Common Sense Approach to New Car Shopping

Transcription

1 Grand Prairie Credit Union Common Sense Approach to New Car Shopping This booklet outlines a plan for you to: Slow Down! Understand Your Trade Value Use The Internet To Research Prices and Rebates Take A Test Drive Walk Away! Let Multiple Dealers Compete For Your Business Negotiate Via NOT At The Dealership Get The Best Price Determine The Bottom Line via BEFORE You Take Delivery And Eliminate Optional Fees (Turn the page if you want to get the best deal possible on your next new vehicle) 1

2 First things first slow down and take your time! One of the costliest things you can do is walk into a dealership at night or on the weekend and drive away with a new car 3-5 hours later. What if you could have walked away and negotiated a lower price via e- mail? What if another dealer would have sold you the same car for $1000 less and given you $1000 more for your trade? What if you could accomplish this from the comfort of your home or office as opposed to sitting across the desk from someone who is a more skilled negotiator than you and you end up making an impulse purchase decision? Patience + Knowledge+ Confidence+ Taking emotion out of the car buying process = $$ in your pocket. 1. Call the credit union and get pre-approved so you will know what you can spend, including how your trade-in value versus your payoff (if applicable) will affect your final negotiated price. 2. Having a firm, realistic, and fair value for your trade and possible negative equity situation is a crucial component to car shopping. If you are legitimately $4000 upside down in your trade then don t let the dealer tell you that you are $6000 upside down unless you want to pay an additional $2000 for your new purchase. By the same token, if you have $4000 equity in your trade then you need to make sure it is applied as a $4000 cost reduction on your next purchase! We can help you determine a realistic value for your trade. If you have a trade.invest in a good detail job. 2

3 3. Utilize the manufacturer websites to view current rebates as well as build and price the vehicle you have in mind. Most of the manufacturer websites are very detailed in regards to equipment packages and pricing, but they will only show you MSRP minus current rebates. To get an idea of the invoice price, build your vehicle on and as well. Note: Ignore the True Market Value and Fair Purchase Price from these websites (Edmunds and KBB) as these sites are funded by dealers. Further, the Invoice and MSRP prices are not always exactly the same as the invoice pricing you will receive from the dealer. However, these sites are a great research tool to help you execute your game plan as well as a platform to receive bids from multiple dealers. 4. Test drive the vehicle(s) you are considering and make note of how the vehicle is equipped. While you are taking your test drive, have the dealership appraise your trade-in. and and Determine if this is the vehicle you want to own or whether you want more or less equipment and features. Take detailed notes of the equipment and features. There will be several thousand dollars difference between a base unit compared to an upscale unit. Compare apples to apples! Tell the salesperson that you are just shopping and taking notes. Kindly thank them for their time and no - there is nothing they can do to get you to buy today. DO NOT sign a credit application and do not try to negotiate at a dealership! 3

4 5. WALK AWAY. DO NOT LET YOUR EMOTIONS COMPEL YOU TO MAKE AN IMPULSE PURCHASE DECISION AT THIS STAGE.but be sure and include this salesperson in the bidding process outlined below. Do this. Don t do this. 6. Submit a price request through the manufacturer websites as well as the following websites: Expand your search as far as you are willing to drive for the best deal You will typically get multiple auto-response s within minutes. Blind copy all the responders and send an along the lines of the following: I will be buying a (insert vehicle) in the next few days and would like to receive a bid from your dealership. I will you the specs as to the vehicle I want to buy. I want to be up front in that I will be receiving bids from multiple dealers. Whoever has the best price will get the sale. Please let me know if you are interested in bidding. If so, I will the specs to you right now. Utilize the Bid Equipment Template (next page) provided to you after you receive your replies as to who is willing to bid. It contains specific language designed to let the dealer know that you are a serious buyer and ensure you get the best price possible. Be as specific as possible in regards to the equipment packages you want! 4

5 If the manager (or internet sales rep) follows your request, they will attach and a clean copy of the invoice and let you know their price in relation to invoice as well as any factory rebates, 0%, 1.9%, 2.9% offers, etc., or customer down payment assistance dollars. If the manager is hesitant to provide the actual invoice, assure them that you are aware of the holdback dollars and advertising costs that will be reflected on the invoice. Let them know that you do not expect them to provide a price based on their wholesale finance credit. Feel free to remove the portion of the invoice that reflects holdback, advertising dollars, etc. I simply want to see the equipment on the invoice and your price in relation to invoice minus any consumer rebates as well as any promotional APR or factory lender bonus cash offers. 5

6 Some dealers will say let me know your lowest bid and I will beat it. Politely inform them that you will only be dealing with those who send a price and an invoice. Lean toward the manager that has not only given you a good price (they will all be close on the price) but has also worked hard to find the vehicle you want as opposed to selling you something in stock (if they don t have exactly what you want). THERE S A VERY GOOD CHANCE YOUR IDEAL NEW VEHICLE WILL BE A RESULT OF A GOOD MANANGER FINDING THIS VEHICLE AT ANOTHER DEALERSHIP AND ARRANGING A DEALER TRADE. 7. Speak with your Grand Prairie Credit Union representative in regards to any 0% APR incentives versus factory rebates. We can tell you to the penny whether you are better served by 0% or the rebate. and lose rebate.or take rebate and use In addition, make note of any additional cash offered by the manufacturer s captive lender. Take advantage of this cash but this will alter your game plan when you take delivery as the Credit Union will not be the initial lender. See Step 13 below. 8. Once you narrow down the 2 lowest bids verified with a faxed or ed invoice as well as applicable rebate information ask the dealer if you can pictures of your trade for an appraisal. Most are willing to do this and it will save you a trip. Invest in a good detail job if you have a trade-in. Clean cars bring more money..then...then. Take lots of pictures and them along with a detailed description of the vehicle, including VIN, mileage, and equipment. If you accurately describe the condition they will typically stick to their word and honor their appraised value after they have physically seen the vehicle. If they insist on seeing the vehicle before placing a trade value, you may have to physically visit the dealership to have your trade appraised before taking delivery. 9. Before you set an appointment to take delivery, have the dealer send you a copy of the buyer s order by sending the below. This is a crucial step don t let all your hard work and patience be wasted by the dealer adding optional items on top of the agreed upon sales price. Also, it is highly recommended that you communicate via only at this point so as to take emotion out of the process that may come into play over the phone or in person. 6

7 Sample Please a copy of the buyer s order so I can review before I write the check. So as to avoid unnecessary and unpleasant back and forth communication, please remove any optional charges for VIN etching, Phantom Footprints, undercoating, maintenance plans, dealer service fees, etc. I understand the VIN Etch or Footprint stickers may already be on the vehicle, but the deal has not been closed and you have not paid for the benefit registration. If everything looks good I will set an appointment to bring in my trade and take delivery of the new vehicle. 10. If the dealer cooperates and sends you a copy of the buyer s order.make sure they are allowing a fair amount for your trade-in (if applicable). Let s say you are confident that your trade is worth $12,000 by virtue of your research as well as data provided by the Credit Union..but the dealer is only offering $10,000. If you feel they aren t allowing a fair price, it s time to send another as follows: Thanks so much for working hard to find the new vehicle for me at such a good price. However, I don t feel the price for my trade is fair at all. If you can get the trade allowance raised to $12,500* I ll be ready to set an appointment for delivery after I review the buyer s order. *Hint..always ask more for your trade even though you know it may be worth less. Important! Requesting a copy of the buyer s order to be ed to you will set off alarm bells at many dealerships. Why? Well..the dealer does not want to give you an opportunity to carefully observe, identify, and remove optional fees that can add hundreds if not thousands of dollars to the price of the vehicle. Further.the dealer will want you to visit with their business manager to verify the paperwork for titling purposes, etc. The F&I (Finance and Insurance) or Business Manager at a typical dealership is highly skilled, highly trained, and highly compensated. Their job is to generate maximum income for the dealer (and themselves) by selling you their financing, Vehicle Service Contract (VSC), GAP, and other types of protection products. Further, they will give you a variety of skilled responses as to why they can t remove optional fees from the buyer s order (VIN etching, dealer service fee, etc.) Many dealerships generate more income per vehicle from the finance department than the sales department. Who pays for this? You do. 7

8 Therefore, it is in your best financial interest to have a copy of the buyer s order ed or faxed to you prior to taking delivery. However..what if the salesman or sales manager refuses to send it to you? Nobody wants to wrap up a new vehicle purchase with a conflict situation. It should be a time of happiness as you are just one step away from enjoying your new vehicle. Unfortunately your happiness (making sure you aren t hit with optional fees) may not coincide with the dealer s happiness (making sure they maximize their profit at your expense). Our advice is to be firm but polite. Be as nice as possible.but hold your ground.keep your money in your pocket.and stick to communication only. Dear Jim: Thanks for your response. As mentioned, I will be writing a check for this vehicle. If you aren t able to send me a copy of the buyer s order, please have your business manager send me a copy. Please do not have your business manager call me as there is nothing to discuss until I receive a copy of the buyer s order before I make an appointment to take delivery. I simply want to review the figures and bottom line before I write my check. If everything looks good, I will have the check in hand when I take delivery and will be happy to sign the title application, buyer s order, etc. You have worked hard to get this sale and I really want to give you guys the best possible rating on the CSI survey. Let s not jeopardize this sale by being uncooperative in regards to sending me a copy of the buyer s order. At this point, the ball is back in the dealer s court. Many dealers will cooperate. Others will not. It may boil down to a war of wills. Hopefully not! Only you can determine if you are willing to show up to the dealership with a blank check without reviewing the buyer s order beforehand. Be aware, you are assured of a friendly visit with the business manager. As mentioned, this individual is highly skilled. No offense to our members.but chances are that he or she is a much better salesman than you. Insist that you will be financing with your Credit Union and there is nothing they can do to change your mind. 8

9 After a little small talk, routine paperwork, and making you feel comfortable, the business manager is going to ask you the following question. What interest rate are you getting from your credit union? You can reply with An excellent rate. Thanks. Here s what may happen: If your rate is 2.5%.they may offer 2.4%. They will probably do their best to get you to focus strictly on the rate..which means you may not focus on the optional fees and charges. They will then focus on selling you their GAP, Warranty, maintenance plans, etc. The Credit Union s GAP and Warranty prices are almost always substantially less than the dealer s prices and provide the highest levels of coverage and terms available in today s marketplace. Our products are insured and administered by A rated carriers with long term, proven track records in both credit unions and dealerships nationwide. So.back to 2.5% vs. 2.4%. The difference in payment is about $1 a month, which can quickly be eclipsed in the following scenario: Credit Union: Credit Union Loan Dealership Loan Example $30,000 Vehicle $30,000 Vehicle $ legit TT&L $ legit TT&L $1295 Vehicle Service Contract $1995 Vehicle Service Contract $350 GAP $750 GAP $495 Dealer Service Fee $299 VIN Etch $33, Total $35, Total 60 Months 60 Months $ Payment $ Payment Is 2.4% at the dealership really better than 2.5% at the Credit Union? The only way to 100% ensure that you aren t burned with optional fees and overpriced protection products is to review the buyer s order before you take delivery. 11. Speak with the Credit Union in regards to what the exact amount of the buyer s order should be (i.e. the bottom line) after factoring in the sales price, trade value, and legit fees and taxes. Use our buyer s order calculator to help you crunch the numbers. A thorough review of the buyer s order can save you thousands of dollars. See an example on the next page. 9

10 Between these items and these items, the dealer added over $8,000 to the price of the car. This could have been avoided!!! Note: Many if not most dealers will tell you that add-on products such as VIN Etching, Theft Protection, and Phantom Footprints are already on the car and they cannot take them off.so you have to pay for it which can cost you from $200 - $600. This is simply not true. The dealer may have utilized the stencil to put the product on the car, but the stencil only costs around $5. The benefit is not activated until the deal is closed. If you just have to have this product, buy it for $25 at If the dealer refuses to take it off because it s on the car you can also say. That s fine..you can leave it on the car but I just need you to lower the cost of the car by $549. (or whatever amount they are trying to charge).you can also say I ll give you $5 for the cost of the stencil, but I know you haven t paid to register the benefit so please remove it from the buyer s order. 10

11 Further many dealers will charge a prep fee or admin fee or dealer service fee ranging from $195 to $695. This fee is nothing more than added profit for the dealer. Firmly but politely refuse to pay this fee and ask the dealer remove it from the buyer s order. Dear Jim: I would hate for you guys to lose this sale because you refused to remove this fee. If you want to keep the fee on the buyer s order that s fine..i just need you to lower the price of the car by the same amount. Review the Buyer s Order from home or work Use our Buyer s Order Calculator Have the Credit Union loan officer s direct phone number to assist in drafting instructions 12. If the transaction has gone smoothly, be sure and give the dealer the highest rating possible on the follow-up survey from the manufacturer. In addition, please share the manager s name with the credit union so that we can steer fellow members their way. 11

12 13. If the manufacturer offers additional cash or down payment assistance for utilizing their finance source, by all means take advantage as it will lower the amount you are paying for the vehicle. 14. The interest rate, however, will more than likely be much higher than what you can get through the Credit Union. However, you can refinance the loan through the credit union and get the best of both! All you have to do is wait a few days contact the lender get a payoff and refinance with the credit union at a lower rate. You do not have to wait 90 days or make 3 payments before you do this and you will not lose the additional cash assistance if you do this. Texas is a simple interest state and there is no pre-payment penalty!!! If the business manager tells you that you have to wait 90 days to refinance, just say OK..sign your paperwork.and drive away..because you know the truth. If you feel the business manager is using scare tactics and not being truthful in regards to waiting 3 months to re-finance, you can also pull out your cell phone.turn on the video camera.point it at the business manager..and say can you please repeat that on camera? 15. In addition.pay CLOSE ATTENTION to the Amount Financed (Line 5) at the bottom before you sign the finance contract with the other lender. The finance contract is the longer, legal size document you will have to sign if you utilize the factory lender to get additional cash. 12

13 $800 Dent Coverage $800 Road Hazard $1000 GAP $2935 Warranty $5535 added to price of car Always make sure Line 5 (Amount Financed) equals the bottom line or unpaid balance you agreed to on the separate buyer s order. If the Line 5 amount is higher, ask the business manager why the amount is different. Remember..you will only need to be aware of Line 5 if you utilize the factory lender to take advantage of additional consumer cash and have to sign the factory lender s finance contract. 13

14 Does the dealer need my Social Security Number? If you are going to take advantage of additional consumer cash by utilizing the factory lender, then yes you will have to complete a credit application and provide your SS# to the dealer. If you are going to utilize our Smart Check, some dealers may require you to provide your SS# for identity verification purposes.and their internal policy may forbid them from selling you the vehicle if you do not provide it. Here s how you handle it. We will provide a form to you that allows the dealer to utilize your SS# for identification purposes only but not to pull your credit. Print your name..sign the form.and have the dealer rep do the same. Tell him or her that they may write your SS# on a piece of paper and utilize the number for identification purposes. Once they write it down, ask them to give the form back to you so that you have documentation that you provided your SS# for identification only. 14

15 16. Final Note: If you opt for accessories to be added later (window tint, running boards, etc..) make sure you get a signed copy of the We Owe document in addition to these items being listed on the Buyer s Order. DO NOT rely on a handshake. This document details the extra equipment or services that were added to your buyer s order and you will need it when you bring your vehicle back to have the equipment installed or services rendered. Final note. The Credit Union understands this process can be more time consuming than just driving to a dealership, negotiating a deal, and driving off in a new car. However, let s say that this process takes up 4 additional hours of your time but you end up saving $4,000 by utilizing patience and this buying guide? You just paid yourself $1000 an hour for your efforts and patience. We think it s worth it! 15