New Automobile Buying Tips

REMEMBER:
Arizona does NOT have a “cooling off” period or three-day right to cancel a car sale.

Advertising

Beware of advertised minimum trade-in amounts. Dealers may have already greatly raised the price of the car that you are buying to offset the value of your trade-in. Also, any debt still owed on a trade-in will be added to your new loan.

Beware of advertisements offering free gifts with a new car purchase. The dealer may add the cost of the “gift” to the purchase price or financing.

Be skeptical of car advertisements and always read the fine print. Sometimes, the advertised deal only applies to a few vehicles and is available only under certain conditions.

Before You Go To The Dealer

Do your homework. Ask family or friends for dealership recommendations. Check with the Better Business Bureau on the dealer’s status.

Know what you want and what it should cost before you visit a dealership. Use a library or the Internet to get an idea of a price range and options before you go.

Before going to a dealer, calculate exactly how much you can afford in terms of price and then figure out what monthly payments fit that budget. People who go to dealers without such knowledge and who then negotiate based solely on what they can pay per month usually end up paying more over the life of the loan.

Arrange vehicle financing with your bank or credit union before you go car shopping. Pre-qualify with the bank or credit union that gives you the best deal. If you have an account with the lender, many will pre-qualify you over the phone.

Negotiating The Deal

Everything is negotiable – no matter what the salesperson says.

Never buy a new car in a hurry. Be prepared to take as long as several weeks to find and negotiate the deal you want.

Make buying your new car, selling your old car, and financing your new car three separate transactions.

Always make the dealer’s invoice price the starting point for your negotiations. Don’t start with the car’s MSRP.

Don’t assume salespeople are your friends, no matter how friendly they act. Their job is to sell you a car. Most are paid on a commission basis, so their compensation increases the more you spend.

Take a notebook, calculator, and pen or pencil. Use them!

Take someone with you. They can take notes while you ask questions. Two people are less likely to miss something.

Ask for the dealer’s best price up front and keep asking for it throughout your negotiations. Tell the salesperson up front that you’ll buy from the dealer that gives you the best price.

Be cautious about purchasing aftermarket add-ons or treatments offered by the dealer. Examine the cost and need for such extras and whether you can afford it. Some add-ons are unnecessary or are significantly overpriced, and they may greatly increase the price or cost of your overall financing.

Negotiate on an “out-the-door” basis. Explain that you want to know the dealer’s total price, including everything except the costs for which the dealer will send a check to governmental agencies (generally only sales tax and registration and title fees). If you don’t, you’ll likely agree on a price and learn later that it’s the dealer’s “policy” to add fees for “document processing,” weatherproofing, safety inspections, dealer “prep,” destination charges, etc.

Remember, if you still owe money on your trade-in, the amount that you still owe will most likely be included in the financing for the new car, and this will raise the overall financing cost of the vehicle you are buying.

Once you have agreed on a price with a dealer, make written notes of what the agreement is and stay alert. Make sure your notes include the cost of each item. Some dealers will try to change the deal later without you noticing.

Closing The Deal

At every point in the negotiations, be prepared to walk away. It’s your ultimate (and often your only) weapon.

Give yourself at least 24 hours to think about a deal before signing a contract. You will not lose a new car deal, and there is only a remote chance you will lose a used car deal. If you do, there are lots of similar deals out there.

Make sure that ALL promises made by the salesperson or dealership are in writing.

Do not let a salesperson rush you to sign paperwork without reviewing the contract terms. Read all documents and understand all terms before signing on the bottom line.

If a contract has terms substantially different from what the salesperson initially promised, do not sign the contract unless you are willing to accept the new terms.

DO NOT allow false information on any forms and beware of a salesperson who suggests putting false information on your finance application, such as stating a higher income. While financing may be approved, the payments may be difficult for you to make. If something goes wrong, the false information could be held against you.

After you’ve agreed on a deal with the sales department, you’ll be taken by the salesperson to the finance and insurance representative and told that he or she will “fill out the paperwork.” Watch out – in some dealerships the finance and insurance representative will try to change your agreement without you catching on.

Be very careful what you sign. Don’t sign anything that contains blank spaces – especially on any contracts or credit applications. Draw a line through all blanks on documents you sign.

Beware of a salesperson who suggests taking the new or used car home before financing is approved. This practice is called “spot delivery” and is designed to “lock you in” to a purchase.

Never buy life or disability insurance from a dealer without comparison shopping with an insurance agent first.

Financing Through The Dealer

When financing through a dealer, always negotiate the car price first. Once the price is settled, then negotiate the monthly payment amount. Otherwise, you may end up with a reasonable monthly payment, but with a longer term and/or a higher interest rate.

Always ask the dealer if the interest rate being offered is the lowest rate he or she can offer and whether it includes a profit for the dealer.

Service Contracts

Service contracts provide for the repair of certain parts or problems. These contracts are offered by manufacturers, dealers or independent companies.

When deciding whether to purchase a service contract, consider the following questions:

What is the difference between the coverage under the warranty for the vehicle and the coverage under the service contract? Most vehicles come with at least a 3-year or 36,000-mile warranty.

What repairs are covered?

Who pays for labor? Who pays for parts?

Who performs the repairs? Can repairs be made elsewhere?

What are the cancellation and refund policies?