12 Most Important Things to Know Before Buying a Car
Buying a car can be a daunting task. Most of us are not automotive experts, we just need transportation. And, yes, we like the way certain models look or the way they zip along the roads in commercials. But we don’t know the first thing about how to wisely get them into our driveways.
The automotive sales industry is not the most reputable. Navigating the murky waters of buying a car without getting ripped off is a work of art. Lucky for you, you’re dealing with someone who has been on both sides of the contract. My first job out of college was as a car salesman.
Not all car salespeople are shady. Not all dealerships are trying to trick you. But many of them will do anything they can to take you for everything you’ve got. The only way to hold up your own is to be prepared. Start thinking about how to buy a car before you’re even shopping…
1. Know what you want and what you can afford
As with any purchase, the first thing to do is consider your values and your limitations. What matters to you most? Do you need something large or something compact? Something light in color or dark in color? A specific color? Horsepower? Safety? Technology? Stereo system? Everyone cares about different things. Know what you want. See what’s available. Then, decide what you can afford. Look exclusively for those makes and models.
2. Do your research on the web
There is no longer any excuse for car buyers to be uninformed. Websites such as Car Gurus, True Car, and Autoblog provide neutral, informative resources to help you make the best decision. If you’re purchasing a used car, I would also recommend actually shopping for a car on the web via sites such as AutoTrader or Cars.com to narrow your options down to a handful.
3. Always see the car in person
The salesperson always faces a difficult dilemma when you ask about the condition of the car. “Condition” is a highly subjective term. If you are buying a used car, it isn’t going to be perfect. The salesperson thinks, “Should I overstate the problems and drive the customer away or should I understate the problems and run the risk of making the customer angry when he/she arrives?” Some salespeople will take pictures or videos of the car but the lighting often makes them unreliable. If you can, always go see the car for yourself. That’s the only way to know what you’re getting for sure.
4. Your car is never worth as much as you think
It’s all fine and good if you want to “see how much your car is worth” by putting its information into websites. But, whatever number you get, it’s going to be worthless. Those websites are not buying your car. And everyone has an agenda. While Kelly Blue Book can be a very valuable resource for finding information about makes and models, its trade-in values are not law. The site relies heavily on ad revenue generated from the people who go there to appraise their cars. Incentive to give inflated values? Maybe. Maybe not. But your best bet for getting a realistic value for your trade-in is to take your car to dealerships and offer to sell it to them. Don’t tell them you’re buying a car; just tell them you’re selling yours. Average the number you get from three or so dealerships and that will be a realistic expectation.
5. Everything is not always negotiable
If you find a rare car at a rock-bottom price that you’re driving 90 miles to see, don’t expect to haggle. As a matter of fact, the era of haggling over a car’s price has just about died. The internet has killed the negotiation process. Many times, if you communicate with an internet department, you may have a price negotiated before you even walk in the door. But, if you’ve done your research and you know what’s out there, you’re kidding yourself if you think the dealer is going to drop the price just because “No one pays sticker for a used car.” There is no sticker anymore. The sticker is dead. Internet pricing is highly competitive. Don’t expect a huge discount — or maybe any discount at all — if you find a car online.
6. Salespeople are not mechanics
Don’t be surprised if your salesperson doesn’t know anything about the mechanics of the car. To most of them, it’s rocket science. Salespeople know about the options and features, what makes the vehicle safe and comfortable — you know, the things that really matter to you. But, if you want to know why a car is making a noise, a bad salesperson will make something up that sounds good and a good salesperson will simply say, “I don’t know.” If a mechanic is available at the dealership, ask him or her about the problem. Even better, if the dealership will let you, take the car to a third-party mechanic down the street for an evaluation.
7. Salespeople are often as afraid of you as you are of them
Most of us see salespeople — especially car salesmen — as sharks. They’re ready to attack you as soon as you walk on the lot. The truth is that most people selling cars are scared to death to talk to you. They know that people see them as the scum of the earth and it’s hard to start a conversation with someone who hates you before you even make eye contact with them. As a rule, more seasoned salespeople are likely to have the typical car salesman persona. You may want to avoid them but, then again, they’ll know a lot more about the product. On the other hand, younger salespeople won’t know much about the problem, but they’ll be a lot less pushy. But, whatever you do, don’t be jerk. Remember that car salespeople are people too.
8. Beware of hidden fees
Car dealers are notorious for the obscure fees that show up on the contract when you’re signing the papers. The most common of these undisclosed fees is the documentary fee, or “doc fee” for short. Almost all dealers have this fee and claim that it is a legal or administrative fee of some sort that they are required by the state to pay. While it is true that they have legal and administrative expenses, everyone has legal and administrative expenses. The “doc fee” is really just a pocket of safety in the profit of a car if they can’t sell it. At least they can get the “doc fee” out of it. I’m not suggesting that you refuse to pay the “doc fee.” Most dealers won’t waive it. I am suggesting, though, that you ask what it is upfront from every dealer that you consider buying a car from. It’ll save you a lot of headaches when you’re in the finance office.
9. Your credit does matter
I can’t wrap my head around this, but many dealers heavily advertise their unique ability to get people who have terrible credit into great cars. For the most part, they’re just gimmicks. They try to get you in the door to see whether or not they can’t get you approved but, most of the time, they can’t and they simply waste three or four hours of your time. And, obviously, if you have bad credit and can get approved by a bank, you will be paying a ridiculously high interest rate. Don’t fool yourself. Car dealers aren’t miracle workers. If your credit is bad, your chances of buying a car are not good.
10. Go with the best interest rates
Dealers will always try to get you to finance in-house. They often make more money in the finance office than they do in the selling price of the car. It’s harder for you to see the money you’re spending when it’s extended over three to six years. But the dealer sees it right away. Shop around for interest rates. Sometimes, the dealer really will be able to get you better rates through the banks it uses. Sometimes, you’ll do better yourself. Just be smart and finance with the lowest bidder.
11. Don’t forget about car insurance
This is something that most people never think to consider when buying a car. How will the new purchase affect their insurance policy? Some cars can raise insurance premiums. Others can lower them. Most don’t really affect them all that much. Before signing a contract, call your insurance representative and give them the VIN number of the car to get an estimate of how it would affect your premium.Mila Araujo, Director of Personal Insurance, Ogilvy&Ogilvy had this piece of advice: “One thing people don’t realize is that different insurance companies have different “appetites” for cars. Just because your current company was the cheapest for your old car, doesn’t mean they will be for the new one. Make sure your broker checks all the available insurance companies and doesn’t take the easy way out by just doing a “substitution” – you’d be surprised at how much better the rates get when they shop and negotiate. Ask your insurance representative how many insurance companies they checked for you – keep them on their toes! It’s your money.” More insurance rate tricks and tips found here.
12. Get everything in writing
I’m typically not a big fan of cynicism, but I’ll make an exception here. Never take their word for it. A handshake means nothing without a written contract. If the dealer promises you anything, politely ask them if you can get it in writing. If they refuse, you probably don’t want to buy a car from them. Most of the time, though, they will concede. When they do fail to deliver on a promise, it’s not likely because they’re liars. It’s often most likely because they forgot about you as soon as you drove off the lot and went right on to the next customer. They sell a hundred cars a month. You buy only one in 5 years. Just get it in writing. It will make everything a lot simpler.
As far as embracing the new paradigm of transparency and authenticity in buyer-seller relationships, car dealers have a long way to go. Sadly, most of them are way too entrenched in the tricks of trade to have open, honest conversations about their methods and motives. That is why buying a car often becomes more a confrontation than a transaction.
It doesn’t have to be this way. I have a dream that people will one day be able to buy cars without the fear of being scammed. But, until that day, you’ve got to be informed. Don’t be a jerk. Don’t lay into the salespeople. Just be ready for anything that might occur. The worst thing you could do is get caught off guard. Above all, know your stuff.