How to Buy a New Car

The top ten mistakes made by n00b buyers of new cars:

1. Giving out your personal information on websites that give you a “free quote”
2. Trusting a dealer when he says on the phone “Come on down and we’ll take great care of ya!”
3. Walking into a dealership and buying a car without doing any research
4. Haggling with a dealer face-to-face
5. Focusing on the monthly payment instead of the total cost of the car
6. Being too rigid on the car selection
7. Start thinking about financing only after committing to the car purchase
8. Buying extended warranties and maintenance contracts from the selling dealer
9. Trading-in a used car to the selling dealer
10. Start thinking about insurance only after driving off the lot

More on each of these in the weeks to come!

This is what we tell our customers before they head out to the dealership to buy their new car. Hope it is useful:

Print out the Autolicious quote-sheet and take it along with you. Usually, an Autolicious representative will arrange to meet with you at the dealership. You may also request the Autolicious rep to drive you to the dealership.

1. Don’t fall for the add-ons: At the prices we get for you, 99% of the time, dealerships are giving away the car to you. That’s not uncommon, really. Dealerships do that all the time, but they usually have a way to make up for it. So they sell accessories, paint protection, fabric protection, gap insurance, extended warranties and service contracts. Stay away from these and say NO to each and every one of them. The mother of them all is the extended warranty. Finance Managers will try very hard to sell you that 10year/100k mile protection that nets them over $1000. Just refuse it at the time of the purchase. With a Toyota, you have 3 years (or 36k miles) to make up your mind. Yes, you can purchase the warranty any time after you purchase the car, while it is under the original warranty. Don’t get fooled into buying it then. If you really need one, Autolicious can find you a genuine Toyota extended warranty for much less (with no extra fees, of course).

2. Test drive and inspect the car, front to back: Always inspect and test-drive the car before you sign the papers. Inspect for dents, dings, paint chips, rim rash and so on. The car should be washed and cleaned before you drive it off.

3. Tank of gas: Make sure you leave the dealership with a full tank of gas.

4. Detail: Dealers should always detail you car, vacuum the interior and present you a clean vehicle in-and-out. Don’t settle for a dusty vehicle sitting on the lot for a few weeks.

5. Demo and Setup: Make sure the sales person shows you how to operate some of the features of the car (keyless entry, Bluetooth, etc). Link up your phone to the car and put down your home address in the nav and you should be good to go!

That’s it. Keep in mind that the entire process will take about two hours.

Happy Car Buying!

A real conversation with a dealer finance manager, circa December 2007

"So now that you are all setup with your new car, let's talk about warranties and such"

"Umm, OK, but I'm not really interested"

"Here at Toyota of XYZ, we offer all our customers a comprehensive Toyota extended warranty for 7 years and 100,000 miles. And you're lucky you came in today – we have a great special going on. We can write you up with a 7yr/100k for just $1800. Yes, just $1800. You know, these contracts retail for like $2500"

"Thanks, but really I am not interested"

"Really? This is a great deal you know."

"Yes, I've made up my mind"

"Are you guys Costco members? I can take off another $200 and bring it down to $1600. Now that's rock bottom"

"Actually, can we just finish this up please? I don't want the warranty"

"OK as you say. You are really the first customer I've seen in a long time that does not want a full warranty on his new car"

"Yeah, I like to be unique. Now PLEASE get me out of here!"

"So I guess you don't want a service contract either?"

I refuse to answer.

Sounds familiar? This is all too common an occurrence in the car buying process. Generally speaking, new car dealers have been losing the "front end" margin, i.e. they are making lesser money on the selling price of the car itself. They have been making up by selling "back end" stuff like extended warranties, service contracts, insurance, paint protection and marked-up interest rates.

Well, any warranty is money losing proposition. That's why insurance companies are in business. The odds are stacked against you needing to use the warranty. But people still buy them – and they do so for peace of mind. Repairs on modern cars can get expensive, and nobody likes to be hit with a big financial bill. But there are some things that car dealers will never tell you about the warranty:

You don't have to buy it when buying a new car. Yes, that's right. You can drive your car off the dealer lot and then decide. For most car brands, you can extend the manufacturer's warranty, as long as the original warranty period has not passed. So that gives most of you 3 years or 36,000 miles to make that decision. So take your time in thinking about it.

You don't have to buy it from the dealer selling you the car. Yes, again, that's true. Toyota extended warranties are sold by Toyota Financial Services and can be bought through any Toyota dealer, even online. So like any service, shop around and you are certain to find a better deal.

Service Contracts

A lot of manufacturers offer pre-paid service contracts to maintain your vehicle. A service contract is often included in the price of a new BMW, Volkswagen, Land Rover or such. To decide whether such a contract is worth it depends on a) the price you buy the plan at b) the expected costs to service the vehicle over its foreseeable future.
 
As with warranties, keep in mind that you don't have to buy them at the dealer selling the car, nor do you have to have one in place when you drive off the lot. So take your time, call around to find the best price and then decide whether you need one.

Finally, keep in mind that routine maintenance on your new car can be performed at the dealer you bought it from, or at any other dealer of the same brand or at any independent car repair shop, without voiding the original warranty (this is the law). So don't feel compelled to bring in your car for service to the exact same dealer who sold you the car. The Sales and Service departments of any dealership are completely independent and the service guys don't care (and probably won't know) where you bought the car from.

So there we go, in the words of Click and Clack…

Well, it's happened again - you've wasted another perfectly good hour listening to us …

For any questions on the car buying process, please visit http://autolicio.us or send us an email at admin@autolicio.us .Thanks for reading and good luck with the car buying!

This blog will primarily focus on the art and science of buying a new car. Yes, it is really an art and a science. Americans buy on an average, about 12 million cars a year. That’s 23 cars, trucks or SUVs every minute of the year. And each one of those is sold by a licensed authorized new car dealer. Well, we all know that you can’t really buy a car online. You just can’t select a Toyota on toyota.com and have it delivered with Free Super Saver Shipping in 2 days.  No, there's no Amazon.com for cars. You just have to walk into a dealership. Actually, there is a good reason for this. The US government wants to protect consumers – after all this will be the second largest purchase (or financial transaction) by the average American consumer. This law also helps car makers to stand behind warranties, service issues and such.

OK so now that you have to walk into a dealer to buy a new car, what is the best way of doing this? We get asked this so many times – we decided to start a blog for this and an actual service to help people out ( http://autolicio.us, Coming soon). To keep it simple, I’d like to focus on three things.

1) Competitive bidding

If there’s one thing I’d keep in mind about buying that new car, it would be this – competitive bidding. The only way to get a great deal on a new car, truck or SUV is to make dealers fight over your business. It’s simple: when dealers square off over you, prices are bound to fall and you’re sure to get a good deal. So how does one do this? Well, head over to Edmunds.com (or any where else) and get the MSRP and invoice price for the exact make, model and type of your interest. Then make a list of dealers in your area that sell that brand. Now go ahead and call them or better yet, email them. Don’t walk into a dealership. Just ask them for the “out the door” price via email. And when you hear from them, reply back asking them to beat the best deal so far. It’s going to be a lot of emails, but you should see dealers trying to outbid each other for your business.

By the way, this is exactly what we do, and do best, at Autolicious, Inc. So if you are in the market for a new car, sign up on our website and we’ll touch base with you when we get operational.

2) Flexibility

The next thing we tell people is to be flexible. That’s not saying be flexible about a getting a Hummer when you really want a Prius. But be a little flexible with features, options and colors. Dealers will cut you big deals if you can “move” some of their long sitting inventory. So if you are OK with a Blizzard Pearl or a Blue Ribbon Metallic or maybe even a Winter Gray Metallic, good for you! Dealers will always give you a better deal on something currently sitting in their lot over something they see on their computer screen only. 

3) Timing

Timing is everything, right? Well, in the car business, it’s not quite everything, but it surely is something. Never walk into a dealership during their “Labor Day Liquidation Event”. Simply do not. Instead, try the day after the sale ends; or the Monday after Thanksgiving. Also, don’t negotiate a deal on the weekend. Try a Monday. And if you can – buy in December. Dealers (like any sellers on a quota system) will cut prices to sell cars and meet their weekly or monthly forecasts. So shop towards the end of the month, and if possible, the last month of the year. Really, I always buy my cars between the 27^th and 31^st of December.

Well, that’s it’s. There are about a 109,546 things left unsaid about buying a new car. But we’ll leave those for later. Head over to http://autolicio.us to stay in touch! Happy car shopping!

-- Sujit