Monday, April 20, 2009

Car Buying 101: The First 2 Rules--Shop at Home 1st & Shop for Your Money

A story in the paper this morning suggested that this is a terrific time to buy a car and get a better price than at this time last year. And I agree with that. The person interviewed was from and said that buyers can save anywhere from $350 to $2500 by smart shopping. Now $350 isn’t much on a purchase that in all likelihood will exceed $15000 but $2500 is real money.

I spent years selling new and used vehicles and additional years training and consulting with dealerships on how to do a better job of selling vehicles. Now, lest you think of me as a fast talking, “no-good-nik” car salesman let me assure me that I constantly the “e” word and the “t” word when it comes to vehicle sales—ethics and trust.

But, it’s always a terrific time to get a great deal on a vehicle. If you follow just a few really simple rules.

Rule 1—Start your shopping at home. Go online. Research the types of vehicles you’re interested in at sources like or or Kelly Blue Book or even Triple A. Look at manufacturers’ websites to get specific information on the make and model you’re interested in.

Rule 2—Shop for money before you go to a dealership. OK, so now you’ve started shopping for a vehicle. Remember, money is a commodity. Find out from your bank or, better yet, your credit union how much the money is likely to cost you (interest rate) and the terms. Plus, secure a copy of your credit report. Before you ever go out and about to dealerships you really need to have a good idea of how much your money will cost (i.e. the interest rate and terms of the loan). This is known as pre-qualifying and it’s better if you do it yourself with the lenders you choose prior to going to a dealership and relying on them. This will let you manage the process and compare and ultimately make a better decision.

Take notes. Use your computer’s printer. Have as much information in writing as you can. Remember, this is a decision making process you’re engaged in. Especially since you’re probably looking to spend anywhere from $15,000 and up on a new or used vehicle.

So, also ask yourself, “How long am I going to drive this car?” If you’re like most people and only plan on keeping it 3 ½ years or so, then you typically don’t want to finance it for more than 60 months (in fact less is better). There are a lot of dealers who will try to get you to a longer term in order to get your payment lower. But, look at 72 or 84 months only if you’re certain that you’ll be driving that vehicle at least 90% of the term of the loan.

Many dealers take a mistaken approach that buyers are only interested in payment and so they will manipulate the term to fit what you tell them is your monthly payment budget. You are far better off “stepping down” in terms of the vehicle you’d like to something that is less expensive than to go for a 6 to 7 year payment contract. You’re generally not likely to get enough discount to reduce the payments to the amount you’ve budgeted. So be realistic.

Remember one thing—it’s a car. It’s not a lifestyle or a personal statement. It’s transportation. And, rather than let things get a bit terse at a dealer, go home. Think on it. Do a bit more homework. Come back another day. The dealer is typically going to try to get you “buy and drive today”. But, unless you just drove your car into the bay or it caught fire, you don’t have to do anything today.

That’s just a couple of thoughts for now. I’ll come back with a few more “rules” in a day or so. But, keep these in mind. They’ll help you do 2 things—pay less for a vehicle (price and payment) and keep the process from getting aggravating.

Bottom line. Yeah, now is a good time to buy a car. If you can afford it and if you go into it with your eyes open. Then it can be a good time to buy and you can have a good time buying a car.

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