Buying a used car
With gas prices skyrocketing, and no end in sight, a lot of people are trying to get out of their gas guzzler and get into something a little better on gas, or cheaper payments, or anything they can to save some money. Here are a few tips I found during my latest car buying adventure.
Trade: If you are going to trade your car in, here is some vital information for you. You won't get anything for your car. I talked to several dealers, and they are giving either "fair" or poor" trade in value for cars. And they use whichever is cheaper, KBB or edmunds. So, that $25k new car you bought last summer, is now valued at around $12k. If you have a gas guzzler, good luck with that as well. Of course this leave a majority of the people what is called upside down in the payment.
1. Option 1: Sell it yourself to a private buyer. This will get you more for your car, and give you cash to take to the dealer. With credit the way it is, cash is a huge bargaining point.
2. Option 2: Trade it in and take what they give you. This is mostly for people who don't have the patience to sell one on their own. And if you are selling a gas guzzler, you will be competing with the others trying to sell theirs as well.
So, we have your older car taken care of, its either been sold and you have cash in hand, or you are going down to the dealer with it as a trade. Before you go, browse the internet sites of the dealers you will be going to. A lot of time they have "special internet pricing" available if you contact them online. This helps many ways, it saves gas, lets you get an idea of whats in your price range, and most importantly, gives you the opportunity to research what they are selling.
Once you have found a couple of cars you are interested in, do the following things.
1. Go to Edmunds.com, or KBB.com and get the retail sale price of that car. Compare it with what they are offering for it, try and find some buying leverage. Know exactly what the dealer should be selling that car for.
2. Go to your bank/credit union. Talk to the loan officer, find out interest rates, what you qualify for, and a guestimate on the payment and terms of that car. Its best to do your own financing with your own bank, instead of the car lot doing it for you. You will probably get a better rate, and if you go in to the lot, saying you have financing, you can haggle a bit more.
3. Call your insurance provider. The last thing you want is to find out your insurance is going up $60 or so a month because that car is a "high theft" risk, or something else silly.
Now that you have cash/trade, financing, and you know your payment, and insurance, take a few minutes and do a quick analysis of your monthly finances. Make sure you can afford it. Once you have, and you can, its time to head to the dealer. Hopefully, you contacted them through internet sales and have an appointment.
Once you arrive, don't reveal all your cards, don't talk down payment, don't talk trade, anything. If they are pushy, leave, or ask for another sales person. Don't play their game. Its their rules, their game. Ask to see the car, ask to test drive it. Drive it with the windows up, radio down, and listen. Roll the windows down and listen. Check the A/C, heat, fans, turn signals, etc. Depending on the dealer, take it to a mechanic of your choice to check it out.
When you get back to the dealer, and you decide you want it, show them the value of their car if it is priced higher then what it should be, ask them to come down. Chances are they will have to ask their boss, don't let them go alone! Go with them and show the boss the paper work. Sometimes they will, because they know they can get it back in fee's etc. Get that price on a deal sheet. Once they have it on a deal sheet, make your down payment offer. After they subtract it, get it signed, call your credit union before they can add the other fees. Pay for the title and tags yourself at the courthouse, no need to pay their fees.
There are many ways to play the game with them, but the main one is don't give away too much upfront, drop it on them once they give you the lowest price on the vehicle you want.