Winter 2007 USAA.com Magazine

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CAR-BUYING You don’t have to choose between the car you want and a stress-free shopping By Sean McCollum • photograph by rick dahms winter 2007 6 usaa.com Ma r q u i s w i l l i s has seen the underbelly of car sales. And it’s not pretty. After six months in the business, the 24-year-old Florida-based USAA member got out. Now, he’s sharing his experiences to help you the next time you’re in the market for a new ride. 1 Pack your papers. When customers showed up with printouts listing market values, trade-in values, financing options, rebates, and other information they'd gathered, we knew we wouldn’t make much money off the deal. So, arrive at the dealership with research in hand. 5 Wear your poker face. To get the best deal, act as if you’re not quite ready to buy. I sold a car to a young engaged couple who both worked. The woman really wanted a new Mustang GT, and I could tell after the test drive that she loved the car. At that point, she lost all her negotiating leverage. 9 Don't fall for last-ditch deals. Sales managers sometimes make departing customers an offer so low, no one else can match it. This is usually just a ploy to get them to come back. Call their bluff and you may come out a winner. But if you leave, don't expect the offer to be there when you return. usaa.com 2 Know the score. Dealers make a lot of money on financing. Being ignorant of your credit score and borrowing options can be like handing them a blank check. A point or two of extra interest adds up over time. When you have preapproved financing, it shows you’ve done your homework. 6 Stick to your budget. A car payment and expenses, including insurance and maintenance, should be 12 percent or less of take-home pay. New cars depreciate quickly. You may soon owe more than the car is worth (being “upside-down” on the loan). Avoid this by putting at least 20 percent down. 10 Avoid trade-in shenanigans. A customer wanted to trade in a car worth $7,000 for a new car. The dealer discounted the new car but offered only $2,500 for the trade-in. In the end, the dealer came out ahead. Always nail down the new car price before discussing your trade-in. 3 Look the part. If you’re dressed too nicely, the dealer might think you have money to burn. Too sloppy You won’t be taken seriously. Choose something casual, clean, and unwrinkled. 7 Draft a quarterback. That’s the nickname dealers have for someone who comes along to coach you. The big thing in car sales is building rapport with customers. A sidekick can run interference, and the salesperson can’t be as aggressive. 11 Avoid yo-yos. You finalize the purchase with dealer financing and drive the vehicle home. The dealer calls later to say the financing fell through and you need to come back. When you return, the interest rate is higher. To avoid this, arrange for financing before you ever hit the lot. To research new or used car prices, log on to usaa.com/magazines and click "Car-Buying Service." 4 Skip the add-ons. This includes service contracts and extended warranties. Know clearly what you need and want by doing research beforehand — online and on the lot. If you buy an extended warranty, read carefully the sections that include items not covered. 8 Never believe the sticker. The sticker price of a car isn’t the actual price. There’s always room to negotiate. I sold a $50,000 Ford F-250 pickup to a couple who paid the sticker price and never even tried to cut a deal. The truck had about an $8,000 markup so I had room to negotiate. 12 Inspect before you buy. When shopping for a used car, take your potential purchase to your mechanic for an independent inspection. A good tech will spot hidden problems. Independent inspections usually run $75-$100. It’s the best 100 bucks you’ll ever spend on a car.
SECRETS experience. Our tips help you navigate the lot. 7 usaa.com winter 2007 Take the Wheel If you've done your homework, you can be in the driver's seat when it comes to wheeling and dealing. Here are some car-related Web sites worth a surf before you shake hands with a dealer. >> cars.com Find one-click research of new and used cars, with Top 10 lists and financing tips. This site also has an up-to-date tracker of rebates and incentives that offer insider knowledge that saves money. >> edmunds.com Check out this respected clearinghouse of vehicle reviews and research tools. >> kbb.com Kelley Blue Book publishes asking and trade-in values for new and used autos. >> carfax.com Look up vehicle damage and ownership history. >> carbuyingtips.com This site walks you through the financing process and offers links to online loan applications with reputable financiers, no matter your credit history. TIP On average, vehicles sold at car dealerships have a $1,500 to $3,000 markup. Also, the more upgrades a vehicle comes with (not ones you request), the more you can negotiate the price. Dealers can add extras such as fancy rims or leather seats cheaply, so don’t let them charge you full price for them.
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Winter 2007 USAA.com Magazine

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