and open? If you asked them about a specific car's availability, did they
respond to your needs? Or did they try to steer you toward another car simply
because they have too many of that model in stock? Do they return your phone
calls? Do they answer your questions in a straightforward manner? Or are they
evasive and confusing?
By considering these issues you should have a sense of whether or not you want
to buy from this salesperson. If you feel comfortable with the individual when
researching by phone, and if the dealership does indeed have the car you're
interested in, set up a time to test drive the car, preferably when the
dealership will not be very busy, such as a weekday morning. Before heading to
the car lot, review all your notes and make sure you bring your
car-buying folder. This might include your checkbook, registration and proof of
insurance. Keep in mind that you're bringing these items so you'll be ready to
buy a car if you get a fair deal. Don't feel obligated to purchase a car
simply because you have all the necessary paperwork with you or because you test
drove the car.
Step 6: If you are
trading in your old car...
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If you are
trading in your old car to a dealer, you will probably not get as much money
toward the price of a new car as you would have if you'd sold it yourself to a
private party. However, trading in offers some advantages.
You can solve all of your car-buying problems in one visit to the dealer. You
can unload a hard-to-sell car with no newspaper ads, DMV lines or tire-kicking
buyers involved. In some states, you will even pay less sales tax on a deal that
involves a trade-in.
Begin the process by looking up your car's trade-in value on Edmunds.com. The
Edmunds.com True
Market Value® (TMV®) Used Vehicle Appraiser will also give you trade-in values. After
you plug in all of the vehicle's information (mileage, options, condition and
colors) you will get a specific trade-in price. This will often be slightly
different from the offers you get once you are on the car lot. At a dealership
the value assigned to your trade-in varies based on the time of the month, the
dealer's specific inventory and the used car manager's mood, but at least TMV
will give you a rough idea of what your trade-in is worth.
If it's important to you to get the maximum value for your trade-in, you should
visit several dealerships and solicit bids. Tell the salesperson that the sale
of a new car will be contingent on the amount he or she will give you for your
trade-in. Also, tell them you are visiting several dealerships. With a little
legwork, you may be able to boost the price you get for your old car by several
hundred dollars or more. Remember, the extra effort you spend in getting
competitive bids is far less than what it would take to advertise, show and sell
the car yourself.
Step 7: Negotiating for
your lowest price.
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Many buyers like
to handle the question of price before they even go to the dealer.
Internet salespeople are willing to discuss price over the phone — even by
e-mail. This wasn't the case a few years ago when the salesperson wanted you in
his office before he would get down to brass tacks and talk price.
It's quite possible that, in your calls to various Internet departments, the
selling price of the car has already come up. Often Internet salespeople will
volunteer the selling price of their car since they know this is the
make-or-break factor in most buyers' decision making process. If the price
they've quoted is at or below Edmunds.com's TMV, then
you are already in the right range to buy the car. If you want to try to improve
the deal, you have a few options.
Everyone has their own idea of
what makes a good deal, but most people just want to know they got a fair
price. Here, TMV will be your best guide. If you want to try for a rock-bottom
price, start by getting bids from three local dealers. Follow this up by taking
the lowest price, calling the two other dealerships and saying, "I've been
offered this car at this price. If you beat it I'll buy it from you." They
almost certainly will. However, keep in mind that you can't play this game
forever. Eventually, they will give you a take-it-or-leave-it price. For more on getting the best price, read
Negotiating 101.
Also, be warned that if you ask the dealer to cut his profit, he might try to
take it back somewhere else. Remember, a good deal isn't just the lowest selling
price. It's the lowest total out-the-door cost on a car that meets your needs.
This means that to ensure you get a fair deal you have to be vigilant throughout
the entire purchase process, even after you and the salesman agree on a price.
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If you feel good
about the price you have been quoted, it's time to take a look at the big
picture. Many buyers focus on the cost of the car and ignore the related
expenses. Besides the cost, you will have to pay sales tax and various fees
which vary from state to state. These expenses can be estimated and totaled with
the Edmunds.com
calculators.
The simplest way to estimate total cost is to ask the salesperson to fax you a
worksheet and invoice before you go to the dealership. This way, you'll be able
to review the figures in a relaxed environment. Compare the numbers from the
dealership to those you have calculated and the TMV prices on Edmunds.com.
In some areas of the country, dealers have costs that don't show up on
Edmunds.com invoice prices. This means the Edmunds.com invoice price of the car
you are researching might not exactly match the dealer's invoice. Don't panic —
and don't begin making accusations. Edmunds.com can't track all regional fees,
such as advertising costs. So, as a rule of thumb, consider the charges on the
dealer's invoice to be nonnegotiable. However, if extra fees are written into
the contract (such as "D&H" or "Administrative Costs") which
seem bogus or redundant, ask to have them removed, or say you will take
your business to another dealership. For more information about this crucial
point in the process read
Invoice Scams and Sudden Extras.
Step 9: Reviewing and
signing the paperwork.
At the
dealership, you will be presented with the contract for your new car and a
dizzying array of forms to sign. This might be done by the Internet salesperson
you have been dealing with, or it could be done in a separate office by the
finance and insurance (F&I) manager. If this happens, the F&I manager might try
to sell you additional items such as extended service contracts, fabric
protection, alarms or a LoJack vehicle locator. In
most cases, we recommend turning down these extras — with the possible exception
of the extended warranty, which provides peace of mind to some buyers.
Additionally, it is worth noting that some states allow up to 60 days after
purchase to cancel an extended warranty, but you should check local laws to
confirm your options in your area.
To prepare yourself for the kinds of products that might be pushed on you, or
inserted into the price without your knowledge, read
High-Priced Dealer Add-ons.
If you have already seen a worksheet for the deal you've made, the contract
should be a formality. Make sure the numbers match the worksheet and no
additional charges or fees have been inserted. You will also be asked to sign
various forms that register your new car and transfer ownership of your
trade-in. Understand what you are signing and what it means. Ask questions if
you don't understand, and don't ever feel like you have to hurry. Buying a car
is a serious commitment and it's the F&I manager's job to ensure you are
comfortable with every document involved. Remember, once you have signed there
is no going back.
Step 10: Inspecting and
taking possession of your new car.
Most dealerships
detail the car and provide a full tank of gas. You will have one more chance to
inspect the car before you take possession of it. Make sure you walk around the
car and look for scratches in the paint and wheels or dents and dings on the
body. If you are paying for floor mats make sure they are included. If anything
is missing, or if any work needs to be done, ask for a "Due Bill" that puts it
in writing. You will then be able to come back and get the work done later.
As you drive away inhaling that new-car smell, there is only one more thing to
be done: enjoy your new car.
Decide how much you have to spend on your new car purchase.
o
Check to see what incentives and rebates
are available on the car you want to buy.
o
Print out the Edmunds.com TMV price on the
car you want to buy (adjusted for options,
color and region).
o
Look up Edmunds.com Cost to Own
for the car you want to buy.
o
If you are financing the car, uses the
payment calculators to determine the monthly payment for the car you want to
buy (and remember to apply the incentives to the
purchase price).
o
If you haven't already done so, test-drive all the cars you are
considering buying.
o
Contact the Internet department and simultaneously solicit quotes from multiple dealers.
o
If you are trading in your old car, check its Edmunds.com True Market Value
and print out this information.
o
Call the Internet manager to negotiate the best price of the car
you want to buy.
o
Once you've reached a good price, ask the salesperson to fax you a
worksheet showing all the prices, taxes and fees.
o
Bring your worksheet with you to the dealership so you can compare
these numbers to the figures on the contract.
o
Inspect the car for dents, dings and scratches before taking final
delivery.