Car Coach: Pointers for New Cars

Pointers for New Cars

New Car Buying Strategies
Avoiding Face-to-Face Negotiations Where Possible
Building Your Dream Car
Buying at the Dealership
Setting Your Starting Bid and Ultimate Target Price
Dealer Cost, Rebates, Incentive Programs

New Car Buying Strategies

Car Coach outlines two strategies for buying a new car: (1) You want to buy a new car but want to avoid face-to-face negotiations, and (2) You don't mind negotiating with the dealer for a new car. With either strategy, knowledge is your best friend.

It's possible to completely avoid face-to-face negotiations if you are buying a new car, paying cash, no trade-in is involved, and you don't want any dealer add-ons. One technique is to use the website's AutoFinder section to contact multiple dealers with cars fitting your description in their inventory, and ask for their best price. Another technique is to "design" your car using the website's New Car Research section and use it's automatic referral system to receive dealer quotes.

Most new car deals require some negotiation, however, such as handling a trade-in or procuring an extended warranty.

Avoiding Face-to-Face Negotiations Where Possible

New car dealers order cars from the factory in the most popular colors and equipped with the most popular options. Use the website's AutoFinder search engine to see if a vehicle with the equipment you want is available in dealer inventory. If so, contact the dealer by calling the toll-free phone number or writing an inquiry email. You can find the telephone number and email section displayed with the vehicle detailed view. Ask the dealer for the Internet manager and give him a description of the vehicle you found. State that you will have the car serviced at the dealership where you purchase it. Say that you researched the invoice price for the car and options via the Internet. Ask about rebates, incentives, and special programs to confirm your Car Coach information. Indicate that you are talking to several dealers and are requesting their best price. If the dealer cannot give a price immediately, set up a time that you can call back within a few days or set a time limit to receive an email response.

Do the same for all dealers in a 25 or 50 mile radius that have similar cars. At the end of your time limit, call the dealership with the best offer and confirm the price. Request that they fax or email the car's invoice along with a worksheet containing the numbers to you. If the price meets your objectives and there is no trade-in, handwrite your acceptance of their offer and fax or email a copy back. If a trade-in is involved, handwrite your conditional acceptance based on getting a reasonable price for your trade. In either case, set an appointment to complete the transaction, using the phone number or email as before.

Even though you have a firm price on the new car, handle the trade-in first. Let the salesperson know that you will only buy the new car if they will buy your car at a reasonable price. After the trade-in issue is resolved and you have negotiated dealer add-ons, ask the salesperson to fill out a complete contract per their offer and to deduct the customer rebate or cash incentives (if applicable) from the price. Make sure the contract includes tax, tag, title, and dealer charges. Compare the "amount due" to your ultimate target -- if it is above your limit, stop the transaction. If the figure is okay, make a complete copy but do not sign. Tell the salesperson that you want to take overnight to make sure you understand everything in the agreement.

After you completely understand the contract and agree with all the figures, go back to the dealer and complete the transaction. Before you take your car home do a thorough inspection of the car including a brief test drive and compare the VIN numbers and equipment on the contract with the vehicle's VIN number and equipment.

Building Your Dream Car

If you can't find the car equipped and painted like you want, use the website's New Car Research section to build a vehicle that fits you perfectly. You may choose body style, engine and transmission, safety equipment, entertainment options, trim packages, etc. The MSRP and invoice pricing as well as rebates, incentives, etc. are available for the vehicle as you configure it. After you are satisfied that you have the car you want, click Request a Quote. The specifications of your car will be emailed to a number of local dealers, who will compete to sell you the car.

When the dealers contact you, tell them that you will have the car serviced at the dealership where you purchase it. State that you researched the invoice price for the car and options via the Internet. Ask about rebates, incentives, and special programs to confirm your Car Coach information. Indicate that you are requesting quotes from several dealers and are requesting their best price. If the dealer cannot give a price immediately, set up a time that you can call back within a few days or set a time limit to receive an email response.

At the end of your time limit, call the dealership with the best offer and confirm the price. Request that they fax or email the car's invoice along with a worksheet containing all the numbers to you. If the price meets your objectives and there is no trade-in, fax or email your acceptance back to the dealer. If a trade-in is involved, handwrite your conditional acceptance based on getting a reasonable price for your trade. Set an appointment to complete the transaction.

Even though you have a firm price on the new car, handle the trade-in first. Let the salesperson know that you will only buy the new car if they will buy your car at a reasonable price. After the trade-in issue is resolved and you have negotiated dealer add-ons, ask the salesperson to fill out a complete contract per their offer and to deduct the customer rebate or cash incentives (if applicable) from the price. Make sure the contract includes tax, tag, title, and dealer charges. You will likely have to give a significant deposit for the dealer to order the car for you. Compare the "amount due" to your ultimate target -- if it is above your limit, start the negotiation over. If the figure is okay, make a complete copy but do not sign. Tell the salesperson that you want to take overnight to make sure you understand everything in the agreement.

After you completely understand the contract and agree with all the figures, go back to the dealer and complete the transaction. When the car arrives, before you take your car home do a thorough inspection of the car including a brief test drive and compare the VIN numbers and equipment on the contract with the vehicle's VIN number and equipment.

Buying at the Dealership

Use the website's AutoFinder search engine to find a car you like and contact the dealer by calling the phone number on the detailed search results page. If you previously went for a test drive at the dealership, make an appointment with the salesperson you interacted with if he treated you well. If you don't know anyone, make an appointment with the Internet manager or sales manager. The salesperson will probably ask lots of questions. Be polite but noncommital. Don't tell the salesperson your ultimate target price. Tell him/her that you are definitely going to buy a car, but not necessarily from them -- there are other cars in the running. State that you have researched the price for the trade, the car and options via the Internet. This will establish your credibility.

Handle the trade-in first. If the value of the trade is acceptable, make an offer on the car and begin to negotiate. Always negotiate using the invoice price as the base -- don't let the salesperson talk MSRP. Start with a bid based on Car Coach knowledge and allow yourself to be worked upward -- a very small amount at a time. Sign a buyer's offer, if necessary, saying you'll buy at a given price, but don't give a deposit until the offer is approved in writing. Make sure the price includes tax, tag, title, and dealer charges.

After you reach agreement, and have negotiated dealer add-ons, have the salesperson fill out a complete contract and deduct the customer rebate or cash incentives (if applicable) from the price. Make sure the contract includes tax, tag, title, and dealer charges. Compare the "amount due" to your ultimate target -- if it is above your limit, stop the transaction. If the figure is okay, make a complete copy but do not sign. Tell the salesperson that you want to take overnight to make sure you understand everything in the agreement.

Setting Starting Bid and Ultimate Target Price

Set your trade-in expectations based on the Car Coach wholesale value -- try for full wholesale value, but settle for a price that is within a few hundred dollars. Remember that the condition of the car will be a big factor in the trade-in price.

Set your new car starting bid based on invoice price, dealer incentives, and rebates -- try for invoice price minus half the dealer incentive. The rebate, of course, is yours in addition. This gives a dealer the holdback and half the incentive. You may have to settle several hundred dollars above this, particularly if you are buying a popular model.

It's very important to set your ultimate target price -- this is the total cost including the car, options, add-ons, taxes, tags, title, destination fee, etc. minus your trade in. This is your walk-away number -- and you need to steel yourself to walk away if the dealer won't sell you the car without breaking your budget. Set it too low and the dealer will not take you seriously -- you will seem like an uninformed buyer making a lowball offer and not negotiating in good faith. Set it too high and you may not get the good deal you are looking for.

Dealer cost, Rebates and Incentive programs

Good information translates to money in your pocket. Expert negotiators start from the vehicle cost and negotiate the seller's profit, rather than starting from the seller's asking price and negotiating down. You have a great advantage if you know what the dealer's cost is.

Definitions:

Invoice Price	Manufacturer's initial charge to the dealer. Freight is usually included.
Holdback	Percentage or dollar amount that the manufacturer holds back from the dealer until a car is sold. Not reflected in the invoice price. This is intended to offset dealer costs to maintain inventory on their lot.
Base Price	Cost of the car without options. The base price includes standard equipment and factory warranties.
Options	Equipment or processes added to the base model, installed by either the manufacturer or the dealer. Examples are air conditioning, cruise control, rustproofing, etc.
Manufacturer Sticker Price	Required by Federal Law. A window label that shows base price, manufacturer's installed options, Manufacturer's Suggested Retail Price (MSRP), transportation charge, fuel economy mpg, etc.
Dealer Sticker Price	Another window label that shows the MSRP plus the suggested retail price of dealer-installed options.
Rebate	Cash back or low-rate financing direct to the customer. Taking cash back is usually the better plan.
Incentive	Cash that passes from the manufacturer to the dealer and is often not advertised to the public. Used to encourage the dealer to meet sales quotas, to sell slow-moving models, to sell year-end models, etc.
Dealer Cost	Invoice price minus holdbacks and incentives.

You need to upgrade your Flash Player to see the slideshow.

about us