Tips on Buying Cars: Buying A New Minivan, confessions of a former car salesman, honda minivan

Question
Hi,

I hate buying cars and everytime I've bought one, I've always felt like I never done all the homework I needed to do.  I know that I want either a Toyota or Honda minivan.  Toyotas have like 50 gazillion options while Honda seems to have a model and this is what you get with it.  On the internet, I see all these websites that show suggested retail prices, invoice prices, and what people are actually paying.  To top it off, I also have Costco pricing which you can only get if I actually walk into a dealer.  Friends have told me to go to dealer and offer x dollars over invoice and leave if you don't get what you want.  This just leaves me a sour taste in the mouth as I don't want to be rude - but then again, I'm going to be shelling out a significant amount of $$$.  Any advice?

Thanks,

Jeff


Answer
Hey Jeff,

Wow, what a great seg-way you gave me, do I have “any advice?” Ok, one pun here—I could write a book on the subject--and I did! $ave Thousand$ Buying Your Next Car: Confessions of a Former Car Salesman (www.Make-Me-Smarter.com) was written because I saw buyer after buyer just fall in line laying out thousands of dollars more than they had to! The very first one I saw, and which was the very beginning of the book idea, was when a young man was taken for $13,000 more than he would have had to pay to buy a truck. To this day I know who he was: he doesn’t know. Tell me, would you rather the sour taste from this type of deal was in your mouth, or the dealers?

Really, I do know exactly how you feel, and most buyers are the same regardless of how tough they like to sound and position themselves early in the game. This is one of the main reasons I wrote the book as it is.

I’m a certified instructor of Chinese Kung Fu with 15 years of training and teaching experience. Years ago I realized that I couldn’t teach anyone self-defense training in an hour or two class, so I developed an entirely new method to do this that works for anyone. This lead to my understanding that I also couldn’t teach anyone how to negotiate a car deal with people in an industry who’ve been negotiating deals for 60 years, so I developed an entirely new method where buyers don’t have to negotiate—at all. Most of the books on the market today miss this completely. Obviously I can’t tell you everything that my book has in 120 pages, but here are a few tidbits that should help you.

1.   Don’t fall into the media ads trap and think you’re going to get something great for a low price. These ads are only meant to get you on the lot where they can work on you and get you to buy something else.
2.   Don’t buy based on emotion. Ok, easier said than done, but this is one of the main ways dealers get you to buy, and then get you to buy more options, additions, insurance, etc. It’s also the main way they get you to pay more money every month for your loan.
3.   Research before you go. It sounds like you’ve already started this, Jeff: keep it up. The more you know the better, especially about the real price of a vehicle and options. Informed buyers make more decisions based on what they know, not what a dealer tells them.
4.   Dealers really do buy vehicles at invoice price, regardless of what people like to believe. They may have extra incentives that lower their purchase price, but that’s separate. Go to a site such as www.kbb.com and look up the vehicle you’re interested in. In addition to MSRP and available options, you’ll find the invoice price, and any rebates or other incentives. ALWAYS start from invoice, subtract any rebates and incentives, add any extra costs of options (never, ever pay full price for them), and then add a reasonable dealer’s profit. How much is up to you since it depends on how much you want the vehicle. On a new $25,000 vehicle 3-4% is a good profit for them to make. They won’t think so, but you’re the one spending your money to buy what you want, not what they want to sell you.
5.   If they don’t take it tell them you’ll buy right now at this price; if they don’t take tell them you’re going to buy a vehicle today one way or the other, and then politely ask them for directions to the next dealer who has what you want. Stick to your price, whatever it is. You may be willing to go an extra $500 for example, but only do this as a last resort.
6.   NEVER, NEVER, NEVER negotiate a monthly payment. Always work from the vehicle price. A purchase price has a fixed payment amount based on the interest rate and length of the loan. It’s not rocket science, but every day thousands of people do it backwards which can result in you’re paying thousands more and never realizing it.
7.   Finally, question everything. Dealers hate this, but you need to do it. It’s your money that you’re spending, not theirs. I can’t tell you how many times I’ve heard good questions from buyers only to have some very confusing answer with a lot of numbers in it from a manger trying to close the deal. Not wanting to sound like they didn’t understand, buyers typically nod their heads as if they really knew what they just heard. It’s a smoke screen, a common tactic used in the industry. And always take a pad and calculator with you to check any numbers they give you. I can’t begin to tell you how much they hate this!

Jeff, the bottom line is that buying a car is all about you. It doesn’t have to be adversarial, and it can and should be fun. But stick to what you want and want to pay. Be polite (they’re not always) and don’t let them talk you into something you don’t want or need. There are literally thousands of cars available, new and pre-owned, for you to pick from. Don’t get wrapped up in something you just have to own and make a bad financial decision: walk away and look for something that’s good and right for you.

Ok, short of this (long) answer, my book will give you all of the details and other things you need to consider that can have a huge impact on what you pay. For example, about six weeks ago I know a woman who, by her own admission, saved about $5,000 buying a 2003 Honda Civic for her daughter. Boy, was she happy! Personally, I would rather have that money in my pocket rather than literally putting it in a dealers pocket and getting NOTHING in return. I don’t know about you but $5,000 is a good chunk of change to me.

Hope this helps you, Jeff.

Happy Holidays,


Ron