L’America: Buying a Car From a Dealer

One of the first things you’ll need when you move to America is a car. Sure, there are places where you can (and should) do without – Manhattan, for instance. All in all, though, America assumes everybody owns a car, which translates directly into the typical distances you travel to get from anywhere to anywhere.

For the average American, the car is the second-largest expense they will make (the first one being their home). As such, it’s a really important choice, and you should think a lot before committing to anything.

Just kidding: grab your pile of cash and waltz to the nearest dealership. That’ll do the trick!

In all seriousness, car buying in America is fairly complicated. More complicated than buying a house, say, because there it’s almost automatic that you need a mortgage, which means the bank ensures that you don’t get totally ripped off.

With cars, the tension is between the dealer/owner, who wants to close immediately, and you, who should want to compare. In your disfavor, you don’t really like dealing with the buying, so you try to close as fast as you can and get a good deal.

So far, that’s true in the rest of the world, too. What’s different in America is that most people here buy cars with loans, which means they can afford a variable amount of car. When the best you can haggle is a $10 a month discount, you become less price-sensitive.

I would love to be cute and funny here, but you really need good directions. So no joking allowed.

First, ignore everything the dealer says about prices. They throw around stuff like MSRP (manufacturer suggested retail pricing), which is a random number you should absolutely never pay. Then there is thing called an “invoice price,” which is formally the amount of money the dealership pays for the car. That’s total baloney, too, since dealerships get “incentives” that bring down the invoice price.

There are more shenanigans. Dealerships love adding phony surcharges like a “destination fee,” a “local marketing fee,” etc. The purpose is to give you a lower number they can pad later. (You should also not forget the sales taxes, which are typically not included in prices in America.)

So, whenever you talk with any dealership, always mention that you want prices “out the door.” If you have a vehicle to trade in, make sure they appraise it as part of your price out the door, or you’ll get unpleasant surprises after the fact.

Do your research online! Major car buying sites have sections devoted to pricing new and used cars. The most widely used are probably kbb.com and edmunds.com. They also serve as an all-purpose shop for research about cars in general. Newer contenders are truecar.com, which offers a discount program for buyers, and cars.com.

Since it is time-honored practice to upsell anyone at a dealership, you are better off learning about the different models available on those sites, and in particular learn about the differences between the model you want and the next more expensive models.

For instance, I really like the Subaru Outback (my current car), but it’s really too long and wide for the parking here. Subaru has a smaller model, the Forester, which is billed as an SUV instead of a Wagon, but is really the same thing in smaller and cheaper. Now, armed with that knowledge, I will be able to tell the dealership why I don’t want an Outback.

The experience at the dealership itself is slightly surreal. The first thing you’ll notice is that the salespeople are trained to pretend they are your best buddies ever. They will make small talk and try to wedge themselves into your conscience. The assumption is that you will want to buy a car from them at any price they give you. But you should use this to your advantage, and allow them to be your best friends for the time you are there: salespeople really hate it when you are stand-offish, because it means they are not good at their job.

Aside from the phony friendship, the next thing you’ll notice is the random nature of numbers. In America, it is always assumed you will haggle for a better price, and only suckers say yes to the first price mentioned. That’s even if the price says “no-haggle.” Go figure.

So, you need laser focus on prices. First, as mentioned, get your facts straight. Find out what model you want, do your research up front, and show that when you get to the dealership. Be clear about the options you want, how much they cost (and how much they are worth if buying a used car). Make absolutely sure you know what color you want for the exterior and interior, and what colors you could live with if your preferred choice is not available.

Go to the dealership with a price sheet in hand. Don’t show it until they actually give you a price first, if that price is higher than what you have on the sheet. Also, when they ask you for a budget, ignore the question. You are not there to tell them how much you are going to spend, but to get the best deal on the car you want. As soon as you let out a budget figure, the salesperson starts ignoring whatever you say, focusing instead on the other cars he could sell you just above that number.

Notice how everybody at the dealership will focus on your buying the car right there and then. A typical phrasing might be, “What would it take for you to get the car out of the lot today?” If that comes up, you should just laugh and explain there is no way you will sign anything that very day. That’s even if you actually would like to. You’d see prices inflate instantly if you give them the appearance of an impulse buyer.

Another really annoying aspect of the sales experience is that the dealership will try to protract the negotiation while you are there. First they will find a way to get to the keys to your existing ride, then keep you in an office alone for whatever amount they want to mollify you. The more you look like a sucker, the more they’ll make you wait.

To reduce the wait time and if you are flexible on timing and price, drop all your cards up-front. Say you are not going to pay more than this (including the trade-in) out the door. That you only have a short amount of time before you have to get back to work/get the kids to soccer practice/feed the cats/get to your water aerobics class, and that you’ll have to come back if that doesn’t happen.

You should always get at least two quotes from different dealerships. You should also research the dealerships online before you go there.

Make sure everything that is said is in writing, or ignore it. If the salesperson says they are going to fix something, but doesn’t put it in writing, they won’t. If an option is missing and the salesperson says they are going to add it after the sale, but doesn’t put it in writing, forget about it. Unless it’s in writing, you can completely forget it. Capisce?

If you can, secure your funds before going to the dealer. I find that credit unions are really good about car loans, and maybe you have enough cash stashed up not to need a loan in the first place. Having to deal with dealership financing means having to add another layer of time waste, and the dealership is really good about wasting your time.

If you have a bank account, pay with a cashier’s check. The advantage of doing it this way is that the price on the paper is the price you’ll pay, or the deal is off – there are dealers that “forgot” to tell you about this and that surcharge and then demand the balance in cash, or with a bigger check.

Once you sign on the dotted line, the dealership will take care of transfer and registration. Nice. You can typically drive off with your “new” car, and the paperwork will come your way, shortly.

You will know if you have been gipped if the dealership starts calling after 6 months, trying to sell you another car. Sigh!

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