“Please don’t make me…I’ll do anything” (ten ways to make car-buying much easier)

  • Guest post by Nadine Ballard, esq.

After I recently purchased a new car, I found it odd that my friends responded by saying “Congratulations!  Good for you!” What exactly are they commending me for? Going into debt? Surviving the ordeal of negotiating with a car dealer?  We all know it is not a pleasant experience, so I suggest that the appropriate comment to a friend should be, “I’m sorry, I hope you survived the process without too much stress.” So let me tell you how I survived in the following ten (not so easy) steps:

First: Don’t be in a hurry. 

I waited until my 13 year old car had nearly 209,000 miles on the odometer, which necessitated finding and using a very reliable mechanic (I used cartalk.com which led me to the best mechanic ever!) This delay allowed me to save a good amount for a down payment, which truly helped me control the entire transaction. I wanted to purchase a late model used car, and would have used my reliable mechanic to do an inspection.  But when I got an offer on a new car that was a better price than a used model, I choose the new one even though I was extremely reluctant to step foot in a new car dealer showroom.  My daughter practically dragged me kicking and screaming to make that first test drive.  Without her this deal wouldn’t have happened. (Surviving the process means getting help from friends and family)

Second, compare different models; Go to three different dealers.

I downloaded the FREE app from Consumer Reports, which has a handy loan calculator that instantly tells you the MSRP and Invoice price* of any car.  This helps you figure out if they are offering a good deal. The Consumer Reports App also leads you to several other reliable websites that will help you determine the true value for your trade-in.  Since the free app doesn’t give you access to their Annual Car Buying guide, I went to my local library website and found free access to all Consumer Reports buying guides so that I could read about the cars I was considering. I was pleasantly surprised to find out that their test drive showed even better gas mileage than what was reported on the window sticker.  More importantly, Consumer Reports pointed out some issues that I needed to look for in my test drive and in my conversation with the dealer. 

* Don’t assume that getting a car at invoice price is a good deal – they can still negotiate thousands less than invoice price based on incentives from the manufacturer, kickbacks from financing companies, and other profit sources.

Third: Wait for the fall. 

I waited to the end of August, when dealers offer deals to get rid of their current inventory before the next year model arrives. When I saw one dealer offering $5500 off the MSRP on all 2015’s in inventory, I called another dealer to ask if they would beat that.  Of course they said yes! They gave me numbers over the phone which made the 2015 cheaper than the price of a one year old 2014 that I had just test-driven. So I took the bait and made an appointment with the Manager of the dealership. 

Warning: Inventory information on the Dealership’s website is unreliable.  It’s not updated timely and the features available on specific cars were not always accurate. If part of your research is looking on the dealer’s website, make sure to call them to verify what you find. Their website is designed to get you to “come on down!” – not to give you reliable information.

Fourth: Take the salesman along for the test-drive.

Although I was allowed to take a test drive without the salesman, I asked him to come along.  This gave us the opportunity to talk freely away from the showroom floor.  He taught me how “turbocharge” works and was honest about some extra maintenance costs for a diesel that would be required at 40,000 miles. At the other dealer I went to, the salesman spent time on his phone while I did a test drive, and showed no real interest in me or the car. It was such a drastic difference and showed me that dealers can make the experience almost pleasant with just a bit of friendliness.

Fifth: Look at the numbers. 

Once the test drive was done, I began to take control of the show by asking to talk numbers and carefully going over the contract terms.  Remember to go over both the numbers AND the words. Right away I saw the $250 “documentation fee.” I assertively stated that fee is optional (because it’s not legally required) and I insisted that it be removed. I compromised with a reduction in the purchase price because the manager claimed he couldn’t remove the fee from their preprinted contract.

Next, I told them it was a deal-breaker if they were going to ask me to sign a mandatory arbitration agreement.  It was not in the “Default” provision of the contract, where it usually is. On this particular form contract, on the front page, near the signature line there was an area called “Other Material Understandings and Integrated Documents” with three boxes that could be checked.  One of those would allow the dealer to insert a mandatory arbitration agreement. The manager agreed that we did not have to check the box! 

Right under that box was a statement that read:

JURY WAIVER: The purchaser and dealer waive and renounce the right under federal and state law to a trial by jury for any claim.

I quickly and firmly responded that I would NOT waive my constitutional rights just to buy a car! 

Editor’s quick class on Constitutional Law: Both the United States Constitution and the Ohio Constitution guarantee us all the right to have a jury trial in any civil matters. (which usually means “legal fights over money”)  Ohio uses the word “inviolate.”  So, the next time that someone tells you that if you are against Mandatory Arbitration you are “un-American,” ask them “What’s more American than a Jury Trial?”

I assured the manager that if he could negotiate the numbers on this contract, he also had the authority to change the words. It took a call to the owner of the dealership, but they finally agreed to let me cross it off.

Sixth: Talk about money.

It was time to talk financing. By this time, the manager had figured out I was calling the shots, so after I told him that I intended to get a loan through my own credit union, he acknowledged that if I had a good relationship with them I should use them.  (Even though he admitted that the dealership gets a kickback from the financing company when they arrange financing) He explained that the advertised .09% financing was only available as a choice between that reduced rate OR a cash rebate, and the cash rebate was a much better deal. 

Here’s where it’s good to get out your phone, use your calculator or the Consumer Reports App to start verifying numbers. Ask to see the current offer in writing, read the fine print and do the math to see if a higher rate of interest will cost more or less over the life of your loan than the total of the cash rebate.  Just showing the dealer that you are verifying his numbers helps set the tone that you are in control of the transaction.  At this point, they asked, but knew it was pointless to try to sell me any extras and I quickly said no to the extended warranty, gap insurance, and whatever else (I quit listening, and just repeated NO, NO, NO!!).

Seventh: Figure out what you can afford. 

Although everything I have read about buying a car warns you NOT to make decisions based on what monthly payment you can afford, once you’ve locked down the price, the rebates, the discounts and the trade-in value, you should figure out your down payment and the length of your loan based on how much you want your monthly payments to be. When you are arranging your own financing after you have picked out the car, you will need to decide at the dealership how much you intend to pay upfront as a down-payment, so they can prepare a final contract for you to take to your credit union.  We simply looked up the current interest rate on my credit union’s website.  They were very helpful in running the numbers to help me figure out how much to put down in order to keep my monthly payments reasonable during a 3 year loan. I would have preferred a two year loan, but the payments were too steep – so I made a mental note to talk to my credit union about ways to pay off the loan early.

Eighth: OEM parts. 

Anxious to complete the transaction, I left the dealership to head to my credit union and to my insurance agent. (Here’s where I made a mistake.  But I’m willing to blame the dealer for letting me leave without giving me the opportunity to read the terms of the manufacturer’s warranty, or giving me a copy as he is required to do –  before the purchase – under Federal law). It’s essential to look at the warranty for one really important reason: what it says about OEM parts.

What is an “OEM part?”  If you don’t know you may inadvertently VOID your warranty – so pay attention!  OEM stands for Original Equipment Manufacturer and it refers to parts that are made by the company that built the car.  MOST new car warranties require you to use OEM parts or your warranty will be voided.  The problem is: MOST insurance policies only cover payment for a collision repair facility to use NON-OEM parts. 

“So what?” you say.  “A part’s a part.” That’s probably true. Even more so when you’re at the shop and the clerk says “We can give you a flux-capacitor that is made by Toyota for $580 or we can give you one made by a private supplier for $259.”  Most of us will think about how much we’re saving and not about whether the warranty on our car will be voided when it breaks because of a part that is merely connected to the flux-capacitor.

Ohio law requires the insurance company to tell you when they give you the estimate for collision repairs that the use of non-OEM parts might VOID your warranty.  But, you have insurance, why should you make this kind of choice?  You have to decide between letting them void your auto-warranty or pay extra for OEM parts. (Sometimes a lot extra)  What can you do? When you call your insurance agent to add the new car onto your policy you should ask to pay the extra cost to get a policy that does pay for the more expensive OEM parts.  My agent told me it only costs an extra $7 per year, which is incredibly reasonable. After my new car warranty expires I can just drop the extra charge, because it won’t matter to anybody whether I use OEM parts or non-OEM parts.

Author’s reminder that you’re not quite out of the woods: My sister drives a Lexus SUV, and was involved in a rear ender last year.  The repair shop had to push the insurance company to approve the estimate with OEM parts, even though her insurance policy allowed for OEM parts!  One of the parts that had to be replaced was a simple 4 or 5 inch wide film (sort of like scotch tape) that was placed over the bottom of the back hatch opening to prevent scratching. The NON-OEM part was $27.00, the Lexus version (with the name Lexus on the tape) was over $300.

Ninth: Get your money elsewhere. 

Going to my credit union was a breeze. I am in a friendly place, they know me, give me free coffee and are happy to chat about stuff like the evils of auto-title loans. There, I am in my comfort zone, and happy to complete the transaction free from stress or a closing agent who is more concerned with loading up my loan with unnecessary fees. They don’t have to run a credit report (which is often unreliable…don’t get me started).  They already have my financial history and of course instantly approved my loan. I also set up automatic loan payments to coincide with my directly deposited paycheck, in an amount a little higher than the minimum payment because there is no penalty for paying it off early. It couldn’t be easier!  

By the way, I was also interested to learn that my credit union offers an open enrollment (you can sign up anytime) extended warranty that would allow me to use my own mechanic.

Tenth: Ask your insurance agent for a little discount action.

I stopped by my insurance agent, thinking it will take 5 minutes to have them drop the old car and add the new. Luckily, I had the time to chat with my agent, who wanted to run a few numbers and see what they could do to reduce my premium, which under the same policy would have gone up about $400 a year to add on the new car. After spending more than an hour there, she was able to reduce my annual premium, so I will actually pay less for the new car than I was paying for the old one! (She is the one who asked about the coverage of OEM parts, which made me realize my earlier mistake) 

Even though all those TV ads keep telling us to jump to the cheapest insurance company, my agent explained that loyalty discounts for sticking with the same company are far more important than a one-time discounted rate. My advice: Build a trusting relationship with your insurance agent and they will get you the best policy at the best price. (While you are there, ask about identity theft insurance – instead of paying hundreds of dollars a year to someone like Lifelock.  You can get the same coverage for about $15.00 a year through your homeowner’s insurance)

I am going to stop counting because I promised this was ten easy steps.  But, if you stop reading now, you’ll realize that I don’t have my new car yet!    

Next: Picking up the new car and dropping off the old.

I had to ignore the sad and guilty feelings I was having for giving away my old car and trading her in for a new model. I felt like I was trading in my old dog for a new puppy!  All I can say is “Get over it,” and focus on all the stuff you have to learn about the new technology in cars – plan on more than an hour to have your salesman train you how to use the Bluetooth technology, the fancy radio, the keyless system, and of course the “nav” (or navigation system).  My salesman promised that my first oil change was free (twice!) but I never saw anything in writing. 

BEWARE: Ohio law no longer requires a dealer to put all his promises in writing, so it’s your job to ask for something in writing to back up any promise.

When I got home, I spent hours reading the manual, watching instructional videos, and it took forever to re-program my garage door opener, but when it finally worked, I used the Bluetooth technology, found the right song on my phone, and the whole neighborhood heard me singing along with Helen Reddy, “Oh yes, I am wise, But its wisdom born of pain, Yes, I’ve paid the price But look how much I gained, If I have to, I can do anything,  I am STRONG, I am INVINCIBLE, I AM WOMAN!!!”

In summary, here is my list of tips:

  1. Put this off as long as possible: Find a good mechanic and save for a big down payment.
  2. Use the Consumer Reports App, and your library website free access to the Consumer Reports Buying Guide.
  3. Wait for end of the model year discounts, compare prices and get dealers to beat others pricing.
  4. Choose to have the salesman go with you on your test drive.
  5. Negotiate NUMBERS and WORDS – preprinted fees do not make them legally required, and never waive your constitutional rights!
  6. Do some math. Compare cost savings, calculate payments and say NO to add-on charges like extended warranties.
  7. Figure out what you can afford
  8. Make sure your new insurance policy covers OEM parts.
  9. Get financing through your own credit union.
  10. Get all promises in writing.

Posted by: Nadine Ballard (who is admired so much by Consumer Courage that he now has “I am woman” on his work PC’s Google search history)