Car Buying Basics - Take Three

It's time to shop! I am going to give you a bunch of websites and tools to use in your hunt and haggling. Unless you choose a no-pressure/no-haggle dealership like CarMax (although the one time we shopped there, it was no haggle but HIGH pressure), you should be prepared to negotiate price.

If you don't have a lot of time to research every aspect and you know the make and model of the vehicle you want, Consumer Reports has an amazing tool to help you negotiate a good price. This tool was one of the best purchases we made in this process. One other tool that you should not skimp on is the Carfax report. This report will show you some of the repairs done on the vehicle (if done by a garage that reports repairs - many do not), if the odometer is accurate, and if there has been major damage (rebuilt after accident, flooding, etc).

Be prepared with information to back up both the price you are offering to pay for the vehicle and the price you want for your trade. When the dealership gave us the $2000 offer on our Honda trade, DH pulled paperwork out from NADA and Kelly Blue Book showing trade values. Having this information at his fingertips was quite helpful when the manager took him to the computer to pull up their own information.

Once you have gathered your information, have fun! Go for a few test drives. Put the vehicles through their paces. This is a major purchase. Many people spend more time and effort for a stereo purchase than they do for a vehicle purchase. By doing a little research before hand, you can save a lot of money.

When it is time to negotiate, don't be afraid to walk away. Here are tips that served us well:

• Don't say right away that you plan to trade something. The trade-in should be a separate transaction so you know what you are actually paying for the car and what you are getting for the trade.
• Don't be afraid to walk away. Many times, we got the dealership's best price on a certain vehicle and said, "Thank you" and went on our way. Every time, we got a follow up phone call. Armed with these "best prices," you are able to use the lower prices as leverage to bring the higher prices down. In our van transaction, the manager actually called another dealership with a similar van that was priced less. At the time, the dealership was offering a pitifully low price on our trade and had mentioned that his competitor may have the van for less money but wouldn't offer as much for the trade to make up the difference. DH called his bluff. When the manager called his competitor, he learned they would offer a full $1000 more for the trade.
• Don't assume the deal is done when a price has been agreed upon. Some dealerships may try to recoup some profits through creative financing. Make sure you understand the terms completely before signing anything.
• If you are buying a used car, don't be afraid to ask to have your mechanic look it over. Don't be afraid to work some repairs into the deal. We had a check engine light on at the second test drive. In our deal, the engine light and whatever problem caused it would be fixed before we took possession. It took over a week for the problem to be fixed correctly, but now we have a great vehicle in great running condition!
  

Happy shopping!

Car Buying Basics - Take Two

So, now you have an idea of what type of vehicle you want and the rough price range you hope to pay. When we were in this step, we had narrowed our search down to a mid-sized SUV, minivan, or large sedan - something that would fit 2 and potentially 3 carseats that we could use as a family car for long trips with luggage and the dog. We had pretty much decided on an SUV or sedan with 4WD/AWD (we live in the mountains and winters can be rough) but we knew we wanted a minivan eventually.

You have also made the decision about what to trade or sell if applicable. We went back and forth on this issue as well. My car was a 13 year old beater that we just replaced the transmission and knew needed brakes and knew had some sort of leak (turns out it just needed a new power steering pump - not too pricey). My car had a Kelly Blue Book trade in value of a whopping $500. DH's car was in much better shape - a 1999 Honda Accord that drove great. The biggest problem was it was a stick. He had developed foot problems and has been getting shots in his left foot. Shifting wasn't very fun for him. I hadn't driven the car in over a year. I know I am able to drive it and now that most of my anxiety issues have resolved, I could relearn, but we also knew that when I am pregnant again, I would quickly be unable to reach the clutch with my belly in the way (I could no longer drive that car at 5 1/2 months pregnant). Lastly, the Honda had a much higher trade-in value. In the end, we traded the Honda. We thought about doing a private sale. We had done that in the past and decided it wasn't worth the extra hassle for the relatively small amount of money we'd make above trade-in value.

Let's talk finances. I am a huge Dave Ramsey fan. DH and I took the Financial Peace University class last year. We've always been very careful with our money and have tried our hardest to stay out of debt and to pay off my student loan. We have never had a car payment. We never wanted to have a car payment. When we looked at our situation, we weighed everything carefully and decided to finance a small amount and pay extra to get it paid off as soon as possible. If the medical conditions weren't an issue, we definitely would have paid cash. Dave Ramsey suggests always paying cash and never buying brand new unless you have over a million dollars. He feels that unless you have a LOT of money, you just can't afford to take the butt kicking in depreciation with a new car.

I strongly urge you to consider saving up to pay cash for a car. Pay yourself a car payment into a savings account each month. Scrape together as much cash as you can. If you are in dire need of a car, Dave suggests buying what you can with cash even if it is only a $1000 car. Drive that car while you continue saving up money. Once you can, sell the $1000 car for $1000 (no depriciation left at that level) and use what you saved up plus the sale price (ex. $1000) to move up to a $2000 car and so on until you are in a comfortable car.

If you are unable to pay cash outright, I suggest keeping your cost down as much as possible and financing as little as possible. Shop around for rates before purchasing. You can get some quotes, ideas, and information from Bankrate.

Now, for the fun parts! You are just about ready to start test driving! I don't have the willpower to go for test drives without being at the point where I can buy. DH can. Stop back tomorrow for some great links to fill in all the information gaps so you will be ready to shop smartly and buy smartly. I leave you with a FANTASTIC article that looks into the inner workings of car dealerships and car salesmen. This is a long article but a very worthwhile read. Enjoy "Confessions of a Car Salesman."

Car Buying Basics - Take One

And so begins the series on car buying. My husband and I tend to research any major purchase we make to the point of overkill. I take that back. Overkill is an understatement. We do A LOT of research. This week I will write about what we learned through our car buying experiences. I feel like we got a good deal. I'll start with that and let you decide.

Our deal. We got a base model 2005 Nissan Quest minivan with 71,000 miles on it. The asking price was $9100. We paid $8000. The offer for our trade was $2000. We got $3250 for the trade. We got a minor engine repair covered before the purchase plus have free tires and oil changes for the life of the car plus an engine warranty as long as we follow the strict rules on the oil change program. The only thing we need to pay to stay in the oil/engine/tire program is $35 every 6000 miles for a tire rotation. After all our research, we saw this as a pretty good deal. We have a very reliable vehicle that suits our needs and will grow with our family.

Now, step by step, how did we get to that deal? I'll start with the first step - Know Your Needs. This step may seem obvious. This may seem easy. For us, this may have been the hardest step. Ask yourself:

• What is my price range? (I highly recommend paying cash for all cars - more on that later)
• What type of vehicle do I need? (sedan, coupe, SUV, minivan, truck, etc.)
• What size do I need of that type?
• What features do I need? (4WD, AWD, manual, automatic, etc)
• What bells and whistles would I like to have?

Once you narrow down your needs/wants, you can start your research. Spend a little time learning what vehicles are available in your price range. Get to know what is a good price for the vehicles on your list. Here are some websites that can be great help in this step:

• Autotrader.com
• kbb.com
• Edmunds.com
• Autos.msn.com
• NADA

Another part of this step is deciding if you will be trading in a vehicle or selling one yourself. Now is a good time to get to know what your vehicle is worth. Use those same sites above to get a good realistic idea of what your vehicle is worth. If you are trading, this information can save you a lot of money. If you are selling it yourself, you will be able to price it appropriately for a quick sale.

Check back tomorrow for step two!