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Chapter 3 -
How to Buy a New Car for 15% Less and Save Hours of Frustration By
Talking to Two Dealers for Only 10 Minutes … No Haggling Required!
Buying a new car can be an exhilarating, frustrating, exciting,
time-consuming, self-discovering process where you drive away in a posh
new car while thinking, “I got a fantastic deal … or could I
have done a lot better?” These
days, a car is a basic necessity in most parts of the country.
However, excluding your home and taxes, a car is probably the
biggest expense you’ll ever have … and you’ll have it many times
throughout your life. So,
it’s crucial to your financial future to get it right.
You need to get what you need at the lowest lifecycle cost you
can. Lifecycle costs include
the purchase price plus all your operating costs (gas, oil, maintenance,
repairs, licensing fees, insurance, and property taxes) less any money
you get when, and if, you sell the car.
The goal of this chapter is to help you get the new car
you need for the best possible price in your local area with the least
frustration and wasted time as possible.
Chapter four will show you how to get the used car you
need for the best possible price.
NEW
CAR BUYING PROCEDURE:
STEP
1 – RESEARCH: First,
do the research discussed in chapter two.
Don’t skip this step; it can be one of the most valuable steps
in the buying process. The
best time to do your research for a new car is about a month before you
plan to visit the dealer. Which
brings us to …
THE
BEST TIME TO BUY A NEW CAR: The
best time of the year to buy any car, new or used, is when everyone else
is selling which is usually late fall/early winter; the closer to
Thanksgiving or Christmas, the better.
The best times of the year to buy a new car are August,
September, and December. Midsummer is also a good time to buy new cars
because most people have already bought their new cars and are now
playing. The 4th
of July weekend is really good for buying new cars because most people
are out of town on vacation which lessens your competition.
For planning purposes, you need to know there
are several conditions that define the best time to negotiate a purchase
for a new car. The more of
these conditions you combine together, the more negotiable the salesman
will be. The best time of all is the last day or two of the year.
This puts the salesman under pressure to meet his end-of-month
quotas during the holidays when there are the fewest customers.
The next best times are the last selling day or two of the month
when the salesman is concerned about meeting their quotas (especially if
it's a sales contest month (e.g., Summer-Sell-a-Thon).
Also, check the weather report a day or so before you plan to go;
if one of the last two days of the month is supposed to have bad
weather, go on the bad weather day.
There will be fewer customers, and the salesman will be more
agreeable to your terms. Finally,
go at the end of the day when the salesman is tired.
If you follow our guidelines below, you should set an appointment
with the salesman for an hour or two before the dealership closes.
If you are buying a new model, wait until around 90 to 120 days
after the new model is announced; by then most of the buying frenzy will
have worn off, supplies are up because sales are beginning to slow down,
and dealers will be more likely to negotiate.
STEP
2 – TEST DRIVES: Pick
the top five cars you’re interested in buying. Pick a day early in the
month to test drive each model. Obtain all the written information you
can from the salesman. Make
sure you have read and understood all our guidelines for test driving
cars in chapter six.
STEP
3 – FOLLOW-UP RESEARCH: Using
the information you gathered from your test drives, pick the options you
want for each model. Estimate the price for each model using data from http://www.kbb.com/
, http://www.nada.com/ , http://www.Edmunds.com
, or http://www.AutoAdvisor.com
, and pick the model you want most. Remember any new car loses 15% to
30% of it's value the moment you drive it off the lot; you will
generally fair best with the least expensive model. Contact your
insurance company to determine how much the insurance will be for each
model you are considering.
STEP
4 – FINANCING: Line up
your financing. You will save the most money if you pay cash since you
will incur no interest. However, if you need to get a loan from a bank
or credit union, do it now. Get pre-approved for a loan sufficient to
cover the estimated cost of the car from Step three.
STEP
5 – RFP #1: Prepare a
Request For Proposal (RFP) including a one-page description of the car
you want including all options. Also, write a cover letter stating you
want to buy a car this week and you will accept a bid from any
dealership interested in making you an offer. Require the bid to include
all costs itemized by options including all taxes. In this Request
For Proposal package include only your name and return fax number or
email address to keep dealers from trying to call you directly. Also,
request a response from any dealership interested in bidding to be
delivered to you by a specific date (e.g., the 3rd business day before
the end of the month). If you are willing to accept a demo model in
exchange for $3,000 to $4,000 additional savings, state that in the
Request For Proposal; just be aware you may not find a demo that has all
the exact options you want.
- The demo model
is a popular model that the dealers are allowed to drive and use to
give customers test drives. These
cars are typically well-serviced and fully stocked to give customers
the best impression. They
typically have 1,500 to 3,000 miles on them when they are
"retired" as demos. Thus,
they can't be sold as "new".
Thus, the price is reduced by as much as $3,000 to $4,000
depending on the model. Demos
are not normally advertised, but you can get one by asking if any
are available.
- State in the
Request For Proposal whether you do or do not want an extended
warranty. We recommend
you don't waste your time and money on extended warranties for your
car. Cars generally come
with warranties that fix anything that goes wrong for the first year
or two; so, an extended warranty would be duplicative.
Furthermore, you are normally required to perform recommended
maintenance to schedule and be ready to prove it, or the warranty
will be rendered invalid. Finally,
most of the stuff covered by these warranties don't break in the
first five years anyway, and most of things that do break, are not
covered by the warranty. For
example, the warranty may say it covers the air conditioner, and the
salesman will back it up saying, "It covers everything!"
However, the service department will tell you the air
conditioner hoses and gaskets are NOT covered even though they are
not specifically excluded in the extended warranty.
If you feel you MUST have an extended warranty, tell the
salesman you want it thrown in for free or you won't buy the car.
The Complete Car
Book Includes Financing, Insurance, & Tax-Saving Tips
Download today so you can review these tips & tricks forever ....
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