Wednesday, February 23, 2011

Everything I Know About Buying a Car

To many people, shopping for a new or used car is one of the most stressful things they will ever do. For some reason, it's something that I find very entertaining.
About 10 years ago, I found myself in the car business; selling, trading and buying something just about every day, and throughout that experience I learned a little bit about the car buying process.
Here are my Top Ten recommendations:
1. Know the 'True Market Value' of the Car You're Buying and/or Trading
Many people go to Kelly Blue Book to find out how much a vehicle is worth and once they see that number (which most of the time is too high), they believe what they see. But a car/truck is like anything else... it's only worth what the market says it's worth. There's a handy tool at that allows you to get a better picture of what a vehicle is truly worth by giving you a TMV (True Market Value).
2. Know the History Before You Make a Commitment
Buying a car is like beginning a new relationship: You ought to know a little background before you make a commitment. With the progression of technology, now it's easy to find out the history of a vehicle with one simple click of the mouse at Most Dealers provide this service for free. If they don't offer it to you, ask for it specifically and they'll make sure to get you a copy. If they won't pay for that service for some reason... RUN! (they're hiding something)
3. What's the Hurry?
You know why people hate car shopping? Because the car dealer puts pressure on the customer and makes them feel uncomfortable. Here's the secret... they do it on purpose. If you find yourself at a table with a car salesman and he draws a '4 square,' he's doing it for a reason. It's to take your mind off of the price of the vehicle and on to the payment. The reason they do that is because at first, if you're buying a car that is $10,000, they can show your payment at $335 for 60 months. Once you see the $335, you're locked into that price, because in all reality, that's the number you're paying each month and it therefore becomes the priority. Once you say that the payment is too high, they can adjust interest rates a little, lower your payment to $275 and the number becomes a lot more doable. What you don't know is that they're still holding on to a couple percentage points on the APR and they never even adjusted the price of the car. Another trick is over-allowing on the trade. Where they appraise it at $8,000 but tell you that it's worth 7. They just held $1,000 and added it to the gross profit on your car deal (and that money could have been in your pocket).
So, what's the hurry? If the salesman is in a hurry, it's because he's about to make a killing. If you ever hear the words, "Sign here saying that if I can get you this deal, you'll walk out with it today," just know that you're about to lose...
4. Beware of Horse Traders & Don't Be Afraid to Become One
When you have a vehicle to trade in, the dealer will have someone appraise that vehicle. Most of the time they like to appraise it while you watch. This form of psychology goes back to the "horse traders." Horse traders used this same method while negotiating, trading and buying horses hundreds of years ago. A car dealer will walk around your car and touch every flaw he sees. If there's a scratch, he'll literally touch it. If there's a dent, he'll place his finger inside the tent and let it sit for just a second. The reason they do this today is the same reason they did it in the Wild West... by touching the flaws of the vehicle, it devalues the car in your mind. Once it's devalued, you'll be willing to let it go for less.
Here's the cool part: Not everybody knows about this, so next time you go shopping for a Used Vehicle, you have the opportunity to become the Horse trader! Devalue Away!!!
5. Cracking the Pricing Code
It's a lot easier to shop on a car lot when you know how they price their vehicles. For instance, I used to work at a dealership that would price their cars as follows: When we first put a car out on the lot, the price would always end in a 1. That way, when the salesmen were on the lot with a customer, we would look for those cars because if we pulled up on a Ford Mustang with a price of $16,991, that meant to us that this Mustang was new to the lot and hadn't been marked down at all. When a vehicle stayed on the lot too long, we would mark them down and end them with a 2. Then later, we would mark them down again and end them with a 3. Finally, if a car had been on the lot too long, the dealership was then forced to pay a tax on the vehicle and we had to price them to move. Many times the dealership wouldn't make any money on the vehicle, and the salesmen avoided the cars/trucks ending in 4. Every dealership is a little different, but if you investigate, you may be able to crack the pricing code.
6. Don't Be Afraid to Walk Away
If you find THE car or THE truck and you feel like you're getting a good deal... then look at your salesman... get up... and walk away. I know, it doesn't make sense, but if you want to make sure you're getting the best deal, it's critical that you leave. Just tell your salesman, "I just think ya'll can do better than that," make sure he has your cell number and leave. If there's room to move... even a little, he'll call you back within 24 hours.
7. Be Educated
Once you know what you're looking for, then begin your research. Search all over the Internet and find out what similar vehicles are going for and bring these examples with you for your negotiation. Remember in buying a vehicle that it is a negotiation, which means that you both have to be willing to compromise a little. They will be quicker to negotiate when they realize you're not an uneducated pushover that is ready to sign and drive. A couple websites I recommend browsing are,,,,
Also, not many people know this but BLACK vehicles are worth more than any other color. I'm not sure why, other than desirability and resale statistics, but if you buy a black vehicle and keep it clean, there's a good chance it'll bring more when it comes time to sell.
8. Be Pre-Approved
Dealerships make most of their money in this department. When you don't know what you're qualified for, it's a lot easier to get you to settle at a higher rate. Get pre-qualified at your local bank or credit union before you buy your car. If the dealership can match or beat the rate (which they can do most of the time) then go with them. But don't expect them to show you their hand if there's no reason to do so.
9. Know What Cash is Available
When you buy a new vehicle, there's something called 'Dealer Cash.' It's not something they want to talk about, but for instance, when I sold a new Dodge Ram Pickup, the dealership was given a $1,500 bonus no matter how much we made on the vehicle and then they would give me a couple hundred out of that as well. That's why a lot of times dealerships can sell a vehicle at invoice; because they're still making money. Some of these vehicles have bonuses up to $3,000. Before you buy your new car or truck, search to see what the dealer cash bonuses are at that point in time; they change all the time. Sometimes, if you know about it, you can get them to share a little of it with you (but they've still got to make a living so be nice).
10. Avoid Add-On's
This is genius... dealerships will sell you a new truck that already has a spray in bed liner, it has bed rails, it has chrome steps and window guards, and it's all included in the price of the truck. You wish. Look at the sticker and you'll notice add-on's. What they do is pay $200 for the bed liner and then charge you $500. It's the same with the rails and the steps and the window guards. I would recommend that you only agree to pay the 'cost' of the add-on items or you ask them to take everything off and then have it added yourself after the transaction is complete.
Another place you'll find add-on's is in the finance department of the dealership. They'll recommend 'window etching' and 'low jack' and 'gap insurance' and 'extended warranties.' All of these things are good things... maybe not necessities, but they're good. But with every good thing you add on, you're extending your wallet that much more. Just say no to add on's and you'll probably never miss them.
I hope this list helps you out on your next car-buying adventure!


  1. Speaking of being educated, you should also check out car reviews as well as car forums to see what people who already own the car you're thinking of buying have to say. If you see it tends to have a lot of problems, avoid it!

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