What To Look For When You Purchase A New Vehicle
Every time a new vehicle buyer steps on a car dealership lot they are a target. That’s because the dealership wants and needs to make as much profit from each new car sale as they can. I would say that you have better odds of winning a jackpot at most gambling casinos then you do of walking out of a new car dealership without getting financially hosed in one way or another. Despite my pessimistic prophecy for new vehicle buyers, there are some ways to save money and keep from getting completely taken.
The first step any new vehicle buyer must take is to decide how they will pay for it. The vast majority of people require financing, but if you happen to be fortunate enough to have cash available for your purchase, make sure you buy at the right time. Car manufacturers and dealerships do not like cash sales because it is a lot harder for them to make those extra financing dollars and hide all sorts of add-ons in your financing. The one time each year that dealers love cash paying customers is during end of year clearance sales. Buying later rather than sooner can save you thousands of dollars and even get some extras thrown in on the house.
If you are going to finance your vehicle purchase, your next step is to decide if you are going to offer the dealer a trade in. The new vehicle salespeople will always try to make the trade in option look extremely attractive because it is a money maker for their dealership. Most of their financing and buying plans are trade-in based, so they make it look like you are losing out on something if you do not trade in. If you fall for that line, you will get your pocket picked twice: Once through the trade-in allowance you receive, and again when they get done with your financing deal.
If you have a used, one owner, low mileage vehicle to trade in that is in good shape with and no major body or mechanical issues, you should sell it yourself. You can find out what the fair market value of your vehicle is at Edmunds.com or KBB.com (Kelly Blue book). More importantly, browse used vehicle listings online to see what yours is selling for. I have sold two older vehicles for more than their blue book value twice on Ebay Motors. In both instances the vehicles were sold to local people who needed them for a specific purpose and were willing to pay more. Both were satisfied with their purchases.
Most new vehicle buyers lose big on financing and warranty scams. Although it is more work setting up your own financing, you can save you big money for the long haul. That is especially true if you have good credit and work well with your local bank. Too many buyers get lured into auto maker financing deals with bait and switch promises of a low APR. Buyer beware when you see 0% down and low APR deals. According to various consumer watchdog organizations, as few as 5% of the people who apply for those programs are actually accepted. The rest are convinced to accept ‘alternative’ dealer financing that offers no value and costs consumers a fortune over time.
Extended warrantees are the worst scam of all. When I purchased a new van in 1994 I bought the extended warranty which was buried in my financing and cost me a bundle. When I tried to use it, the dealership mechanic told me that I could not because the warranty was based on the dealership’s mechanical interpretation of my problem. In other words, even if I brought in my own mechanic and he told the dealership that the mechanical problem I was having was one thing, the dealership mechanic could say it was another and not covered by my extended warranty.You can instantly check on most warrantees by calling NationWarranty (866-769-1773), WarrantyDirect(877-867-3580) or CARCHEX (866-538-5986). If you have good vehicle insurance, you might be surprised to find that many mechanical and other vehicle issues are already covered under your existing policy.
The last step in trying to get out of a new vehicle dealership with your shirt still on your back is to make sure you do not purchase new cars that are not really new or add-ons that are not needed. Always check the mileage on any vehicle you want to buy (should be 20 miles or less), then give it a thorough inspection to be sure it has not had any body repairs. Look for any signs of rust or wear to make sure you are not buying a car that the salespeople regularly used for test drives or to get lunch.
Dealers hawk everything from expensive ant-theft devices and services, to the ever-popular ‘special undercoating’ deals. Most of the anti-theft devices or services they offer can be purchased and installed for much lower prices at any large electronics store (like Best Buy). Dealers get the high end price by offering to bury these goodies in your financing. As far as undercoating goes, most new vehicles already have sufficient protection from the elements: At least more protection than new car buyers have against dealership money-grabbing tactics.