Buying a car

[BlingObsession]

Calling @sledge - I think I saw on one of the threads that you mentioned your experience in purchasing a car from a car yard? We are repatriating to Australia in a couple of months and will need to purchase cars for myself and my husband. What tips and negotiating techniques do you (and others) recommend?

We have only leased and/or had company provided vehicles for the past decade or two so we are totally out of the loop with the latest things to watch out for.

Any advice anyone can give, would be greatly appreciated.

 

[sledge]

Wow, first off...congrats on your return! No matter how great another country is, it always feels good to be "home".

I'm a car enthusiast so I've managed to buy, sell and trade a little over 30 different cars so far, lol. Some were hot rods and go fast cars, while others were offroad vehicles and then some were just common point A to B vehicles. I'm slowing down as I'm maturing but if my resources were unlimited I'd likely be like Jay Leno and his crazy collection. Sledge's Garage...has a nice ring to it!

Through many good & bad buying experiences, here are some things that tend to work in my favor and help me get the best deal:

1. Before considering any car, examine your finances and determine what you can afford. This should be a reasonable number that allows you still live and have fun. Never let your car own you.
2. Do your research and figure out a few different models that you would seriously like to own. Make sure they fit well with your financial goals. There is no need to search for $50k cars if you can only afford $30k. Find something in your range that you think you will like and become educated on it. Also, I like to do price history research so I know the approximate market value of the car, and this helps me know when I'm negotiating if the price I am asking for is reasonable or not.
3. Decide if you will finance or use cash reserves. Although my first experience was limited, since then I've had a few opportunities to choose. Sometimes I've elected cash and others I've financed as the interest rate was 0% or so close it didn't make sense to use my cash reserves. The security and missed opportunities of that cash outweighed the few hundred dollars of financing charges (assuming you keep the vehicle full loan term).
4. If financing, check your credit and know your numbers. Then work with your own banker to determine the loan amount, interest rate, term and ultimately payment that you will be comfortable paying and that the bank will loan you. This is advantageous for you in several facets. It establishes you as a serious buyer. It puts leverage on your side, just like if you had cash. It sets a necessary maximum boundary so you don't overspend.
5. Never buy a car based on payments! I cringe when I hear people say this, "I told them only $300/mo and they did it!". There are opportunities galore to rip you off here. Change interest rate, term length and financed amount and a slick sales or finance guy can pull one over on you. I'm the guy with a finance calculator app on my phone. I know my rate and terms (pre approved at my bank) so I don't need them to figure out my payment. I just need them to sell to me at the price I tell them and I will get the payment I want. If they come back at a different number I find acceptable I can re-enter that number in my calculator and determine if I like that payment. Also, with a finance calculator you can enter the KNOWN different variables (finance amount, interest rate, loan term, payment amount, etc) and search for the UNKNOWN. So if a dealership tells you, yes we can do $300/mo. Then you ask for how long and what interest rate. Plug those numbers into the calculator and it will tell you the sales price. Or maybe they tell you sales price, loan term and payment amount but avoid the interest rate. Again, plug the known variables and search for the unknown (in this case the interest rate). I've helped friends and family buy cars before and many people are "payment buyers" and as such I catch them trying to offer stupid high interest to make a payment fit their maximum amount. Make sense if you think about it. If you can finance $15k for 5 years at 4.5% it gives you a payment of $279.65. If your maximum payment amount is $300 and all other variables stay the same then the dealership could change your interest rate to 7.5% or 8% and present payment a payment option of $300.57/mo or $304.15/mo, respectively. If your max payment is $300, probably both would be acceptable to most buyers. And if your credit is questionable and you didn't pre-qualify the sales people could give you a story about that too and how they are "helping" you. But if you got pre-approved at 4.5% your payment would not only be lower but you'd only pay $1,778 in interest. With the 7.5% and 8% interest rates you'd pay $3,034 and $3,248 in interest.
6. Car dealerships make a good portion of their profit in the finance office. Extended warranties, BS documentation fees and financing in general. I dove into the financing above. I'll expand on the warranties below. This leaves the documentation fees. I hate these with passion. It seems most places charge some silly fee for typing up the paper work. I consider this the cost of doing business so I'm pretty adamant about NOT paying them. That works about half the time. The other half I negotiate something else into the deal (tinted windows, a free year of oil changes, etc).
7. Negotiate everything -- including extended warranties! About every extended warranty is marked up 50% or more. Never buy one without negotiating the price down. Also, keep in mind, math nerds called statisticians figured the probability of them paying out a claim that justifies the warranty amount AND includes profit. They have better data and crunch numbers better than most normal people. They are betting against you. Because of this I am normally NOT a warranty buyer. I did make an exception on my last purchase because of all the electronics, GPS, etc. Plus I beat them down to $400 for it. Should my heated steering wheel, cooled leather seats, GPS/satellite radio head unit, etc. go out this will easily pay for itself with ONE claim. On vehicles with less gadgets I find extended warranties less desirable. But some of this comes down to risk tolerance and most vehicle manufacturers offer 100k warranties on the engine and main drive line components. If buying used, be aware that most factory warranties DO NOT transfer to anyone but the original purchaser. If they tell you otherwise, you should verify with the manufacturer directly.
8. Get EVERYTHING in writing. On items they must do for you AFTER the sale, make sure you have a copy of your paperwork and follow up and ensure they do this. I helped a friend's daughter negotiate a new car purchase and one of the items she got was tinted windows. Both her and her mom were too timid to go back and collect the rest of what was owed to them. I tried to convince both to let me handle it and they declined saying it was okay and they had already gotten a good enough deal.
9. If buying a new car it's easy to find sites online that will identify the invoice price. In general, that is the MAXIMUM I will pay for a new car. Many people think that is a great deal and it's "fair" I guess. But it's also easy for dealerships to have invoices they show you with things they did like clean the car, etc. as extras tacked on. Also, there is what they call "hold back" on a vehicle. It's around 3% and normally for advertising, etc. Most dealers will fit tooth and nail to keep it, but I've had a few cave in. Also, many times the various manufacturers will offer "dealer cash" for pushing a certain line or quantity of vehicles by a certain time. This can be harder to find but should be included in your research. These amounts can vary.
10. As silly as it sounds, buying a car on the last day of the month is somewhat true. They all have quotas to meet, both sales people and the dealerships. Dealerships can get some pretty hefty rewards by hitting different quantities of vehicles each month, and if you help them achieve that next level then losing money on your deal may provide a windfall overall.
11. I personally don't like sales guys much. I prefer to deal with the internet sales department when possible, and managers that can make the decisions. It drives me nuts when you have a guy going back and forth to his manager and getting you to sign the X saying "you will buy today for this price". Ugh. Most the time I just tell them to get the manager so we can look each other in the eye and talk.
12. It probably shouldn't have to be said, but treat people respectfully. Even though I push the numbers hard and am totally willing to walk out of a deal if I don't like it, I am respectful. Most people I walk away from the table as friends, and many times they will comment about the hardcore negotiating.
13. Make sure you check manufacturer incentives. If given a choice between 0% interest and cash, it's almost always more advantageous to take the cash unless the cash is so little or interest rates are otherwise so high it creates an unusual gap. But normally to get 0% your credit score has to be above average so you'd likely already be getting a really good interest rate. The other problem with taking the interest rate is that for you to realize the maximum savings you must keep the vehicle the FULL loan term. Many people take a 5-6 year loan but keep a vehicle for 2-3 years and then trade. If you are one of those people, you are only getting about half the benefit.

There are a few other things to consider that doesn't really help you negotiate the best deal for yourself but helps put you in a better position down the road:

• Try to avoid any loan term over 5 years.
• If you have a current vehicle, try to sell as a private seller ahead of time. You will maximize your profit.
• If financing, try to utilize funds received from a private sale or simply saved to help put down on your vehicle. It will help with the payments, and also help you to stay ahead of a "negative equity" situation should you need to sell/trade the vehicle in the future before the expected break even point in the loan term.
• If buying new, or rolling negative equity, into a car deal then spend the few hundred bucks and secure a GAP insurance policy. Basically this covers any difference between the financed amount and market value of the car.
• Try to avoid rolling any tags or taxes into the purchase price of the vehicle.

 

[Austina]

I don’t know what the situation is over there, but we’ve bought the dealer’s demo on a couple of occasions, very little mileage, came loaded with lots of extras, and 1000’s off the full retail price. Everything checked prior to our purchase, full warranty, for us a win/win situation. One car was only 6 weeks old, the other was a few months old.

 

[VRBeauty]

My last car was a 2-year old lease return. It's a plug-in hybrid, and the hybrid display included information which showed me that it had been driven and treated well. The dealer had spiffed it up, including four brand new tires, and it came with a one-year manufacturer's warranty. (Because it's a hybrid and this is California, it also comes with a 10 year warranty on the battery, including roadside assistance, and 15-year warranty on other emission-related devices - but I imagine that doesn't apply in Australia!)

I don't remember the specifics, but I saved an awful lot buying a lease return as compared to buying a brand new car. I think it was in the 30% neighborhood.

 

[lyra]

We just bought a new car. The salesperson would have us believe that there is only $2000 profit to be had on a $34K vehicle, so therefore there would be little room for negotiation. We were like, yeah, right! Stay civil and pleasant and ask for extras to be included where possible, especially if there doesn't seem to be much wiggle room. Honestly, I'm tired of negotiating. We did very little this time. We picked a car that had a great package of items included and it was a limited edition. Do your best.

 

[BlingObsession]

Oh my goodness, @sledge thank you so much. What a huge effort you put in for us. You have no idea how much I appreciate it.

Our "plan" is to buy demo models - at this stage anyway. That way we get the new car thing with a slightly less hefty price ticket. At least that's our thinking but as I said - we are effectively complete novices now having been out of the Australian system for so many years.

We will be paying cash - unless we can get 0% interest of course which I think is unlikely - I haven't seen anything online which indicates interest rates that low. We would have to consider the pros/cons in the event there is a very low interest rate offer - nothing is for free as they say.

And yes, we have a maximum budget per vehicle. DH wants a European car - Jag, Audi or Alfa Romeo or Beemer or maybe even a Merc but on the other hand - he is thinking a Pajero or other big blokey car - guess he'll just have to drive some and see what really floats his boat.

Me - I just want a small 4 door hatch and am kind of leaning towards a Hyundai - don't really know why - it's a bit weird. I'm not really a car person. As long as it gets me there and back safely, has aircon and heating and doesn't look like it belongs in the scrap yard, I'm good.

Price history search - any pointers as to where I can get that info? I see some used cars come with a "red book" report which you have to pay for but I think that's more a condition/history report. Way back in the day, I used to have access to the Red Book and could easily check the going rates for all vehicles so I could advise my new employees arriving in Australia - not sure how to do that now. An awful lot has changed in 17 years.

Again - many thanks for taking the time to share your valuable experience.

 

[MarionC]

Bling Obsession, good luck with your search. You’ve gotten some great advice to be armed with. I used Edmunds for car research prices and reviews by owners.

 

[BlingObsession]

Bling Obsession, good luck with your search. You’ve gotten some great advice to be armed with. I used Edmunds for car research prices and reviews by owners.

Thank you. Love this community. Who knew bling and cars in the same place hahhaha.

 

[prs]

My last car was a 2-year old lease return. It's a plug-in hybrid, and the hybrid display included information which showed me that it had been driven and treated well. The dealer had spiffed it up, including four brand new tires, and it came with a one-year manufacturer's warranty. (Because it's a hybrid and this is California, it also comes with a 10 year warranty on the battery, including roadside assistance, and 15-year warranty on other emission-related devices - but I imagine that doesn't apply in Australia!)

I don't remember the specifics, but I saved an awful lot buying a lease return as compared to buying a brand new car. I think it was in the 30% neighborhood.

+1 We always buy cars that are coming off lease, and have 10,000 miles or less on them. Check it out....you'll be amazed at how much you can save over new car pricing. Usually you'll also be able get an extended warranty thrown in, or at a very low cost.

 

[arkieb1]

Another Aussie. https://www.carsguide.com.au/?gclid=EAIaIQobChMI7fXy_ti-3AIVVqmWCh0uMA3_EAAYAiAAEgI3LPD_BwE

If you want something preloved friends of ours used to own a number of Thrifty and then Europcar yards and they sold their cars at auction every 2 to 3 years. If you want something less used, there are auctions for high end and company cars that get repossessed ie low kms and someone else takes the hit on the purchase price in every state.

Our last few cars have always been brand new. The car I had before my current car was a demo model BMW sedan. I saved a heap by buying a showroom demo car that had around 1000kms on the clock and was basically in pristine to perfect condition. My current car also a BMW, wasn't a demo or a runout model but we still haggled a better than advertised price for it.

 

[GliderPoss]

Would highly recommend getting a Mazda - we’ve had 2 and both were terrific cars. Very comfortable with all the perks but no hassles! Fixed price servicing for 5 years too.

 

[BlingObsession]

Would highly recommend getting a Mazda - we’ve had 2 and both were terrific cars. Very comfortable with all the perks but no hassles! Fixed price servicing for 5 years too.

Thanks @HotPozzum - a Mazda 2 or Mazda 3 was also on my list of possibles for a run-around car for me. Will check it out when we are home and I can test drive some.

Another Aussie. https://www.carsguide.com.au/?gclid=EAIaIQobChMI7fXy_ti-3AIVVqmWCh0uMA3_EAAYAiAAEgI3LPD_BwE

If you want something preloved friends of ours used to own a number of Thrifty and then Europcar yards and they sold their cars at auction every 2 to 3 years. If you want something less used, there are auctions for high end and company cars that get repossessed ie low kms and someone else takes the hit on the purchase price in every state.

Our last few cars have always been brand new. The car I had before my current car was a demo model BMW sedan. I saved a heap by buying a showroom demo car that had around 1000kms on the clock and was basically in pristine to perfect condition. My current car also a BMW, wasn't a demo or a runout model but we still haggled a better than advertised price for it.

Thanks @arkieb1 That website link is particularly useful. DH definitely has a Beemer on his "possible" wish list - and almost certainly a demo model. With the demo models - in your experience how flexible is the asking price?

 

[arkieb1]

They will generally negotiate on demo, runout and new models if it is plated in the previous year ie made in the previous year you can sometimes get runout models as well. Depending upon where you go most cities have more than one high end car dealer in each brand, so more than one BMW dealer, more than one Aldi dealer, more than one Lexis dealer and so on, if it's a rural area compare country to city.

One of my son's classmate's parents bought a low km BMW that was a repo several states away and just paid to have it shipped here on a truck so if you find something advertised on a site like the one I linked you just either use that to haggle, or phone the dealer ship and find out how much one of their cars would cost to get shipped up or down to where ever you are going to be.

 

[BlingObsession]

Thanks @arkieb1 - very helpful.

 

[eapj]

I’m in the US - Sledge’s advise is spot on. I’m loving this thread - I’m 100% a car nut (I’m a middle aged woman) who has bought and sold a bunch of cars. I am a lurker on several car sites but don’t post much. I was just telling my husband this morning that the PS community is so much more open and friendly than the car boards I frequent! Anyway cars plus jewels in the same place is my dream.

 

[BlingObsession]

I’m in the US - Sledge’s advise is spot on. I’m loving this thread - I’m 100% a car nut (I’m a middle aged woman) who has bought and sold a bunch of cars. I am a lurker on several car sites but don’t post much. I was just telling my husband this morning that the PS community is so much more open and friendly than the car boards I frequent! Anyway cars plus jewels in the same place is my dream.

Hahahah - such a Pricescoper statement!