By Craig Fitzgerald, Globe Correspondent | November 7, 2004
So you've decided that a 2005 Chrysler 300C is the car for you. You march down to a dealer, armed with invoice pricing you found on the Internet, and insist you'll pay not a dollar more.
You're willing to go up to $300 a month, maximum. You've washed your trade-in and are hoping that the dealer will give you the maximum value listed in the "blue book."
You're also hoping that you qualify for one of the hot financing deals that the manufacturer has been trumpeting for months. But if that doesn't happen, you figure you can always get a cheap lease.
Not so fast.
Having information and a game plan may seem like a good thing, but having the right information and being flexible is even better.
Phil Reed, Edmunds.com's consumer advice editor, worked undercover for three months at two car stores in California for a series of articles he wrote for Edmunds.com.
"I worked at a high-volume, high-pressure dealership in an 'automile' sort of neighborhood. I also spent time at a smaller 'no-haggle' dealership that was in a quieter part of town," says Reed.
He also purchased cars several times a month for Edmunds, as well as for friends, family, and co-workers who needed help getting through the process.
Here is his advice on how to get the best deal when buying a car:
Understand that there isn't just one car out there for you.
"I recently helped purchase cars for two members of my family who live in the Boston area," says Reed. "One wanted a Subaru Forester, and the other was really interested in the Toyota Matrix. The first thing I asked both of them was if they had thought about other cars that met their criteria." Reed suggested that they visit Edmunds' Vehicle Comparator tool. Several other online informational websites (AutoSite.com, Kelley Blue Book's site at kbb.com, and NADAguides.com) feature similar tools that allow you to research other cars that closely compare to a particular model.
Find out what vehicles in your marketplace actually sell for. "The first few minutes of conversation at a car dealership really defines the atmosphere," Reed notes. "If you walked into a Mini dealership with a printout from the Internet and demanded to purchase a Cooper S at invoice price, the conversation would essentially be over," he says.
Hot products aren't generally sold at rock-bottom prices, since sales managers are often confident they can sell the cars for a higher markup. Likewise, paying invoice price for a slow-selling model just before the next generation of that product becomes available is a gift to a car salesman. "You need to understand what the actual transaction prices have been," Reed says.
Shopping on monthly payment alone is almost a guaranteed disaster. It's an easy way for car salesmen to divert your attention from paying an average of $25,000 -- and very often much higher -- for a new car. Psychologically, $400 a month sounds a lot better than $35,000. And once you've agreed to $300 a month, $325 a month is an easy jump from there.
The trade-in is also where even the most sharp-eyed car shopper leaves money on the table, Reed says. "Most car dealerships are unwilling to offer market value for a trade-in," he says. So even if you've worked out the absolute rock-bottom price for a new car, a car dealership might offer you $2,000 less than your trade-in is truly worth.
The only way to find out what the car is really worth is to shop it around to several dealers. Reed also said it's wise to keep the purchase of a new car and the allowance for a trade-in separate. If the transactions are performed simultaneously, it's easy for a salesman to move numbers around, making it harder to understand what you're paying for the new car and what you're getting for your old car.
Financing deals are another lure, with nearly every manufacturer offering between zero and 6.9 percent as an enticement. "The lowest finance rates," says Reed, "are only available to those with perfect or nearly perfect credit scores." It is also not uncommon for dealerships to quote a certain percentage rate, then add to that rate for "paperwork handling" fees. Reed encourages car buyers to get preapproved for financing so they know exactly how much they'll pay for the loan.
Shop online. There are several auto purchasing sites on the Internet, including Autoweb.com, AutobyTel.com, Priceline.com, and AutoTrader.com, that get you price quotes from dealerships in your area. "All the dealers that I talk to say that the number of sales that come from online shopping sites is about 30 percent," says Reed. "In our experience, the process is a lot easier. Internet sales managers tend to assume a certain level of knowledge with an online consumer." Consumers without access to the Internet can still solicit bids from new car dealers by calling and asking to speak to the Internet or fleet manager, says Reed. Since Internet sales managers know they're responding with a bid that has to be competitive with other local dealers, they'll much more frequently respond with a reasonable price.
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