Something I am really good at

When Buying a New Car, the More You Know, the Less You Pay

New car shoppers who look up a car’s invoice price, shop multiple dealerships and aren’t afraid to haggle can save as much as $800 on average on a vehicle purchase, according to a study that is one of the first to test economic bargaining theory against real world data from the $340 billion U.S. auto business.

Just coming to a dealership armed with the invoice price of a vehicle can save a shopper as much as $140, according to an analysis of data from 1,402 shoppers who purchased one of eight car models in California between April and May 2002. The analysis is the foundation of a paper by F. Scott Morton of Yale University, Jorge Silva-Risso of the University of California Riverside and Florian Zettelmeyer of Northwestern University.

... Shopping around, visiting at least one additional dealership to get a competing quote, can save more, the study found.
Comment: The first new car I "bought" was for a widow who needed a new car. She wanted a Pontiac. I was a senior in college. I shopped and shopped the details (it was much harder back before the Internet) and called and called. I used my deepest voice to sound as adult as I could sound (I was 21). Basically I negotiated the deal over the phone and went to the dealership with her. This was back when I lived in Cincinnati. The best deal was in Northern Kentucky .... I think in Covington. It was a 1971 Pontiac Ventura. New cars are easier to buy than used because there are less variables and there is more information available. The keys (just off the top of my head):
  • Separate all of the elements: Financing from trade in from add ons, etc.. Arrange financing in advance. The dealer may be able to beat it but by separating it out it makes negotiation easier
  • Either don't trade in a car (sell it yourself) or know the value of it.
  • Don't buy any dealer add-ons: undercoating was a big deal years ago and a waste of money. Don't by the extended warrenty
  • Back then I used the phone. Today check the internet. Know what cars are available. Be willing to drive to another state to buy a car. Our last car was purchased in Wisconsin
  • Be willing to buy a different brand. There's little difference between a Ford and a Chevy
  • Be flexible of colors
  • Know that the salesman is powerless to make a deal. It's the guy above him
  • Be willing to walk away.

1 comment:

  1. The last vehicle we bought (used) from a dealer I went in with my own financing ready. Having that number got us 3 percentage points lower than their initial offer, and half a percentage less than what I had from the other place. Definitely worth it...


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