Car Buying Tips

1. Learn the Car Dealership's Tricks and Systems into Buying your Car

Many of the car dealerships in the U.S train their sales staff in a selling system with lots of sales psychology, which manipulates the customers into buying a car today. These selling tactics are well rehearsed and practiced and well known throughout the whole dealership company. You are not only dealing with the sales person but also with the sales manager, the finance manager, the used car manager and sometimes even the floor manager who usually closes the deals. This is why it's extremely important to understand how they work to avoid falling into their traps. Their systems have different names such as the four square, eight step, ten step, but the methods are about the same everywhere; which is to manipulate you to buy a car now. Some teach ten steps but they are just breaking one or two down further.

Usually it starts with the sales person greeting you with a hand shake to make you feel at ease. Then after the small talk he will try to qualify you by asking various questions. He is also well aware of your spouse and will try to make your spouse feel at ease as much as possible since this can make the deal turn sour. Qualification is used to bring the prospect to focus on what he/she is interested in before he/she gets out of control by looking at all the models and colors just for the heck of it. Questions control the conversation and a good salesperson has many questions. The purpose of the questions is to focus on the selling and usually not on the prospect's concerns. Questions like, Are you trading? How much do you want for your trade-in? Do you owe money for the trade in? How much would you like your payments to be? How much would you want to pay down? Who is the decision maker? So the sales person will try to get as much information out of you as possible and especially your phone number so he can follow up with you since much of the sales are made this way. There is a saying in this industry: "Keep calling them until they buy or die!"

A great sales man will always give a good presentation of the product and also about himself of course. A good salesperson will go with you so he can keep on top of you and your spouse's conversations. He wants to answer all objections as they come up, and to keep up with the questioning. He will usually isolate the vehicle. That is, get away from all the other vehicles around it so that you may focus on the car of your interest and show you all the specifications. This is the time to soak up lots of information and ask a lot of questions (especially things you do not like about the car).

So once they have all the information they will go to great lengths to get you to test drive it. They want you in the car. They want your senses stimulated. They want you emotionally involved with the car! Their theory is that the more emotionally involved you get the easier you will be to close, and the more money they can make from you.

Usually you will have a good time up to this point in your shopping experience. It is at the end of the demo ride when you have answered his question, "How do you like it?" when the frustration usually takes place. So when you ask for the price you will most likely get the price that is on the sticker. There won't be any other way they will give you a price less than this. You can be as forthright as you can and I assure you when they hit you with the first price they will be using up all of your down payment in structuring the deal. If you took this deal, you would lose big time. You can surely see that the information that you give will be used against you.

If you tell your salesperson that you want to think it over, he would most likely counter this statement with "If I Could, Would You" and goes something like this: "If I could get my manager to make you the best deal you ever had in your life, would you buy this car today?" This is the start to a commitment that will be used against you later. They will try everything to close the deal with you. After they have run back and forth to a manager, marking down the price and trying to get you to make an offer, they will remind you that you said you would buy today, and this is the best deal anyone ever had in their entire life. So, go ahead and tell him, if you want to, that you will buy today if the deal is good enough.

Some sales people will ask for your social security number and do not give it to them. The sales person wants to make sure you are credit worthy and will run a credit report. If you have bad credit you will be turned over to the special finance person who handles people with bad credit. If you are financing they will try to close you on a payment. This is bad for you, and good for them, because you have no clue what the selling price is. If you have a trade they will offer you peanuts for it, and then very grudgingly increase their offer as you fight for every penny. Understand that every move they make is calculated and deliberate. They have all the angles covered, and they're going to come at you with every trick in their arsenal.

Now, when you honestly weigh all of the above techniques, is there really anything wrong with what they do? If so, not much. The thing is, now you know what they do. Why not do the same thing? Keep them off balance with questions. Turn their questions around. When asked "How much do you want for your trade-in", ask "How much will you give?" After this it is usually time for the Write Up, which is quite simple. The transaction is put down on paper so that it can be read by nearly anybody. So you should read it and ask about sales taxes, license fees, safety inspection sticker fees any charges that you don't understand. Lastly you should clear up any abbreviations or Car Biz jargon.

2. How to Make the Most Out of the Interest Payments

The true fact is you should never arrange your car loan through the dealership. As friendly and nice as the finance and sales rep may be, they make much money from their customers from the loan payments because they are usually paid on commission and they want you to walk away with the highest payment possible. So when you are at the dealership and try to negotiate a car loan they will implement something called "loaded payment", which means they add hidden extra things that makes them money (such as credit life & disability and extended auto warranty), which you have to pay for of course. Many times they add this on to the payments without your knowledge, which will boost your monthly payments quite a lot. Credit life insurance is an insurance that covers the payments of the car in case you die prior to paying off your loan. So if you die before you pay it off the insurance company will pay the remaining balance off for you.

Another aspect to think about prior to buying a car is to decide whether you want to sign up for a joint credit life to cover you and another person (such as you spouse) or the other one which is called disability or accident and health. The latter one is very expensive and it will cover you in case you become disabled, sick or are unable to work. This insurance will make payments for you while you are not working. However, make sure to read the fine prints to see when it starts taking place in the event you cannot work. You may want to add this insurance and it could be a good idea, but the problem is that the dealership makes lots of commission from this. Commissions from this can be up to 50%, and this money is added to your monthly car payments. Just to be aware, the car dealerships mark up these things aggressively without your knowledge.

Many times the car dealers make more money from the car loans and insurances than the car itself, but they don't want you to know this of course. So if you take a car loan of $30,000, the dealer may get a kick-back from the bank (which could be 10% more/less). So this extra money $3000 (if it's 10%) is added to your monthly payments, which is just money that goes straight to their pockets. So as you can see the higher interest they can get you to sign, the more money they make from you.

In conclusion it is wiser to arrange your own car loans with a credit union or any other low interest finance institution and avoid their sneaky methods. You should also be aware of other things they may sneak into your payments. These could include Gap Insurance, rust proofing, stereo upgrades, window etching, alarms etc etc. So before you enter the car dealership ensure you take care and think of this before signing any documents.

3. When is the optimal time to buy your car?

There are times when you can bargain buying a car and this report will tell you when a good time is to buy a car. The best time to buy a car is on a Monday night, weekends, at the end of the month, and at the end of the year. There are various reasons why this is the best time and here are the reasons. Mondays but also the weekends are very busy times in a car dealership. Many times the sales promotions are targeted for the weekends and Mondays. Since it's busy during that time, the sales people try to capitalize on these days to make the most in commissions. Usually the sales reps will get extra bonuses during these periods. Bonuses could be incentive based such as "who sells the most on the Saturday makes an extra $200 cash". Also dealerships provide the sales people with lunch over the weekend, which also fires them up. So remember this is usually the time where you can get a good car deal.

At the end of the month is also another good strategy to come to the dealership and buy a car. Because the car industry is quota based, a sales manager may commit to sell a certain amount of cars for that month. Because of this, the sales reps then receives an extra monthly additional bonus if the quota is met and are willing to go great lengths to come up with a good deal for you (because that would mean more money for them).

The end of the year is also a very good time to buy a car because the dealership wants to get rid of the older models quickly, because the new models come in. This put you at an advantage since you can negotiate the good deals. Many times there are hidden rebates that go to the dealer for leftover models. If you know about them you can ask the dealer to give this rebate back to you.

4. How to Avoid the Car Dealership Scams

There are various scams you should be aware of that car dealerships may trick you into:

The first one is "we have lowered your payments". This is how it works. After you have purchased your car, the dealership may call you up and say they you can actually lower your payments and less APR if you come in and sign some papers. What you have to be aware of now is that the car dealership may actually change your loan from 48 months to 72 months. So what they did was to increase the APR on you and then spread out the time longer to 72 months.

The other scam to be aware of is the so called previously wrecked used car "As Is" Scam. As the name applies, the dealer tries to sell you a car that many times have been wrecked previously, but he would say that it's in great shape. However, in some cases, they could be unaware about it. Buying "as is" means you buy it without any warranty on it which means you assume all risks and cannot return the car. Keep in mind that certified used cars can also be previous wrecks. Many times people are not aware of this until they have to service the car to find out it was wrecked. So when they return to the dealership to complain they have no recourse because they have already signed the papers "as is". The recommendation is to never buy any used cars from dealers that offer "as is" with no warranty. If they say it's such a great car they have to back it up with a 3 months warranty. One way to avoid the problem is to run a carfax report on the used car before you buy it. A car mechanic will also be able to tell you if the car was wrecked. If you don't perform both or any of these, do not buy the car.

Here is another scam to watch out for. In this one, the dealers slip in an advertising fee on the vehicle contract. Since the dealership has to advertise for the cars, they build in the advertising expense into the purchase price. This is a fully acceptable practice. However, if this fee is added on to the vehicle purchase contract, they have just charged you twice. On the factory invoice, there will be an advertising fee on it. The dealer has already taken this into account when negotiating your purchase price. Now, they are charging you again and making themselves pure profit. If you are confronted with this, tell the dealer to remove this advertising fee from the contract. If the dealer tells you that the factory does not charge them an advertising fee on the invoice, have them show you the invoice. What you will find out is there is no fee on the invoice, but in case there would be one it is ok for the dealer to charge anywhere between 1% to 3% MSRP for an advertising fee. Also, keep in mind that this fee is 100% negotiable, and this fee is not charged by the factory. However, the advertising fees that appear on the factory invoice are a part of the dealer cost and are not negotiable.

5. Important information about car insurance when you decide to buy a car

It is always advisable to check the insurance rates on the cars prior to purchasing one. Many people fail to do this research prior and end up with huge monthly payments when adding the monthly car payments. This always has to be included in the budget because it is the cost of ownership. However, when signing up for an insurance company it is important to choose reputable ones with a good rating. The more A's in a rating the better the ability to pay off. Many smaller companies go belly up and don't make it in the end. However, the low price is how some smaller companies get people hooked up with them in the first place. This can be a rap that many people fall into. Try to buy from companies with an A rating, but a B rating is also acceptable.

You'll be surprised how much some new cars cost to insure. Get your auto insurance quotes before you buy a car, and plan your budget to include insurance. If you're buying a car on the edge of what you can afford, insurance payments will drag you under. Insurance payments are part of your monthly cost of ownership. Also remember that many car insurance companies may give you a break if you buy two or more types of insurance. You may also get a reduction if you have more than one vehicle insured with the same company. Some insurers reduce the rates for long-time customers. Some companies offer reductions to drivers who get insurance through a group plan from their employers, through professional, business and alumni groups, or other associations. Ask your employer and inquire with groups or clubs you are a member of to see if this is possible! Some companies offer discounts to motorists who drive a lower than average number of miles a year. Low mileage discounts can also apply to drivers who car pool to work.