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HOW TO BUY A NEW CAR

 Buying a new car should be fun -- but it’s not! The fact is that most people  rank buying a car well below a trip to the dentist. Getting a good deal on a car  is a challenge, and dropping thousands of extra dollars should be reason for  meeting the challenge. One alternative, if you don’t want to go through the  steps listed below, is to buy a Saturn (the price is set -- no negotiating ) or  use the Auto Connection to get the information you need to get a super deal.  BUT... if you are determined to do this yourself --- then read on... 

Obviously a motor vehicle represents a substantial investment for most  people, so it only makes sense to do your homework before you hit the road  looking for a new set of wheels. Doing your homework is the first phase of new  car buying. 

Here are the three phases we recommend in buying a car:
    1.   Research     

    2.  Shopping 
   
    3.  Buying


All too often, people visit a car dealership with little or no idea of what  they want or what it will cost them. Those buyers are sitting ducks for car
salesmen.

 Then there are the people who do a little research, then take the plunge.  Like a patient at the dentist’s office, they want to get it over with as soon as  possible. I recommend preparing well, shopping carefully, then, when you are  fully prepared, negotiating for the car of YOUR choice. By separating the shopping and buying phase, you’ll drive off in a car that suits your  personality, your needs AND your budget. 

Here are the steps that will take you through the research phase:


THE RESEARCH PHASE


1. Choose the right car for you. Read consumer magazine reports, talk to your
friends, and of course, carefully review the information you obtain. Make sure
the cars suit your lifestyle (don’t buy a sports car if you have 5 kids). Also,
look for cars with a good repair record and cars that hold their value (don’t
depreciate quickly).

2. Make sure the car you choose fits your  finances. Talk to your credit union and loan officer to determine how much you  can afford to spend on a purchase.

3. Price out insurance costs for  each of your prospect cars. Call your agent and get a quote for insurance  premiums on the vehicles you are interested in. In some areas, the cost of  insurance will help determine which car you should buy. Remember to compute the  cost for the life of the car.

4. Know the value of your trade in. If  you are going to trade in your old car, make sure you know what it’s worth. Look  up current car’s value by contacting the Auto Connection at the credit union or  in the used car value guides available in the reference section of public  libraries. The most widely used guide is the NADA (National Automobile Dealers  Association) also known as the "Blue Book" (although it is orange in color). The
most convenient and economical method of getting NEW and USED car information is  through the Auto Connection. They will provide free of charge the latest dealer  cost, rebates and vehicle specification information available and will mail or  fax these to you. Another method is to also check the local classified ads to  see what a comparable car is selling for in your area in the event you should  decide to sell the old car yourself.

5. Decide on three different
vehicles that are right for you. Decide which of the vehicles is your first  choice and determine if you can afford it at the list (MSRP) price and be sure  to include the insurance premium.

6. Prepare an auto-buying folder. Get  the addresses and phone numbers of the local dealerships and the nearest large  volume dealership. Obtain several Xerox copies of your drivers’ license, finance  source information (credit union name, address, etc.) and your car insurance  card. Place all this information in a file folder.

7. Choose a day to  go shopping. A weekday towards the end of the month is the best bet but it  really does not make a huge difference. It is important, however, that you  purchase the car during daylight hours so you can thoroughly inspect it.


THE SHOPPING PHASE

Now that you’ve picked the car you want to  buy, it’s time to shop for it. Here are the steps that will take you through  that phase of the car buying process.


1.  Locate the car of your choice. Call the dealers you located and the  closest volume dealer. Ask if they have the exact vehicle (model, color, engine,  transmission type etc.) you want in stock. If they don’t have it in stock ask if  they accept orders-- and how long it would take to receive an ordered vehicle.  If the salesman says "I don’t have it in stock but I can have one here tomorrow"  say "Thanks, but no thanks". That is a standard salesperson response. Instead,  call the other dealers in the area and try to find at least two locations with  acceptable alternatives.

If they have the appropriate vehicle in stock,  get this information: 

The Vehicle Identification Number (VIN) AKA the serial number. This way you  can confirm that the salesman was not "playing games" on the phone by comparing  the number he gave you to the VIN number on the car.
     
  • Get the total price on the vehicle’s Monroni Sticker (Sticker Price) (If the  dealer has an additional markup sticker, you probably don’t want to shop  there).
  • Get the salesperson’s name.
  • Ask if there are any factory rebates or dealer incentives and the expiration  dates.

2. Test drive the cars. Visit your local dealerships and ask to test drive  the cars you researched. Make sure the car "fits" you, your family and your
lifestyle.

3. Test drive the salesperson. As you test drive the car,  you can test drive the salesman too. Ask yourself if you feel you could  negotiate with this person? Get the salesman’s card and LEAVE the dealership.  Refuse all invitations to be drawn into negotiations at this point.

4.
Determine the dealer’s cost. Find out what the dealer paid for the cars you are  interested in buying. By doing this, you can figure out what a fair profit would  be and make an intelligent offer.

You can determine dealer cost in one  of several ways:

Because pricing and rebate amounts change so often, we  recommend you contact the Auto Connection at the credit union. You can also look
up this information in such books as the Kelly Blue Book, New Car Cost Guide,  Edmund’s Car Price’s as well as other publications available in the reference  section of the local public library.

5. Preset your opening offer and  the buying range. Once you know how much the dealer paid for the car, you can  set your opening offer at about 2% over this figure. Make sure to allow for any options you are requesting. How much higher should you expect to pay will depend  greatly on the car itself and the supply and demand of each vehicle. If a  vehicle is very scarce, you may have to pay retail cost to buy the car. On the  other hand, if the dealer has a large number of the same model on his lot, you  can expect to remain at the 2% offer. A portion of your research should pertain  to the availability of the model you want. You should also decide on the highest  figure you will pay for the car. Now that you have the buying range, write it  down on a 3x5 index card. Put this card in you auto-buying folder.


THE BUYING PHASE

Now that you know what car  you want AND what you should pay for it, it’s time to go in and make a deal.  Here are the steps that will take you through the car buying phase of the  process:

1. Bribe a friend into going along with you. If possible, find  someone who knows a lot about cars, or a lot about negotiating. Instruct your  friend to drag you out of the dealership if you begin to go over the buying  range specified on the index card. 

2. Bring a car buying kit. Make sure you include:

Your car buying folder, with the buying range index card.
     
  • If you are trading in your old car, bring a Xeroxed copy of the value from  the current NADA Used Car Guide.
  • Blank index cards to write down the figures as negotiations proceed.
  • An extra set of trade-in keys. Some salespeople trap you at the dealership  by "misplacing" the keys to your trade-in.
  • A calculator to check the figures throughout the deal.

3. Start out early and allow plenty of time. Spending enough time at the  dealership may save you thousands of dollars.

4. Return to the  salesperson you met before. Choose the salesperson you feel you have the best  chance of getting a good deal from.

5. Test drive the car again and  inspect it for damage. Virtually all new cars have some damage caused by the  rigors of transportation from the manufacturer and from the time spent on the  dealer lot. Most time the damage is very minor but it should be repaired  nonetheless.

6. Negotiate for a good deal. You have finally found the  car or truck you want and you can have it if you hand over enough money.
Remember these tips as you negotiate: 

The salesperson’s job is to take as much of your money as possible---
regardless of what he or she may tell you!
     
  • Write down the VIN number and your initial offer of the 3x5 index card or  one of your vehicle spec sheets. Explain that you need to know all of the fees  that will be charged as part of a cash deal and you would like them detailed  with the dealers response written on your spec sheet.

ALWAYS be ready to "walk". This is the highest card you hold. Don’t become so  attached to any deal that you can’t walk away from it. If you do walk, you can  just start over again at the next dealership. NEVER BECOME EMOTIONALLY INVOLVED.  Be ready for the crossover. Salespeople like to confuse you with figures.  Therefore, if they are losing ground in one area, they are likely to switch to  another area. Thus the "crossover". To make an offer, simply write the amount on  the spec sheet and ask the salesman to present this price to his manager. The
salesman is never authorized to accept an offer. Never give the salesperson any  type of money during the negotiating process. Once you reach your price limit or  time limit, thank the salesperson and leave, regardless of how many people you  have talked to or what they have said. DO NOT let the salespeople intimidate you  in any way to keep you in the dealership -- when you are ready to leave, say  thank you and walk out. Remember... IT’S YOUR MONEY.

7. Try the next
dealer in your folder. Head to the next dealership with the previous dealer’s  best offer in your notes. If the same process is not successful at the second  dealership, you may have to go to a third and so on until you get what you feel  to be the best price available.

8. Get your good deal in writing. Once  you have struck a deal, make sure the total price is written on a dealer’s  Purchase order form and is signed by the sales manager. Remember, the salesman  cannot guarantee a price on his own. Only the manager’s signature will be  binding.

9. Be wary of additional sales pitches in the Finance Office  (F&I). If you do not finance the purchase at the credit union, be sure to  review the contract that is presented to you. Make sure there are no added  costs. The only additional costs should be for state taxes, license fees and a
documentation fee (never over $50.00).

There you have it -- The three  phases of new car buying. If you do your homework and patiently apply these  steps, your chances of getting a good deal are greatly increased. GOOD LUCK!!


TRADE-IN NOTES

There is a difference of  opinion concerning the wisdom of trading in your old car when buying a new one.  Some people claim you can never get what its worth. True, the salesperson may  make you think you got a good deal but he probably took more profit somewhere  else in the deal. This is why it’s important to know the value of your trade-in  before you set foot on the dealer lot. Also, make sure you pay attention to all  the figures in the deal. If you get a good price for your trade-in, examine the  other figures to see if any have been inflated to give the false impression of a  good deal. If the deal looks too good to be true -- it usually is!!

If  you don’t mind a little extra hassle, you could consider using the trade-in as  bait in new car negotiations -- then pull it out of the deal if you are not  getting the figure you want for it. OR You can enter the deal without a trade-in  and once an agreed upon price has been reached, bring in your trade-in. You  should then find out exactly what the trade-in is worth. You can also sell your  car to a private party and normally get a substantial amount more for it,  however most people don’t want the hassle of advertising and having strangers  come to their home to look at the car.

Ignore all of the salesperson’s  attempts to convince you that your trade-in is worthless. If you believe him and  accept a below value figure, you will see it on their lot the next day for  hundreds more than they gave you for it.

Also make sure that the amount  of your trade-in is subtracted from the taxable amount of your vehicle as this  can also save you hundreds of dollars.

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