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Personal and Business Banking

Auto Buying Step by Step

Chapter 5: At the Dealership

  • Summary
  • Article

Chapter 5: At the Dealership

  • Simple Rules to Remember
  • The StreetWise Buyer's Fact Sheet

At the Dealership

Some Simple Rules To Remember

  1. Narrow your choice to one or two models or makes before setting foot on a car lot.

    Why? Trying to think about a big list will do nothing but confuse you.

  2. Choose two nearby dealerships that carry the vehicle you like.

    If you've done your homework, where you buy isn't important as long as the dealership is reputable.

  3. Find only one car at each dealership.

    Again, more cars mean more confusion.

  4. Take control of the transaction.

    Tell the salesperson you are not buying a car today under any circumstances, but you will buy soon. Today you are just shopping and fact finding. Check the car out. Take a test drive. But be firm and don't let the salesperson lead you into any discussion of buying today. If you start to feel pressure or confusion leave immediately.

  5. Copy all the information from the Manufacturer's Suggested Retail Price sticker before leaving the dealership (MSRP, not the dealer's sticker).

    The MSRP is the lowest priced sticker. Copy the base price of the car, the price and name/code of its options, and anything else listed on the manufacturer's sticker. For now, ignore the dealer's sticker. It contains hugely inflated profits.

    NOTE: Pickup trucks, and full-size conversion vans, are not required by law to have a MSRP. So the price sticker on the window may be any figure the dealer wishes. Trucks and vans, however, have a specific cost. Copy down the stock number, the base vehicle and option codes, and prices for the truck or van you've picked. You can find cost information on trucks and vans through the CUDL AutoSmart, Edmunds and NADA Guides web sites.

  6. Compute the dealer's invoice cost – A very important step.

    Why? Dealers want you to negotiate down from their inflated asking price, a very expensive way to negotiate. The StreetWise approach negotiates up from what a dealer paid for the one car you like. Don't ever think in terms of percentage discounts off dealer asking price. Don't ever think “sale” price. Know what the dealer paid for the car you like and negotiate up from that. It is hard to nail down the true dealer cost. The CUDL AutoSmart and Edmunds sites might help you estimate it and find out about rebate and incentives available.

  7. Check to see if the car will fit your Available Cash.

    It's the moment of truth. After you pay for the car, and give the dealer a profit, and pay tax and other charges, will you still be in budget? We have a simple worksheet to help you determine this, but first decide how much profit you want to pay a dealer, the last variable in the transaction.

    What's a fair profit? You have a perfect right to pay all the profit you want. But if your objective is to pay the least profit a dealer will take for the car, you'll need to start negotiating up from what the dealer paid the manufacturer for the car. That figure usually includes hidden dealer profit. And at times, a dealership will be happy to accept cost rather than lose a sale. The only way to know whether a dealer will do so is to offer that figure and stick to it for a while. But if starting at zero bothers you, add any figure you'd like as a profit figure.

The StreetWise Buyer's Fact Sheet

All that information you've gathered is going to pay off. Here is where you determine how much you can offer for that car you like. Use only whole positive numbers – no commas, decimals, or negative numbers.



One Other Piece Of Important Information

If you're planning to trade your car in, your old car's wholesale value is already included in your Available Cash figure. You've, in essence, already turned it into cash. But dealerships don't talk about the transaction like we do. They say "Okay, what you owe us is X dollars and your old car." That dollar figure is called the difference figure, and you should figure it right now for the car you like.



Now compare your maximum offer to your Available Cash to determine if you are over or under budget. Do you see the importance of this little worksheet? It shows the entire transaction in its simplest terms. If your Available Cash figure is greater than your Maximum Offer, your payment is going to be within your budget.



Wouldn't that be nice? If your Available Cash is less than your maximum offer, you'll need to find more cash, expect a higher payment, or look for less expensive wheels.


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