8
Mar

Buying a Car Best Practices

Having just purchased a new car, I thought it would be helpful to write down some of the steps I took to help me get a good deal. Like a lot of big ticket purchases, buying a car for most people is a rare occurrence. For this reason, and the fact there is a lot of money at stake, it can be a stressful experience. Many people don’t know if they are getting a good deal, Lord knows the car dealers are not going to clue you in. They have a lot of tactics they use to apply pressure and put you on the defensive. After a few hours in front of a high pressure car salesman you can break down and then they have a big edge on you. So being as prepared as possible before you enter the showroom is the best way to fight against this. Often times the salesman you are working with will not make a pricing decision, but brings it to his manager. This situation puts pressure on you because you are alone making every decision, while he is not making a decision, rather deferring them to his boss. There is even a good cop bad cop scenario, the salesman is a nice guy, not too savvy, but the manager comes out and he is a not a happy camper. After all, you are being unreasonable! Why do you want them to lose money?

So as I said the best way to deal with all this is to know in your mind what you are willing to pay for your new car and also what you will accept for your trade in if you have one. Note this is another area of deception, often people fixate on what they are getting for their trade rather than both sides of the equation. This is most likely because you have a much better knowledge of the value of your car than the new one you are buying. Car dealers know this and will offer you a very good price for your car, knowing they will make it up on the new one. So you have to have 2 figures in mind before you go. This is a good time to mention something that you don’t see too often in car sales articles. In new jersey at least, you do not pay tax on the difference between your trade in and the new car purchase. This is not significant if you are trading your beat up ‘89 Chevy, but it’s a $700 savings on a $10,000 trade. Anyway, even if you forget, be assured the salesman will remind you.

The best way to get a good knowledge of new and used car values is the internet. What can you get for your trade in? Kelly Blue Book is a company that many people turn to for used car values. This is a good starting point. But for a more practical analysis, it is better to look for dealer prices on cars that match your trade in. This lets you know what they will be selling your car for, and how much room you have to negotiate. Using nj.com, and go to the used car section – it is a very good tool. If it looks like your car is being sold for around $20,000 you should know that the dealer very well won’t get this full price, and he still has to make a profit. So it would be reasonable for you to try and get 17,000 or even 17,500 for your car. here his potential profit is $2,500 – $3,000. Bear in mind if your car is only selling for around $5,000, you may be able to get $3500 but now his potential profit is only $1500, and this will have to be reflected in the price you can negotiate on your new car. the more he can make on your trade, the more leverage you have on the new purchase price.

Truecar.com is another site that will help in knowing what is a good trade in price for your new car. they actually take a number of recent sales prices and create a bell curve that will indicate the average price paid and what a really good price would be.

So know ahead of time what you are willing to get for both your used car and the new one, know what your net is. If you are willing to accept $5,000 for your car and pay $24,000 for the new one, then any way you slice it $19,000 is what you are willing to pay. Knowing this you can withstand the pressure they will put on you for a lesser deal. If they won’t get to your number, simply say you may be correct, and my price may be unreasonable, but in order to confirm that I have to check other dealerships. You guys know a lot more than I do, so I have to check around” either they will come down to your price because they do not want you to walk, or they won’t at which point you will have to leave the dealership. If the latter happens, you can feel fairly confident that you have pushed beyond their profitability limit, so at least you know if you get the $19,000 net you should be getting a good deal. Now you should see at least 1 more dealer to see if they can meet that number. If they also cannot, then your price is too rich for the market, and you will have to adjust.

One other thing to note, it is a very good idea to test drive the actual car you will be purchasing, once you have made a deal. You can test out the a/c, mirrors, etc as well as see how it drives. So it is a good idea to ask to drive the actual car you will be buying. Don’t forget the most important part, after you buy you will need New Jersey auto insurance. If you’re reading this article you’re already on American Insurance Services website. With over 30 insurance carriers, American Insurance does the shopping so you can live your life. Stop wasting your time searching for the best auto insurance policy – give us a call so we can start saving you money today!