This guest post from Nicole is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all levels of financial maturity and with all sorts of incomes. Nicole is an active GRS commenter. She’s also half of the blog Grumpy Rumblings of the Untenured, where she and her partner-in-crime write about personal finance, novels, academia, and cats — among other things.
Four years ago, in November, my husband and I had one car (a tiny Hyundai Accent), a house that was too big, and not enough money to furnish the house. It was our first year with real jobs since leaving graduate school and we hadn’t quite caught up yet, especially with all the unexpected expenses that come when you buy a house. But that’s another story.
On top of that, I was hugely pregnant with our first child. We knew we were going to need a second car once our son was born because, on any given day either one of us could be called to use the car in case of emergency. With no parental leave (FMLA doesn’t cover first-year employees…that’s also another story), we wouldn’t be able to make commuting and baby care work with just one car. At the rate we were saving, we would have enough by January (just in time for our son) to buy a fancy new Honda Civic Hybrid so long as we didn’t bother to furnish any of the empty rooms.
A catalyst
We weren’t expecting to have to buy a car prior to the birth of our child. We weren’t expecting it in the same way we weren’t expecting an F150 in front of us to make a sudden unexpected stop on a 70 mph highway. Turns out the F150 has much better brakes than the Hyundai Accent. With physics being what it is, we ended up with a crumpled smoking front, and, since we had the minimum insurance we were on our own for repair and rental expenses.
All of a sudden, we were in the market for a car earlier than we had expected. (The F150 drove away completely unscathed.) After a few days in a dreadful rental PT Cruiser, we decided we were ready for a new car right away.
NOT Nicole’s motorcrash — just a stock photo for illustrative purposes…
Learning from past mistakes
Our first car-buying experience — several years before — had been miserable. The Hyundai salesman tried every trick in the book to wear down my poor husband and succeeded at adding $300 in additional fees (we got away easy!). They also got us to accept zero for our trade-in, a 5-year-old Accent that drove perfectly well, but needed body work that would cost more than the value of the car to get an inspection sticker.
In their defense, we couldn’t get anybody to take the old car as a donation, so maybe it was worth zero. Happily, my husband didn’t allow them to up-sell him a fancier car, even when they pretended the car he wanted suddenly wasn’t in stock and walked him by the ones with fancy power windows. (As he made to leave, they “found” the missing car.) We wanted to avoid that kind of experience this time.
So, we were prepared. We’d found the Motley Fool car-buying guide, and with a little updating, we were able to use their methodology to our advantage.
Step one: Finding financing
We couldn’t pay in cash this time without completely liquidating our emergency fund. We debated getting a cheaper car that we could pay cash for, but since we would have the cash in a couple of months, we decided to take out a loan, even for a depreciating asset. Using Edmunds and Kelly Blue Book, we had a general idea of what people were paying for the car we wanted. We decided to finance about $6,000 worth of the car.
Our first stop was at our local credit union to get pre-qualified for a loan. A day after we went in to apply, we found that we’d been qualified for a 5% loan. The same credit union was offering Term Shares (like CDs) for 5.05%, and our online savings account was also offering a little more. (Now it’s hard to remember those days when interest rates were more than 1%!)
If we’d known in advance, we would have financed more of the car! We’d been planning to pay the loan off early, but instead we put the money away in online savings until interest rates dropped below 5%. In the end, the dealership admitted there was no way they could beat that interest rate no matter how good our credit was.
Step two: Negotiation
The next stop was negotiation. I’m much better at negotiating than my husband is, mainly because it doesn’t give me a stomach ache. But, there’s hard evidence that car dealers offer worse initial deals to woman than they do to men. In fact, women are often advised to just bring a guy with them — even an unrelated one — when car shopping. Luckily, the Motley Fool method allows a way around that.
Using my husband’s junk hotmail account, I impersonated him — with his permission. That Friday, I emailed every Honda dealership within 100 miles. I told them we were in the market for a new 2006 Honda Civic Hybrid, no navigation, and that we were emailing every dealership in the area and were planning on buying one that Saturday from whoever gave us the best deal. Color and other details did not matter. I asked for a walk-away price.
Return emails trickled, then flooded in. Almost all were reluctant to give a price. Most suggested that I give my phone number so they could talk over the phone. I politely emailed back to say I would prefer to keep the transactions via email. Finally someone sent me a price. Jackpot.
With that price, I emailed all of the dealerships that had responded to the first round of emails. I told them I had gotten that offer as a price and could any of them beat it? Yes, many of them could. Some places offered navigation upgrades for more money, to which I politely responded I was only interested in the upgrade if it were the same price as the one I’d quoted. At least one dealership offered me what I wanted for $3,000 less. So I did a third round with the new price. The dealerships in the expensive city two hours away dropped out at that point — they couldn’t beat that price. Several other dealerships offered to match. The offers got closer with each round of negotiation.
If you buy a car Nicole’s way, you don’t have to deal with this…
Step three: Closing the deal
Finally, I emailed the local dealership in town and told them the best offer I’d received was in a city an hour-and-a-half away and quite a bit less than what they had offered me. It was worth $50 to me not to have to drive that far on Saturday. Could they give me the lowest price offered plus $50?
The local salesperson countered with how wonderful it is to have a relationship with a local dealership (note: not much of an incentive given its reputation for service). I emailed back saying that if they were willing to take the price I had named, I would buy the car that night instead of Saturday. The salesperson emailed back, “Let me talk to the manager,” as if we were actually negotiating in person.
Eventually, the salesperson agreed, and with the sun setting and ten minutes left before closing time, we shook hands and did a test drive. We came back the next day to finish the paperwork and actually get the car. In all, we spent less than 30 minutes at the dealership. The email negotiation did take most of the day, but I was able to get some work done in between emails, and during that time I was in control, not the dealership. Much more pleasant than our first car-buying experience.
Lessons learned
Based on that experience, here are my suggestions for buying a new car:
- If you’re going to get financing, get it before playing with the dealership. Credit Unions are awesome.
- Decide exactly what you want. Put a price item on any potential upgrades you might consider. Do not waiver from that unless they are willing to give you the additional benefits for free. This makes it easier to compare.
- When you start emailing dealerships, use a junk email address. Four years and many unsubscribes later, we’re still getting junk mail from various dealerships.
- In your emails, ask for the “walk-away price.” Dealerships will try to confuse you with prices that cannot be compared because they will add on different fees. Some of these fees are the same for all dealerships, but some of them are imaginary and dealer-specific. Asking for the walk-away price cuts through the garbage and gives you something you can understand.
- Don’t let them get you on the phone. The tricks they try sound much less convincing in email than they do spoken.
- Once you get a price, keep pushing for matches until you get tired of emailing or everyone has settled on one price.
- Use their tricks against them — tell them you have a specific deadline that they have to meet or they won’t get your sale. It also doesn’t hurt to make them feel like they’re getting a deal.
By the way, we love our Honda Civic Hybrid. I have to admit that after having spent most of my life with the cheapest model Ford or Hyundai, (and a good portion of my childhood in an ancient Volkswagen Beetle with holes rusted through the floor) I felt a little guilty having such a luxurious car. Intellectually, I know there are fancier cars out there, but they’re beyond my ability to imagine.
My husband loved all the fancy electronic gee-gaws even more than he had expected to, though after the initial fascination he started finding them distracting and has since turned them off. I hope that we get many more years out of it and my (repaired) Accent before we have to go through the car-buying process again. But when we do, we’ll be prepared.
Nicole’s son loves his new car!
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Good for you Nicole! I’ve read about these kinds of car buying tactics but never kind of knew anyone that actually used them. I’m quite sure I got taken for a ride – literally – the last time I bought a car. Actually, it’s probably happened every time I’ve bought a car.
You’re right about selling to the man – I took my dad along to buy my first car and you would have thought he was the one buying it from the way the salesmen acted.
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Very interesting story – and great tactic with the e-mail negotiations. I’ll have to think about that when I’m in the market again for a car (which may be in the next year or two – my current one is ~10 years old and gettin’ up there
).
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We had almost the exact same experience! My wife and I were sharing a 2000 Volvo with over 210,000 miles on it, and it was getting ready to die. Knowing this, we started saving for another used car, but we didn’t make it. The Volvo died before we had the savings we wanted!
We ended up paying cash for a Jeep, but we did dip into our emergency fund, which was a little stressful. Thankfully we got through that, and now life is good again!
Read all about it at http://www.lifeandmyfinances.com
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I’ve never bought a car before so this was particularly interesting reading.
Whilst I’m not convinced that “buying a new car is about equivalent to buying a used car once you factor in the probability of getting a lemon”, I really did like the email approach to negotiating as it seems to take a lot of the pressure out.
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Great story, and great strategy! Asking dealers to ‘bid’ for your business surely will cut to the chase when it comes to getting the lowest price quote.
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if you do go to a dealership, i would definitely agree to bring a guy with you as well. Just make sure one of you has negotiating skills. I got taken for a good 4k more than expected to spend last time. This email negotiation trick sounds fantastic. It takes out a lot of the awkwardness of the face-to-face negotiation and puts the buyer on a more level playing field. i wish I knew this before! thanks a lot.
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Great post. I love the idea of emailing everyone. I recently pitted two roofers against each other via email, and it was great. I think you are more likely to get a better deal when it is a brand new car because there are so many variables with used cars that it can be difficult to compare apples to apples.
The really famous paper you linked to was written in 1970, 40 years ago. Don’t you think things have changed since then? Especially in the auto industry, and with the availability of certified pre-owned and extended warranties, and lemon laws in many states, it seems quite a bit harder to even stumble upon a lemon. My justification for a new hybrid car would be gettings as much life as possible out of those batteries, since they will eventually grow weaker.
Finally, when did you buy this car and what did you pay for it? In other words, how can we know if this strategy really resulted in getting a much better deal? Obviously, the haggling and sleaziness savings were worth their weight in gold.
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Every Beetle I’ve ever been in had holes in the floor – is it a mandatory thing?
Love the idea of getting the dealers into an e-mail bidding war – will definately use this next time.
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I love to negotiate, but my husband doesn’t like the conflict. Unfortunately, Nicole is right about car salesmen often not negotiating with women. I like the email idea, but sometimes dealerships won’t respond. We’ve gotten around this a couple of ways: some dealerships have at least one woman selling cars. Find out and ask for her by name. Secondly, when we’ve had to negotiate with a man, my husband–a very large man–sternly tells the salesman that he has to negotiate with me. I do all the talking and my husband stands there looking unhappy. This has worked well for us in the past.
I also did all the negotiations for our home–3 days of constant offer/counteroffer–but since I did it through our agent, the sellers did not know they were dealing with me.
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Congrats Nicole! Way to go. I like your tips. As for buying new, I’m in favor of buying new, my parents saved and bought new cars and usually drive them until the car dies.
I’m not in favor of buying used because of the numerous problems that occur, I’ve had to hear friends stories, and my BF’s stories of their woes with used cars.
Oh and isn’t it sad that even though we’re in the 21st century, car salesmen are still stuck in 18th century attitudes, ugh. I usually took one of my parents when I had to get a new car, my mom is a tough lady, and she knows how to deal with them.
My comment made no sense whatsoever but I’ve been up all night so forgive me for being so random
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Great tip on the email negotiating! I will try that next year when I’m in the market for new wheels.
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We used very similiar methods when buying a brand new car. Using email and internet rocks. Our 2008 CR-V is fully paid for!
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I love the internet, it saves so much hassle!
Very interesting, and obviously successful tactic to find the right price for a car. It is so much easier to just send an email than be caught on the phone endlessly with someone telling you that you need an undercoat for your car. (We actually fell for that when we got out of college 20 years ago.)
Great post Nicole!
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I’m glad you point out that buying new is not as dreadful as everyone makes it out to be. Dealers have been using that belief for years to their advantage. At one time it was true, and yes, even today if you went to personally sell a car that was only a year or two old, you’d take a hit on it. But as a buyer, the vast majority of “newer” used cars that are available are being sold through dealerships, and they make their meat & potatoes off of the difference between what they pay a private seller to get the newer used cars and what they mark it up to. When we were in the market for a car, we even found used cars marked higher than new cars of the previous model year. The dealership figured that they could get away with that pricing bc most people coming in to look at the used cars are convinced that buying new is “never” as good as buying used, so they weren’t looking at the sales–just the SRP of the latest model. Even there, people often make comparisons between their negotiated used car deal, and the full retail price for the new car, ignoring that most people negotiate new car sales down as well. Finally, many dealerships promote “certified” used cars, but often fail to disclose that the certification “process” is generally a few thousand dollars extra added to the cost. If you are buying a used car, unless there is a line item for the certification do not assume your car has had the “150 point inspection” or that you are getting the extended warranty that is mentioned on all the signs throughout the dealership. We actually have had sleazy managers lie to us that all the cars were covered when the salesperson had already let us know about the way the program worked (and that the car we were considering was NOT covered).
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”
http://www.truecar.com
Did you visit this site before your purchase?
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“Buying a new car is about equivalent to buying a used car once you factor in the probability of getting a lemon.” There are so many flaws in this rationalization (and the mostly irrelevant article cited in support of it) that there is not enough room in this comment box to list them all. I’ll just say that if you want to 100% eliminate the risk of buying due to asymmetry of product knowledge, never buy ANYTHING used, including stocks.
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Another tip: many banks and credit unions offer pre-negotiated pricing. My bank (USAA) has agreements to get $1,000-$5,000 off the price depending on the car. Whether you buy through the program or not, it at least offers a place to start negotiating and what you can expect to save.
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IF….you are in the market for a new car this method works well…
However…you still purchased a new, overpriced “hybrid” car and financed it. 3 bad moves in my opinion.
You could have purchased a used 3-4 year old car with 80% of the life for 50% of the cost.
I don’t buy the risk of a “lemon”. Lemons are weeded out after 3-4 years. If it stilllooks and drives well, it passes the lemon test.
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Loved the story. My husband is the negotiator — I tell him what I need and want in a car and he does the research (he thinks it is FUN — I guess opposites do attract), finds a couple of cars that meet the requirements, arranges for me to test drive (telling the salesmen that if they actually talk to me, we walk away because I am just unreasonable that way) and then checks both our credit union’s car buying price and Costco’s price. Then he negotiates away — note that he never really beats the price of the CU or Costco but he has fun trying and he has that price as his fallback position — we can always go through them.
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Interesting and enjoyable read. The negotiation process kind of mirrors corporate / government procurement policies, completely price driven and showing no loyalty to vendors based on relationship. I’m not sure what the “Side-Note” box adds to the post, except to discourage critical thinking. I do not buy the “you might as well buy new because of the inherent risk of purchasing a lemon”. Just because this is GRS it still would have been sufficient to say we preferred a new car despite the economic ramifications. You can buy a new car that’s a lemon that happened to my cousin. Thankfully, their contract had a “lemon clause”.
My household just brought a “new” used car from CarMax and it was relatively painless, although we did purchase the warranty, our savings are meager so I figure we will pay that cost up front and eventually self-insure through maintenance and repair costs. Car Max has full disclosure about what their “certification” process entails.
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If you’d like to discuss whether new cars are a stupid purchase, may I direct you to http://nicoleandmaggie.wordpress.com/2010/09/27/how-the-used-car-market-is-like-health-insurance/ … it would love more discussion. Right now there’s only 16 comments, but I betcha it could get into the 3 digits with your help.
As a thinking question:
Why DO cars lose value the moment you sign the papers and drive them off the lot? Is it really just the micrometer of tire lost or some aura of newness?
(And related questions: How are company stocks NOT like cars? What role do lemon laws and extended warranties play in this market?)
@Tippy– I know! And I think back in the day they were advertised as floating on water… that doesn’t work so well with the rust holes. Man I loved that car though.
@12 RB– No, I had not seen that site.
@14 KT– That is really cool.
p.s. JD– I LOVE the pictures and captions. Hilarious!
p.p.s. For an even more controversial statement: There is no hot-hand in basketball. Being on fire is no more unusual than getting a certain number of heads in a row on a coin that’s weighted by the player’s average hit value. Hm… maybe I shouldn’t go there.
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I always thought used was the way. I like luxury cars (and as you said – used is the way to go there – the savings are dramatic). But my husband likes new. When his 10 yr old Civic was totaled we started pricing Camrys. It actually made sense to buy new. The slightly used versions at Carmax and on dealer’s lots were only a thousand or so less than a new car. The same was true for Accords and Altimas. So I think the takeaway is to do the homework and see if new is worth it – sometimes it will be depending on how old of a car you want.
I like your emailing tactic – I have known people that did this with a fax machine as well (this was back in the mid-90s when email was not as prevalent). I’m in the market for a new, used car myself and if I don’t just go the carmax route I might try this approach. But it does work best with new cars, not used.
Another tactic I recommend is have a price you are willing to pay and if you don’t get it walk out the door. It works, but it helps if you have cash. Of course if you’ve secured your financing ahead of time you do. I did this with my 2001 Acura (bought in 05). I was willing to pay 15% less than their asking price. I started at 20% less, ended up paying 17% less. I had my checkbook and I purposely choose to shop on a day I knew I had to go to work (convenient excuse to HAVE to leave if negotiations weren’t going my way). It also helped that I knew how long this car had been on the lot (carfax report told me this as well as the markings they put on the back windshield – a meant 1 month, aa meant 2 months – aaa meant they were ready to move this car!). If a used car has been on the lot more than 2 months they want to move it!
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@18′s p.p.s: This is true, except that you’re discounting the fact that that making shots gives you a confidence boost which can help performance. So while I’d say that making multiple in a row has more to do with the law of large numbers, as you imply, than with a “hot hand,” it’s not EXACTLY like a coin, as a coin gets no confidence boost, and this does play a small role (though often way overemphasized by some).
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I do not buy this post at all. If you email all the dealers the price you got from another dealer then they will just say “go ahead buy from there”! It does not work that way. Maybe u just got lucky.
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I did like your email tactics and as a single woman I have also learned how to play the game. Doing your homework, securing financing and being willing to play the same game as they do works great. However, the used car market these days is very different than the used car market used as an example in the paper written 40 years ago. Cars themselves are different, there were very few foreign cars on the road back then, leasing was not something the average person did and a host of other variables. It was just a very non relevant part of your piece. You wanted a new car? No need to rationalize. While I buy used because my brain says over the life of the car I’m saving a ton of money (and I am, despite the esoteric economic philosophy) nothing like the smell of a brand new car.
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We did something similar. We learned the dealer cost and called all area dealers with an offer. Most declined, but two agreed.
This worked twice. The first time, we got 1% financing through the dealer. The second time, we had the cash and so charged on a cashback card. And paid it off, of course!
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We recently purchased a Mazda 5 with cash and I did all the negotiation through email as well. The internet sales manager is the best thing that ever happened to the car buying public. I didn’t hardball them, but I got a pretty good price and they made a bit of profit. A few hundred bucks is not a huge deal, but by emailing around I was able to remove the high mark up dealers from my list.
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Congratulations and great post! Go check out Grumpy Rumblings- Nicole and Maggie are one of my favorite bloggers.
I had a VW Carmagia with a hole in the floor and a PT Cruiser that lasted about 4 years!
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What a great post! I did the negotiations on our last vehicle (new, loaded 2005 Toyota Sienna) instead of my husband. I did a ton of research before ever talking to anyone, and I did have several e-mailed price quotes. But I didn’t consider doing the entire negotiation process via e-mail. I think that we could have gotten an even better deal if I had (though I was very happy with the deal we got at the time). I’ll definitely be using this tactic when it comes time to replace my husband’s vehicle. Thanks for sharing your story!
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I wont’ be able to use this technique for quite a while because we won’t be able to afford new. Ignoring that fact, this gets 1 comment, 1 word from me:
GENIUS!!!
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The reason the paper is so important and so heavily cited is actually not because it talks about the used car industry– auto is a big industry but most economists are much more interested in other things. The reason is that it beautifully illustrates one of the main causes of market failure, Adverse Selection. The explanation of why used cars are so cheap is just a side benefit that gets people thinking critically about this issue in a much more tangible way than jumping straight into health insurance (and the need for groups), for example.
I love talking about this stuff– I found it really mind-expanding when I first encountered it in graduate school.
@23 I’m totally not going there with the “hot hand fallacy,” but if you google it, you can find links to the sizeable numbers of articles of people proving it and failing to disprove it. I like it in class because it jars my students and gets them motivated to think really hard about randomization and statistics. (One of my students even did a project that showed it for pool… that was not his prior.) But it is definitely the most controversial class topic I’ve seen, more so than any kind of political discussion.
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My reason for only buying new is that it saves me from having to buy a car more often! Also, if you buy new at least you can tell what the car is supposed to cost.
My primary issue is that I hate dealing with the scammy car dealerships.
When I bought a new car about 10 years ago, I knew exactly what I wanted (the most common model and color sold, and they had several on the lot), and I went to the dealership on a weekday (Sundays car dealerships are closed by law in my state, on Saturdays they are too busy). There were no other customers. It STILL took 5-6 hrs to buy the friggin car because the salesman and manager had to give me the royal run around on price, options, availability etc etc. I actually had to pretend to leave to get them to sell me the thing.
I admit I was feeling very happy when the economic downturn forced 100′s of dealerships to close last year–serves them right, the scum!
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@Nicole
Always great to read your comments here, and now your own article.
Loved the negotiation technique.
However, after the accident… didn’t you want to buy a Ford F-150?
(This is not a gratuitous question. We went from a Mini Cooper to Chevy Avalanche and it’s been great. And didn’t the F-150 drive away unscathed?)
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Not exactly the same topic as car buying, but in regards to:
“I know there are fancier cars out there, but they’re beyond my ability to imagine.”
This becomes a lot harder when your co-workers drive Audis, BMWs, Mercedes, Infinitis and Acuras. Every time you go out to lunch you realize that your car doesn’t show you video from your rear bumper with a distance meter to the car behind you when you’re parallel parking. And it doesn’t turn on the windshield wipers automatically when it starts raining. And if a tire gets low, it can’t tell you which one and by how much.
This is really just a standard case of keeping up with the Jonses, but I really have a fairly nice car, a 2007 Volkswagen GTI, but I’m constantly internet-shopping fro new cars because of all the cool stuff that my co-workers cars do. I wouldn’t be surprised if when I do end up buying another car, it will be sooner, and a fancier car, than it would have been if everyone around me drove Honda Civics and Ford Focuses.
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I will say that an experience at a local dealership is what pushed me to a Saturn dealership in ’02 when I purchased my first new car. Hopefully that car will continue to go strong for another 100k miles, but options are good to have for the next eventual ‘great car hunt’
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Nicole, I used several of your techniques when buying my last two cars.
1997 Subaru – I got pre-approved from the credit union, and then I listed out the price of the car I wanted, with invoice and MSRP costs for the car + options.
I added in $300 over invoice, and faxed it to 10 local dealerships. Two were willing to take the deal, so I bought from the one whose salesman provided me additional information on the CD changer in the car (that in fact resulted in me NOT adding that option!) I spent 30 minutes picking up the car on a Friday night – easy!
1993 Saturn – I took my father-in-law to the dealership with me, and he looked stern and skeptical while I worked out the deal. I got what I wanted for my trade-in.
The only note I’d mention – it’s a routine trick that the dealers leave their phones on “intercom” while they “check with the manager” – so they can overhear your “private” discussions if you come to the dealership with a friend or spouse. So be VERY careful what you say in the cubicle while “alone.”
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@32 Karen– A negotiation prof I know brings a deck of playing cars to the dealership and plays cardgames with her partner very noisily while sitting on the floor. This somehow speeds things up at the dealership for her.
@33 El NL– Yeah, there’s a reason that all the moms around here drive enormous boats. But, the car did take ALL of the damage. We were fine. One of my friends had a similar experience with a Toyota Matrix (though she upgraded to a CRV after that.) When the Civic tangled with an F-150 later (another long story involving a taco truck and a blind turn), the bumper just popped right off and I didn’t even feel the hit, just heard a pop. The engineering even in these smaller cars is just amazing. (I definitely wouldn’t feel comfortable with a smart car around here, but with these mid-level cars we’re good.) Now we do drive with a MUCH bigger gap between us and the car in front than we used to. (The Civic also has a lot better breaks than the Accent. And we have a Garmin so less likely to get lost in neighborhoods with foodtruck obstructed vision.) And hey, less roll-over risk, right?
@34 Tyler K. The biggest benefit in that respect is sharing a parking lot with students (some of whom do have new BMWs, but many of whom are learning about the law of lemons first-hand). I do think that if I were a high-powered lawyer I’d have gone for a first generation Prius– I’d be making a statement that I was environmental and still able to earn a ton without actually spending that kind of money. My status symbol would be my principled environmentalist stand through consumption. (And I wouldn’t need to lease a Mercedes.)
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First time commenter – been following for a long time, but this post’s so great, had to say “Thanks.”
A friend of mine got her CR-V through this method a few years back, but it wasn’t a real concept to me until I read this. Loved the breakdown at the end with tips on what to do and what not to do.
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We just bought a used Kia with Enterprise, mainly because they have a “No Haggle” fixed price. Sure we might have done better at a used car dealership, but it was worth at least $500 or so dollars not to have to haggle and stress over whether or not we were being ripped off. I found their price fair for a certified used car. Having said that, it still took around two hours for us to get the keys to the car. And we were paying cash. They tried to sell us some overpriced warranties and other stuff, but they didn’t push after we gave them a firm “no.”
I think the buying used/new debate really depends on the car you are buying. For instance, our 2009 Kia had already dropped in value quite a bit, but comparable Toyotas or Hondas hadn’t. If we had wanted to spend more money, we would have probably bought those brands new. They really retain their value, and this works in the favor of the owner, but NOT the buyer. And the retaining value argument for buying a Toyota or Honda didn’t really hold for us, since we always drive our cars until they fall apart.
Of course, I know nothing about luxury cars and how it would work in that market!
My husband used a similar tactic to yours ten years ago when he bought his new Nissan Altima. If you are buying new, your e-mail correspondence is really the way to go.
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Ignoring the obvious fact that the little “sidenote” about how used cars are equal to new cars when you factor in “lemon risk” is nonsense (we all agree that’s nonsense, right?), this was an interesting article.
But markets are efficient, and you paid a premium to buy new. Worried about a lemon? That’s why you take it to a trusted, third-party mechanic before you buy. Everybody knows this.
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My husband talking to car dealers so I also have negotiated our last two vehicles, both Honda products, via email. It’s the way to go. Hondas are nice because without a lot of dealer options, you’re typically comparing apples to apples. We paid under invoice for both of our cars. That bologna about a car losing 30 percent of its value when you drive it off the lot is for people who pay sticker.
The only thing I would add to this article is to check the forums at edmunds.com to find out what other folks are paying. That’s your starting point. Negotiate down from there if you can.
You absolutely can pit dealers against each other. I know because I’ve done it. Twice.
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@Nicole – Ah, yes, the engineering in small cars is great for the most part. But there’s also the human factor and here’s an illustration: the day we took the Mini to be sold, my wife drove it to Carmax (they gave us a nice price) and I followed her in our “new” used truck. Sure enough, people were tailgating her like mad on the highway and I was getting furious. Meanwhile, I’m on this huge black truck with tinted windows and everyone around me leaves a respectful space, and nobody dares cut me off (it used to be a frequent problem with the Mini). Why do people act like this? I don’t know, but these days of dumb cellphone drivers and road bullies I feel safer with her in what I like to call “the mafioso truck”. Let them fear us.
[The thing is we don't drive a lot, so mileage/gas is negligible, and we do have a cabin + family in rural areas (mud/snow/washboard roads), plus we have a business that requires occasional heavy loads, so we need a truck anyway.]
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I might try this next time!
A friend does a similar thing with phone calling to our nearest big city. We’re 2,000 mi from anywhere with multiple dealers. Works for them, they always have new cars.
My boss finds invoice price adds $500 walks into the store and asks for the manager. Won’t deal with sales people. Helps that he’s bought 6 cars from their brand. They keep ‘em a couple of years then sell them for about what they paid.
Why didn’t you just keep the 1st car instead of trading it in for 0? Then you would have had 2 cars and wouldn’t have needed to do this negotiation. =)
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I have to respectfully disagree about new vs. used prices–but I just have anecdotal evidence.
We were looking to replace a Kia Pregio (9-person van) in 2006. It was in such bad shape, and parts were so difficult to get, that the dealer offered to torch it for the insurance money. (side note, we paid $6000 for it nearly new 8 years before. That van had a life nearly as interesting as any VW Beetle)
Vans hold their value quite well in Europe, and anything we were looking at used (Renault Espace was the front runner) was well over 30,000.
We ended up with a Dodge Grand Caravan for right at $22,000. We didn’t/couldn’t haggle on price, and we happened to need it at the right time (switching of the model year) We really didn’t want the new car, but it did end up being the best value.
That said, I much prefer to buy used cars when I can. Our second car is a used VW Golf, bought within months of the Dodge. We did negotiate with a local dealer for that.
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Our experience buying our 1999 Accord was pure hell. Next time we buy a new car, we will be armed with 1) a big down payment 2) a financing deal from the credit union if the 95 Accord dies before its replacement is fully saved for 3) a negotiation deal from the credit union and 4) an email bidding war. I LOVE that!
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Great discussion.
I haven’t read ALL of the comments so forgive me if I’m repeating someone’s post….I was wondering if anyone has used a car broker, I saw a show on tv once about a local broker and it looked like a good service.
Appreciate anyone sharing their experience.
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I’m actually in the market for a new car. My credit union has a service where they will locate and negotiate the price of the car you tell them you want. I don’t even have to buy the car though the credit union ( although I will). All I will have to do is go pick up the car, sign a few forms and be off. No haggling at all with the dealer. Check your credit union for such a service.
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My husband always leaves negotiations to me because I WILL get the best deal.
I used many of the same tactics, except when I walked into the dealers I told them “I am buying a car today. You, or one of your 4 competitors will get my business. I am not making a decision until the end of the day.”
Of course, I had all the slime balls trying to not let me leave until they had the sale. I was pregnant and one of the guys held me hostage (he had my other car) for 2 hours during lunch without even a drink. I stayed strong though and that dude didn’t get my business. Yeah, car sales man. The good news was that I knew that the suffering would only last a day.
Ditto about the spam. I still have people who send me stuff 2 years later after multiple calls to stop.
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What a wonderfully savvy post, Nicole. I live in a downtown metro area and have no need for a car, but I almost want to go out and buy one just to give your technique a try.
P.S. Nice hook to introduce folks to your own site. I’d never clicked through before, but I love the really thoughtful ideas you’ve shared there.
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My last (and first) try at negotiating as a single woman got me nowhere. Nada. No discount for offering to buy today (to meet or pad end-of-month sales,) no beating another dealers price for the exact same car (they’d match but not beat,) no negotiating at any time (not even after I’d walked away.) I ended up buying from a private owner. I will totally try email negotiation next time from a man’s email address and see if it makes a difference.
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