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Dealing With The Dealership -- Tips On Purchasing A Car

Jeff Breitner -- Whether replacing an existing vehicle or giving a gift, the end of the year is an ideal great time to purchase a new car. But before you spend thousands of dollars, do your homework.

There are two key words to getting a fair deal on any vehicle purchase at a dealership and they both sound identical: KNOW and NO. It doesn't matter if your salesperson is a slime-ball or the altar boy.

KNOW what you are buying before you step foot on the car lot. Know how much it is worth, how much the dealer paid for it, and know a little about how car dealerships work. You should study the tricks of the trade and know when they're trying to play you for a sucker. Know how to quickly reverse-amortize financing deals to get the real price of the car (a programmable calculator or a print of estimated loans done on a spreadsheet are invaluable tools). Know about car salesmen and how they earn their living; you can usually know when they are very receptive to selling cars.

Fortunately, the Internet makes it easy to get into the know. Edmunds.com has great articles on the art of negotiating and purchasing, plus a humorous article on a guy who became an undercover salesman. Not to mention, they'll tell you everything you want to know about cars, what they are worth, and helpful research and reviews.

Just like the word know is power, so is NO. Far too many people fail to realize that they are in command when it comes to dealing with car dealerships. Think of it, they don't eat until YOU say it's time to do so. So when you start negotiating, you see that because you KNOW, the only realistic reply to 99% of the offers made by the dealership is to say NO. Obviously, the first offer is always NO because they'll try to sucker you. But even when you think you are getting a fair deal, say NO again and you'll be surprised what the dealership offers.

The last time I purchased a vehicle (my Honda Civic), I spent easily 10 hours at the dealership spread out over several days. That doesn't include the research time spent online learning about dealerships and how they work, about the car I was interested in purchasing, and reading funny dealer stories in an attempt to understand where these people try to tilt the deal their way. Car dealerships love uninformed and careless buyers -- don't be one and you'll come out ahead.

Here's how I play the game.

Test drive at least 4 models of vehicles on the lot. Hopefully you already know which ones you're interested in purchasing, but this is a fun little diversion to burn off time with your salesperson. It'll help you decide if you want to do business with this person and also takes non-refundable time from them so they are anxious to close a deal with you. Remember, time with you is time they could be spending with someone else.

Do not purchase a car on the first day of negotiating. Never. They'll try every trick in the book to keep you there, but you really are free to leave any time you like (although it may not feel like it). When I'm tired of negotiating, I'll quickly look at my watch and tell them I have to pick up my dog from the groomers. This excuse helps avoid the awkward situation where they offer you one of their cars to run errands. After all, what car dealership wants a dog riding around in one of their cars? If you don't have a dog and are asked what breed, I suggest you say Kuvacs. These are very, very large and very, very long-haired shedding dogs. I've never owned one because of those facts.

Don't fall victim to pressure sales tactics where they make you believe that somoene else is interested in the same car you're looking at purchasing. So what, your reply to this should be "If it happens, I'm sure you have more cars here I can buy, or you'll find me one just like it." Really, I've never seen a car dealership that was fresh out of cars.

Be very tight-lipped about everything. We've already established knowledge is power and there's no point in giving your salesperson any more advantage. You can say that you like certain aspects of a particular car, but something has to be not to your liking. Be sure to let them hear about it. Even if you LOVE the color of a car, you tell them it's just "okay" or even you dislike it. Certainly, do NOT allow them to pull a credit report before you've agreed to a price. They'll whine and complain or say it's "standard procedure," but remind them it's not YOUR procedure. Again, they can use this to their advantage. If they don't deal because of it, walk out. Just get up and leave; either they'll see it your way or let you know they are not interested. That's fine, they just get to eat ramen noodles that night.

I negotiate on the price of the car, but I'll entertain offers based upon monthly payments. I like to do this because I'll whip out the calculator and reverse the loan and see how much they are trying to jam me. Usually, it's easily a few thousand dollars and you can really raise a stink about it. This shaming technique works really well, and just because I'm a sadist and actually enjoy negotiating, I let my voice get really loud about the trick they just pulled ("Listen, you must have made some sort of mistake here because I'm showing your offer is four-thousand dollars over sticker" -- yeah, it's happened to me).

Don't be intimidated when the sales manager or general manager comes over. Same deal, he doesn't eat until you say he does. Just remember to say NO, even when they hit the price you want. I did and they threw in a $100 gas card and free OEM floor mats.

When it comes to the contract, for God's sake READ IT. S-L-O-W-L-Y. Ask questions and watch for errors and weird charges. Do not accept vehicles that come with things you didn't request (Scotchguard or "clear coat"). If they are there, the deal is OFF. Say no, and start over. Do NOT allow them to reduce the prices of these items, just say NO. Remember, the person who closes the contract (the business manager) doesn't eat until you sign your name. If there's any funny business, you don't sign. This guy can eat macaroni and cheese tonight if you don't like what's in the contract.

Finally, on my last two purchases they tried to throw in a "document preparation fee." One was $50 and the other was for $100. In my case, it's for some lackey to run down to the Secretary of State's office and get my plates and file the title. $50 seems okay since it saves me from having to do it during my lunch hour, but $100 is way too much. I balked at the $100 one and they reduced it to $50. Of course, I thought that I'd say NO again and they removed it -- but I had to get my own plates. Still, it was a win in my book.

I can't imagine making a purchase of many thousands of dollars without a little research and an investment of time. A spot purchase of $30 for a subscription to Fool is ok, but many a fool (not the good kind) has fallen victim to car dealerships because they didn't think it through.

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