How to buy a new car and not get screwed

In this six-minute video from Ignite Seattle, Rob Gruhl offers advice on getting a good deal when shopping for a new car. (via Lifehacker)

Mark Frauenfelder is the founder of Boing Boing and the editor-in-chief of MAKE and Cool Tools. Twitter: @frauenfelder. Come and hear Mark speak at the ALA conference in Chicago on July 1.

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JackThornleigh

Excellent video and tips. Don’t forget to get in a heap of car insurance quotes to get the best deal from them as well. Next to negotiating for the car you might need to negotiate for the best insurance deal, or at least look a lot of them and compare what will be the best value for you and your situation. There is so much more to owning a car than owning a car. Careful negotiating and doing your homework will help in many instances.
Adam Keck

On the advice of my company’s IT equipment buyer, I did three rounds of phone bids with five dealers for my Corolla. God, those dealers were all steamed – but still looking for a deal ;-). Last guy said “Well?! What price do you want?!” So I told him. They honored the phone deal. Of course, it helps to have a lot of dealers in your area and be buying a common trim and option level.
Andrew

#20 has the best advice.

Some more info. I had friends who sold cars. If you are down on you luck, never go in talking about the payment you can afford. On more than one occassion these guys increased the interest rate to make the monthly payment match what the buyer wanted.

Also, I bought a used car by browsing ebay and then calling the local dealer that listed it. The internet sales guy was all business. I was told the reserve price (a great deal) and I stopped in and bought the car. They drove it over from the used car lot. The “sale” price on the windshield was $4,500 more than I paid.
New Cars

Great video. So many things that were said are so true. I found this site with great articles that have many of the same points. Check it out. http://www.autotropolis.com/wiki/index.php?title=Category:Buying_Guides.
Anonymous

After watching this, It is a nice overview. But it is really basic broad strokes of what happens at a dealer. After researching and visiting dealers this month. It appears they all use a very similar system to negotiate. They actually make a lot of their profit on the “back-end” that not covered in this video. i read about it here. http://www.hoopdi.com/guide/index.php/Car-Dealer-Secrets/The-Back-End.html
ridl

buying any new car is a completely unethical thing to do. shame on all of you. shame!

hang your heads.

it was a good video, though, and for those of us who don’t want (nearly as much) baby blood on our hands the tips could be useful for buying used.

seriously, i can’t imagine buying a new car in this day and age, i don’t understand it at all except as a function of advertisement brainwashing. it’s so far from anything i consider justifiable. i would hate myself.

if I haven’t alienated you, potential new car buyer, please think twice before shooting up that new-car scent again!

do it for the kids.
Rob Gruhl

Wow, I think I’ve heard from about 50 friends now that my talk hit boing boing. Before I respond to some of the comments/ideas above a few notes.

First, this was a talk given for the very excellent ignite seattle series hosted by O’reilly and put together by Brady Forest.

http://igniteseattle.com

The format of the talk is you have exactly 5 minutes for 20 slides and the slides advance automatically whether you’re ready or not. Awesome fun.

OK, to the comments above:

#2: My understanding is that leases aren’t a great idea, but I’m basing that on the advice of people who know better than I, not my own analysis.

#3: The extended warrenty rarely covers anything that is likely to break. Most of the parts covered are non-wear parts and very unlikely. If you’re super risk-averse then check with your auto insurer, they’re likely to have a much cheaper extended warranty anyway.

#5: All excellent points about new car vs. used car, this talk was on new cars, so there you go. Most of these tips translate to buying a used car from a dealer too.

#6: Excellent point about the calculator. One trick to watch for is when they deduct money from the post-tax number and then pocket the amount of the tax on the money you’re theoretically saving.

#8: Shopping online often simply is a slow way of getting to a salesperson. It’s more of a referral service. Just pick up the phone and call.

#9: You can easily pay several thousand extra if you’re not careful. Guess it depends on how much your weekends are worth to you. Part of that time will be spent deciding what car you’ll be driving for the next 3-15 years. If all goes well you won’t need much of that time, just make sure you have it if you need it is all.

#11: Great tips, the one gotcha is that it’s really really really hard to know what a fair price is for your car as there are so many layers of hidden incentives and payments made to the dealership that you’re not aware of. The beauty of the competitive bid is that you don’t have to know – someone will offer you the lowest price.

#20: Lots of good points. I wasn’t suggesting not asking for the dealer financing, just go in with your own secured and then you’re not beholden to the dealer. The dealer gets a number from the bank, and is then free to add whatever percentage they feel like they can get away with. It’s certainly possible that some of the backroom deals may be loss-leaders to bring in buyers. Check on the cost though. How much does it really cost for 60k miles of scheduled maintenence? Yes, you can lock in today’s rates, but you’re also paying for all of that today and losing the interest you’d get on that money in the long term. If you think you want a back-room item, just do the competitive research and shop around. As a general rule in a five-minute talk “buy nothing” gets you 99% of the way there. =) Also, good point about giving the salesperson who let you test drive the last chance – I do this myself, just forgot to mention.

#26: For a really good financing deal, buy a cheap used car with cash and then put your new car ‘payments’ into an interest bearing account. When you’ve saved up enough money for your next new/used car, buy it with cash and then start putting ‘payments’ on it back into the account. Hard to beat paying for a car and making interest on your ‘loan’.

#33: Invoice may or may not be accurate, there’s no way to know without owning a dealership. Therefore, it’s of little use when buying a car. Supply and demand also plays a role and every dealer will tell you that the car you want is in huge demand with little supply. At the end of the day, you just can’t know what the fair price is until you get the lowest price that someone’s willing to sell it to you for. As for rewarding someone, well, it’s up to them to sell me the car for what they feel their time is worth. I’m not taking a lot of their time asking for a bid and if they sell me the car at the price quoted without shenanigans they just made good money for 1 hour of work.

#35: Great advice if you know what the car is worth. You could be paying thousands over what someone would be willing to sell it to you for.

#36: One of my favorite lines is “Would you really walk away from this deal for only $150?” Imagine someone saying that to you in line at a McDonalds – you’d be livid! Nothing changes just because you happen to be buying a car, the answer is “Absolutely, yes.”

#37 My advice isn’t to be an a-hole, it’s that often the salesperson will try to make you feel like you’re being an unreasonable a_hole. Everything I recommend is upfront and honest – if the salesperson matches the price and simply has the right car and sells it with no wacky maneuvers it’s a very fast sale. I call up and let them know that if they get the best price I’ll come in and buy it, today. And I mean it. Easy money for an honest salesperson.
Anonymous

My mom bought me a car a long time ago and got the extended warranty. So at 97,000 miles, my transmission blows up. Honda replaced it for free, along with about $500 of other work they tacked on!

Yeah, I’m that guy that they point to when talking about how it’s a good deal. It worked out for me, but it helps to deal with a reputable company.
wisconsincarguy

I burst out laughing just thinking how many people can be so easily misled into believing this crap!

Every “add on” (warranty,insurance ect.) is crap? Really. I have 8 years in the car business and I think this article is missing some meat to it.

consider this:

1. Most people live beyond there means, no secret right?, what are those people to do when they have a costly repair and have no means to fix it? Lets see, roughly $20x mo, wrapped into your loan can cover you up to 100,000 miles. If your trans/engine goes out you can plan on spending between $1500-$3500 out of pocket. Do most people have that laying around? Not in WI.

2. The people who roll negative equity into there loan, most people. There car gets totaled out, they owe more than its worth and guess what? Now they get to pay for a car for MONTHS or YEARS after they can no longer drive there vehicle. Hmm $3-5 could have easily prevented this with GAP coverage.

3. Stick to what you know. PERIOD! I’d be willing to bet the guy giving the advice in this video has never, ever, worked at a dealership. And most of the “educated” comments on here? What a joke.

Ppl wh blv ths sh r RTRDD!
Micah

If you live in an area with high sales tax, you might in theory do better to trade in your old car than to sell it separately, since in most states you only pay sales tax on the difference between the new car price and the trade-in value.

For example, say you’re buying a $25k car and have been offered $10k to trade-in your old one in a jurisdiction with 8% sales tax. If you trade it in, you’ll only be paying $1200 in sales tax to buy the new car (8% * $25k-10k), whereas if you sell the car to a third party, you’ll pay $2000 in sales tax (8% * $25k).

That said, in most cases you can probably more than make up that $800 by selling directly to a third-party buyer rather than to the dealer. And selling to a third party takes one more variable out of your negotiation with the dealer, so you can focus more on the bottom line price and not have him dick you around on the trade-in value.
Anonymous

I wanted to buy a Kia and they offered me one thousand dollars for my 1996 Nissan Sentre, so I walked out because a Nissan is better then a Kia.
MikeStone

It’s just crazy how fast cars depreciate! I bought an Audi A6 ten years ago for around $100,000 and recently sold it for $9000. I was shocked when I looked at the market value for the car, this along with the cost of car insurance has made it a significantly bad invest! But all in all I had many great years in and am looking at buying a new car. This video has some great points on how not to get screwed great work and thanks!
Takuan

who ya gonna believe?
http://papundits.files.wordpress.com/2007/08/used-car-salesman.jpg
ckd

WisconsinCarGuy (#41): So you’re saying that if people are going to make bad decisions (like not saving enough of a cushion for unexpected expenses), they should compound them by making additional bad decisions?

1. “But what if your transmission breaks and you didn’t buy the extended warranty?” See that link MGFarrelly posted in #3?

In August 2003 hundreds of thousands of American motorists found they were holding worthless extended warranty policies following the bankruptcy of National Warranty Insurance Co.

One customer had an extra $1500 added on to her loan amount; wouldn’t it have done her more good to try to save $10/week?

2. “But what if you’re underwater on your loan because you rolled the negative equity in from your last car?” Then maybe you shouldn’t be buying a new car!
RaptorOne

To #41 who commented on people not having that extra cash in pocket…if you had just saved in that same time period the amount you spent on the warranty…you’d have more than enough to cover most expenses with ease considering YOU earn the interest not the finance group. Then you also have to read the fine print on most “extended warranty’s” only to find out most don’t cover crap.

Same thing with car insurance…I’ve already paid enough in car insurance to pay for my car 3 times…yet never had I had a single claim…

Yes, some people do roll over and that’s their own fault, but this video takes us from a clean slate.

And I do believe each post here is an “educated” bit of advise…provided each one at some point has purchased a car…there are many forms of education. Some come from common sense and learning from past mistakes, and others come from what you learn in a back room from Satan himself along with 6 other sales guys.
aldasin

1.I would never buy a new car
2.I took over 6 months to find the vehicle I was looking for, mainly because I was trying to avoid tacky trim packages and accessory bloat.
klawansky

Also a lot of good advice on this edmunds link as well.

http://www.edmunds.com/advice/buying/articles/42962/article.html
PeaceLove

Overall decent advice, but not entirely accurate. I worked for a high-end dealership (European car) in Silicon Valley with a very savvy clientele. We never played the kinds of “old-school” games he describes, such as wearing people down, constant back and forth negotiation, after-the-fact add-on fees. If we had, people would have simply walked out and not returned. Instead, we built our business on trust, respect, and years and years of repeat business.

We heard plenty of stories about the competition, though…

Contrary to the claim in the video, we could usually beat the finance rate most people got from their banks or credit unions. But you should certainly find your best rate before you walk into the dealership.

As far as back room add-ons, not everything is junk. For instance, the manufacturer offered pre-paid factory scheduled maintenance through 60K, an option that not only (demonstrably) saved clients money on all the scheduled Services, but also locked in today’s rates. An extended “warranty” (actually, technically an “Service Contract) can also be a very cost effective option if you plan to keep your car for 6 or 7 years — especially with European cars.

Be wary of off-brand warranties, “treatments,” and other aftermarket schwag. Some may be useful, but most are major profit centers for the dealership and are available much cheaper elsewhere.

The “lease vs. buy” argument is not as clear as some commenters above seem to think. We often had ludicrously cheap leases, and people who planned to buy outright ended up leasing. Other times, the leases were less favorable. The loose rule of thumb is if you like to get out of a car every 3-4 years a lease may be a good option; if you like to keep a car for 5+ years (the most cost-effective choice), buy.

#15 The real screw-job with leasing is the return. Car dealers charge hundreds of dollar for getting rid of tiny scratches, cleaning the car and maintenance.

That’s incorrect. Car dealers have nothing to do with any charges incurred after they sell or lease you the car; those are between you and the bank who wrote the lease. In many cases, the lease includes both gap insurance and a certain amount of wear and tear. With the brand I was selling, leases through their finance company automatically covered the first $1000 in wear and tear.

Caveat emptor. Ascertain the lease terms, including the disposal fee and other end of lease fees, before you sign anything.

Nowadays, your best option is to solicit a bunch of bids on the Internet. The people who do Internet sales are smart enough to know they need to pretty much give the car away if they have any hope of capturing your business. Get 3 or 4 dealers to email you the color, options, and “out the door” price of the closest car they have to the one you want.

Then, if you liked the salesman who took you out on a test drive and the dealership he works for, try to give him the last chance to match or beat your best bid. Selling cars is a tough way to make a living.
mgfarrelly

@ Peacelove:

I think your experience was on the high end of things and not indicative of most new car purchases.

Caveat emptor. Ascertain the lease terms, including the disposal fee and other end of lease fees, before you sign anything.

Completely agreed. But leasing a new vehicle is simply not worth the hassle and expense when you could, for the same money, purchase a slightly used car.

The only happy lease customers I’ve known were too wealthy to care one way or another or were going through a company.

*Sigh* Riding a bike is much easier…except when it snows.
Bren

You can bargain on the warranty like you can bargain on the price of the vehicle. A nice, totally comprhensive warranty by the actual automaker is far superior to a third party one from either the dealer or the credit union – but only if you can get it for a great price. You don’t have to decide now. With a new car, you can go ahead and buy it … and you have up to a year to decide on the factory warranty. If you go back in many months later to the F&I guy and have a few hundred bucks on you, you may walk out with one cheap.

Still … Cars are depreciating assets, and 1 or 2 years old used is often a much better deal. Even better – I always always buy older cars with low miles. Miles are the Coke. The rest is can.

Spend your money on assets that appreciate! Find that little old lady in tennies that changed her oil every 3000 miles. That’s what I do.
Anonymous

I’m kind of dissapointed by many of these posts slamming the motorized vehicle industry. Yeah, sure there are scumbags out there, but that doesn’t mean that you have to deal with them. I grew up in the RV, Car, and Powersports Industries, and the dealerships that survive are either ethical and make their living in repeat and refferal business, or they are the ones that twist your arm and gouge you.

The average person is smart enough to know to NOT BUY FROM THE LATTER! But how do you know if it is a reputable dealership? Especially since you taught all over the place to believe that all sales people are evil blood-sucking maggots.

Quite frankly, there is no way of knowing for sure, but aside from my Business Psychology PH.D, I have enough experience around the good ones (and unfortuently some bad ones) to give some tell signs that the salesman is there to help you as apposed to merely seeing you as a means to money.

1. Don’t deal with shady people – Common Sense on this one, if someone seems unhonest to you after talking to them for a bit, human instinct is genuinly pretty good at judging character

2. Be wary of salespeople who just talk and talk and don’t listen. If the salesperson actually cares that you get the right vehicle for you, s/he will ask you about your wants and needs as well as budget, the trick is you have to be honest with them so they can help you…which leads to the next point…

3. If a salesperson shows you a vehicle before finding out how you intend to use it and before they get what you planned on spending, then they are wasting both their and your time!! A good salesperson is trained to know about the pros/cons of the vehicles he is selling, and while I know some about the cars, I know not as much about the models as s/he does. So, make sure the saleperson helps you find the right product for what you are looking for.

Last thing I just want to comment on is MSRP and Invoice does not reflect the cost of the vehicle. While sure there are many dealer incentives and money back programs, a dealer’s true cost of a vehicle includes their cost of running the business. Rent, flooring, utilities, payroll for all the staff, many kinds insurance, taxes, and the list goes on and on. It absolutely impossible to know the true cost, and even if you did, would you really want to gouge the dealer???

At first you might think yes, but even if you don’t care if the salesperson makes a living and feeds his kids, you want the dealer to make money so s/he can take care of you in the long run. Too many dealers have gone out of business lately for us to try to pay cost for a vehicle, not to mention expect quality service.

A joke I heard recently at a dealership service shop was that the next time someone comes in and asks to not have to pay for service fees that they would just turn off the lights and then the service people would say….ok then we don’t get electricity for the month.
Anonymous

Just a few late notes to add. You can find manufacturer interest rates on-line so NEVER let that be a mystery. Getting a pre-approval from your bank is not a bad idea and, as earlier stated it locks in a rate. Also ask your banker to run some numbers that match the car(s) you have considered. Knowing your rate is one thing knowing your payments before hand is even better.

The invoice is actually a fairly accurate picture. Usually there is money behind it, such as holdback, dealer cash, regional ad money, dealer incentives that usually only the owner knows about, etc, ect…
(In truth the dealers goal is to at least break even in sales but the real earnings are with the service and parts department, I digress)
An invoice purchase is usually fair for both parties, plus the rebates.

The salesperson is usually just a mouthpiece, so consider them an extension of the management. As with any good service if the salesperson is good do try to reward them with your business. (Industry average commission is $180 to $250 per sale)

Beware in finance, never let them tell you “It’s already on the car” for any product. Warranties can be good but find out who insures them, get a list of ALL parts and components that are covered, and find out the rules to handling a claim and who you can use for warranty work. GAP is a good idea if you don’t a lot money down, and LoJack is a great product if you are worried about vehicle theft.

Leasing just like buying has it’s bad experiences. Your bank can run some lease figures for you as well so find out all fees associated with a manufacturer lease and then take them to a bank. Basically NEVER lease on the first day.

I hope this helps somebody.
Takuan

there hasn’t been an American car worth buying since 1969.
eap

Leasing a car ensures you will always have a car payment. Buy an inexpensive used car, and you can easily be payment free one day.
PeaceLove

Late follow-up comment here. I’ll just paraphrase [Kissinger's?] old saw about politicians and apply it to the car business: It’s the 90% of scumbags who give the other 10% a bad name. I like to think those of us here who write from experience are in the ethical 10%.

If the dealership you’re shopping at plays any old school scumbag moves, walk out and find another dealership. Period. There are plenty of ethical dealerships out there, where everyone from the owners on down values repeat customers over a quick, unethical buck. Find those ones and support them with your business.

On the other hand, keep in mind that if you go in aggressively shopping only for the very lowest price, you are in effect telling the dealership: I don’t care about the quality of your service or your ethics. I’m only looking for the biggest whore out there. Ethical dealers understandably aren’t too excited to work with people like that, especially since the biggest mooches are also the people most likely to slam them in the “customer satisfaction” survey the manufacturer sends new owners.

Dealers get rated by the manufacturer on their Customer Satisfaction Index (CSI), and a high CSI is worth a lot of money to the dealership. Since the biggest mooch is also the least likely to be happy, dealerships often have an incentive to let mooches go elsewhere. Who wants to lose money selling a car to a guy who’s going to slam you on the CSI survey?
Shane

Not bad, but only if you are a glutton for punishment and want to spend an (IMO) excessive amount of time on the whole thing.

So, I’ll offer my cut-to-the-quick method. Its geared toward being prepared and making 1 visit.

1. Do get pre-approved. On this I agree 100%. Its easy and quick to do online and then you’ll know where you stand. Also, be sure you know your credit score.

2. Know the market. Do you want an SUV? A Prius? The amount you’re gonna be able to save can be affected tremendously by the market. For example, if I was in the market to buy, today, I would expect to be able to knock up to 20-25% off the sticker on a SUV. I’d expect to knock 12-15% off a Camry and maybe only 5-10% off a Prius.

3. If you expect to take a loan, try to time your purchase to those “low-interest” promotions that are tied to weekend/holiday promotions.

4. Go in and cut to the chase. Go alone. Ask for the manager. Tell him your offer and if he does anything other than take it, leave. Even if your set on a specific make/model, most urban areas will have 5 dealerships within driving range. Feel free to point this out.

I’ve purchased two new cars this way and in both cases got my price.

I think for my next purchase I’m going to email the dealers with my terms, somthing like “I’ll take any new Prius on your lot for 10% off sticker (that’s my current estimation given their current popularity/scarcity. I will put $3000 down and am pre-approved at 4.9%. My Credit score is 780. The first dealer who calls/emails/faxes affirmatively will receive my business. No negotiations.”

We’ll see.
mgfarrelly

Everything in that video is SPOT-ON.

The library I work at hosted a consumer advocacy night and the non-profit financial planners made almost the exact same points. Especially about all the add-ons, competitive bidding and “The back room”.

When my girlfriend bought her car she stuck to her price, bought none of their add-on junk and walked out with the car she wanted for less than she expected to pay. We waited at the dealership for nearly SIX HOURS of course, so yeah, bring some knitting or a book.
stonecold

Surely this is informative, although a lot of it is common sense. I’m in the process of buying a car for which I’ve been researching thoroughly to get the best advise. I recently came across a very useful site: http://www.buyingadvice.com/
For the latest prices and models of both new and used cars it’s proven to be very useful for me.
PeaceLove

#18

I sold cars in Illinois and California. Your point about the tax credit on the trade-in applies in the former but not the latter. Unfortunately, you don’t get any tax credit on trade-ins in California.

Another trap with leases: some states charge tax on the whole purchase, some only charge “use” tax on the payments. Illinois charged on the whole purchase price, but the city of Chicago actually charged that plus a 6% use tax, which made leasing if you lived in Chicago itself a very expensive option.

California charges use tax on the payments only, thank god.
Patrick Dodds

@15: If you’re not planning to drive it for five years, perhaps you might be better waiting before you buy….
[I know, I know, you meant "sell" - sorry, I couldn't resist].
Anonymous

NEVER sign anything without redoing the math on every single page in front of you. Bring your own adding machine and financial calculator.

I’ve purchased nine cars from dealerships in my lifetime (seven new, two used) and in all that time, only ONCE has the paperwork been prepared without an error. In ALL cases, the “error” was in the dealer’s favor, between fifty and six hundred and fifty dollars. Each time the salesperson played stupid and gave me the whole “OMG! That never happens!” act, yet more than once upon raising the alarm, I overheard someone else in another nearby sales cubicle say that “HEY”, they were being screwed in the same way.

“Paperwork errors” are their last chance to sneak in a little more profit margin on the deal, and don’t think they won’t try. And for god’s sake, YES, it IS worth your extra fifteen minutes to force them to retype all the forms to get back to the right bottom line price! Would you really give away fifty dollars of your money that easily in any other situation?
halfacat

Great post about buying a car but even better post about the Ignite Presentation format!

We are working on the second Ignite Phoenix now and the submissions page is open till Friday. So if you are in Phoenix or will be in the area submit your presentation and be ready to present on Oct 29th.

Come to our site for more information:
http://www.ignite-phoenix.org

Here are some videos of the first Ignite Phoenix:
http://ignitephoenix.blip.tv/
We live streamed it on Ustream and will do so again for the next one.

Critiques and thoughts are welcomed.

This is a really fun way of having a lot of presenters in a short amount of time. Keeps the audience engaged and the presenters on their toes.
toxonix

summary:
1. take your time, 2 weekends at least.
2. get your own financing from your bank.
3. get competitive bids from multiple dealers for FINAL price, with mfr warranty
4. walk out if deal changes. they are still trying to screw you.
5. don’t buy anything else from the dealer, just the car.

Leases are especially screw-prone. DONT LEASE. Buy the car with cash, take good care of it, plan to sell it in 3-4 years on craigslist or whatever for 1/4 or less of what you bought it for, pay off the loan.
autoinsider

Interesting stuuff. For more car buying advice I recommend http://www.autoinsidertips.com

The Auto Insider
> Insider Car Buying Tips
mgfarrelly

A really excellent summary of why extended warranties are bunk (on every purchase) can be found here.

http://www.consumeraffairs.com/news04/2005/extended_warranty.html

Leases is pure idiocy. If you can’t afford a car payment on a purchase, you can’t afford a car.
- Anonymous
  
  If you dont beleive in extended warrenties good luck. Be prepared to pay the $3,000.00 for a transmission when it goes.
Anonymous

I always hear people say don’t lease, but what about the case where your car gets in an accident and suffers some frame damage?

I took a $3k loss on the value of my car after just such an accident after repairs.

It seems that in a lease, you are only responsible for the cost of repairing the vehicle, but not for the depreciation on value after an accident.

I’m sure I am missing something in this point of view but hopefully someone here can clear it up for me.
cinemajay

1. Never buy a new car, only buy used. Preferably 2-3 years old. By then all the recalls and wonkiness will have been sorted out by the manufacturer.

2. Buy rentals or certified pre-owned to ensure the cars have been inspected. They are usually also in new shape (having been pristinely cared for).

3. If something doesn’t feel right–either with the car itself or the sales person. Walk away without feeling guilty. Talk things over with a friend or spouse if you like. Come back if you like. But never feel pressure to get ‘that one’ because the sales person told you so. If it gets bought by someone else, oh well–they work for a dealer they can get you another. It’s their job.

/offspring of an honest car sales person*

*not an oxymoron, but perhaps an endangered species
cinemajay

P.S. Leasing isn’t for everyone and states/cities vary (#21 raises excellent points). Make the choice yourself based on where you live and the deal. Some leases aren’t so bad, especially if you think you may buy the car.

One last important lesson: it will almost always be cheaper to fix a car you own than to buy a new one. Even if the bills are in the thousands you’ll end up paying more in the long run. Morale of the story–make car purchasing a “need to” not a “want to” decision.
zuzu

This was an excellent straight-to-the-point video, and very much appreciated.

However, it also assumes you want (or are willing to pay for) a new car.

I’m much more inclined to be that person who buys that well-maintained car 3-4 years later on craigslist for 1/4 or less of the price it was new. Based on brand strength, practically any Toyota or Honda that hasn’t been mistreated will easily last to 200,000 miles. So why would you ever pay more than $5000 cash for a car? (Which is certain to only continue to depreciate.)

Unless you’ve been through racing school and enjoy your expensive hobby of Porches and Ferraris, all the vehicles are going to just get you from point A to point B. The main issues are that it will start when you want it to (especially in the cold), that it won’t need repairs (i.e. don’t buy American), and that the gas mileage is decent (~30mpg). Bonus points for being easy (and inexpensive) to work on / maintain yourself, both mechanically and electrically. And if it has decent storage room.
xzzy

I’ve found that having a skeptical friend and a calculator are indispensable tools when at the dealership.

Any time the salesman makes a claim about how much something will save you or cost you.. run it through the calculator. Eventually he’ll get the point that you’re not falling for the bullshit and will temper his claims a bit.

And the skeptical friend will keep you from drowning in said bullshit.
John Mark Ockerbloom

Toxonix implicitly gives the alternative way to buy a car and not get screwed: Buy the 3-4 year old car from the guy who’s selling it on Craigslist for 1/4 or less of what they bought it for. (After you’ve checked carefully to make sure the car is still in good shape, of course.)

The cars with a better reputation for longevity probably won’t depreciate quite that fast. But you can still get a good deal for, say, a Honda that’s 1/3 of its original selling price after a few years, if you can then drive it for lots more years after that.
Anonymous

@12 – Agreed! If you’re in the market for a new car with gas prices rising, and the decline of sustainable, available fuel sources, and you’ll look like a real idiot. A waste of money and time if you ask me. I have put my vehichle (purchased used in the first place) on the market and am reaping the benefits of no vehicular insurance costs, no repair or maintenance costs, various public transporation possibilities and the joys of riding my bicycle. Try a car co-op, or flexcar if you need it, and suck up your ego long enough to do something good for you and the environment. I’ve never been happier (or healthier) than the day I abandoned driving. There is nothing more inelegant in design than a 2000 lb sedan hauling around a 175 lb individual with a combustion engine that has a peak efficiency of 20%… and aren’t you folks all about well implemented, well purposed, and thoughtful design?
wylkyn

The best thing we did was to shop online and print out the deal we found, and then went to a dealer and said “match this or we walk.” He actually let us get to the door once before he caved. It was very empowering to have that piece of paper.
toolbag

2 weekends? Unless that saves me a wheelbarrow full of money it’s not really worth it to give up 2 whole weekends.

But I really like 2-5, right up my alley. Vowed that after the next thing on my car broke (ac this time) I’d buy a new one. Cars have all gotten a lot smaller since last I bought one….
Takuan

just buy a good, used Toyota and be done with it.
dlelash

My wife recently bought a one-year-old rental Honda, and I was the designated cynic for the transaction. One thing that killed me was how on the sales floor, an ex-rental was described as a good thing because it would have been well-maintained by the rental company, but as soon as we got into the financial area, the ex-rental became a bad thing because, well, “you never know who’s been driving it,” and you’d better get the extended warranty…
Narual

http://www.carbuyingtips.com/ — one of the best sites I’ve ever bookmarked. Saved me a few thousand bucks when I bought my first brand new car.

Being perfectly willing to walk out, knowing that your conversation is being monitored when the dealer goes to “discuss” whatever, understanding all the fees, discounts, rebates, etc, and having a really solid idea of what a fair price is for that specific car, on that specific day… most important things.
hey_moe

All car salesmen and managers I don’t care how honest they say they are lie. First thing they have to do before being hired is they have to be able to BS and lie good.A few things that were left off. A lot of times the dealer can get a better rate, because on every loan they make they get a kick back from what ever bank they go through. Even if you pay cash for your car and pay 100.00 below invoice they still made plenty of money. For every car they sale the manufacturer gives them between 750.00 to 1500.00. I don’t care if the dealership gives you the best price and everything you want plus beats everybody’s best price…walk away and think about it. That car isn’t going anywhere. I have read some in here say to ask for the invoice…BS…don’t you think by now they have caught on to this …..their are two printed invoices. The real one and the one they want you to see.Most new cars have a mark up of 3 to 4 thousands….plus all the other kick backs they get. Their is no such thing ” This is our bottom line price” If you saw all the kick backs and profit they make on their cars you would swear to never go back their again because you got took. I have NEVER paid for any add-ons, if they want to charge me for them I just say pull them off. I am not paying for anything I didn’t ask for. Most of the time they just leave them on and take a little bit of a loss. That video is right on…this is a cat and mouse game and who can wear who down first.Go their on a full stomach. If you start to feel tired and worn down, walk out and tell them you need a break…I don’t care if you only got 10 minutes left….don’t be pushed.The last thing a dealer wants to see is the customer leave ….even if it is for a break…they don’t want to take a chance of you changing your mind.One thing you need to get in black in white is lifetime oil changes and free inspection. If they won’t do it, you are buying at the wrong dealership. This should be free no matter what. One of the things I have seen them do is say, well it’s only five more dollars a month, you can’t afford that. Well take that five bucks and times it by 12 then by how many years you took the loan out for. If it isn’t no big deal, tell them to pay it themselves. At then end of the deal before signing anything, go outside and yak on the cell phone. BTW, even if you are in the back room and the price went up a few bucks….c ya…it freaks them out. Oh we made a error….total BS. Computers don’t make errors. To the so call salesmen that came in here and added their BS…..give me a break…please don’t use big words like honest and trust….you don’t have a clue what those words mean and you know you are doing what you are trained to do….blow sugar coated smoke up my buttocks.
Modusoperandi

Takuan: Incorrect, the James Bond Moon Buggy was produced in 1971 and the Damnation Alley SUV was from 1977. They’re a little hard to find today on the used market, but I know a guy who knows a guy.
rageahol

ride a bike instead.
Anonymous

I noticed that on ebay all the used cars have just about the same number of bids (43) and all are 25 to 100 dollars under the reserve. Does the seller do this to make the car look wanted or is it just a coincidence?
scionofgrace

This guy is spot on. A new car is a deal for those who plan to drive them until they fall apart, and this is exactly how to do it. My brother, a former car salesman, gave much the same advice when I bought my used Focus, especially the bit about walking out. He knocked about a thousand bucks off the price of my car just by refusing the dealership the first time.

If I might add: if you do fall in love with a make/model, DON’T LET THE SALESMAN KNOW. Act completely unexcited and indecisive, otherwise they know they have you and will fleece you for all you’re worth.

And the bigger the down-payment and shorter the financing you can manage, the better. All cars lose value and new ones lose a big chunk the minute you drive them off the lot. Don’t let financing eat your money on a depreciating asset.
Alan

If you go to a dealership and have to sit with a salesman you’re going to get a rotten deal. It’s better to handle the whole transaction online. I used http://www.truecar.com and saved thousands of dollars which I never would have done at the dealership with all the sales pressure.
Modusoperandi

Just get one of these. Low price, simple and reliable, tall gearing for relaxed cruising, tough plastic shell. New or used, what more could you ask for?
mgfarrelly

If you’re not willing to put in the time for a purchase costing thousands of dollars you might not be ready for that purchase.

The internet gives you a wealth of information walking in to a dealership, there’s no reason not to be really well informed about the purchase.

It’s sad that you have to fight tooth and nail to get a decent deal on a new (or used) car when going through a dealership. The games they play, the fees, the under-coating and warranties are such off-putting nonsense. I’ve never said “No thank you” so many times in my life. The gent in the video is absolutely right, you will feel like a heel for turning down so much from such a seemingly earnest person. Until you realize you’re turning down a polite person trying to bleed you dry.
RaptorOne

Excellent video indeed!

I too prefer the well maintained and lovingly used car approach, but, this video covers that as well. Used car lots try just as many if not more tricks than the new lots will. The advantage is you have a fair sized base of individuals who wish to sell their cars to you as well. (Anyone want a ’02 Chevy Trailblazer I’m tired of paying for?) ;)

But yes, even at places like CarMax and other “flat price” dealers they’re going to try to hit you with pointless add-ons and warranties.

Just remember, the salesman is never the expert…he’s just trying to earn a living…the real experts are the people who actually drive said vehicles and who have an unbiased approach.
The Blow Leprechaun

I can’t watch the video (at work), but I’m not sure what the justification for the hatred of leasing a vehicle is in the comments. Considering the rapid depreciation of cars, if you’re not planning to drive it for a long time (at least 5 years) leasing is almost always a better economic decision than actually buying.
Bren

Finally! An area of some expertise for me mentioned on BoingBoing!

First, I recommend re-reading #20, who knows whereof he speaks. Good advice.

In re banks vs credit unions vs dealers in the finance department (often the “F&I” – Finance & Insurance Manager- person is co-merged with the “ninja” referred to in the video){formerly me – *ahem*} If you get a better rate from the dealer … it may be due to a FACTORY incentive of some kind. Your Credit Union is often the best bet of the three. Why? Because the factory incentive is sometimes.often and either lower rate or dealer/customer incentive that gives a rebate (which can be taken off the price) at purchase. That is waaaay better if you crash your car and need to pay off your loan with an insurance checck – OR if you’re the type to pay your car off early, or if you win LOTTO. In any case, it is best to get a giveaway NOW than later!

I always tried to ethically educate customers on this … but it was of no effin; use. They are attracted like flies with as much brains to 0%! Get your prices both ways. Do your payment math. But owing less money is almost always better.

2) The key to leasing and whether it is a good deal lies in the residual value (which is a bank estimate) of the car post term and the “Money Factor” which is a term for APR – don’t let them tell you you you cannot get an AOR – they can figure it from the factor the bank/lender gives them. They have it at hand. Many business people lease for buisness purposes — it’s a tax thang, I suppose — but the deal is you are paying for depriciation — plus intrest on the original value and full freight od intrest for the remainder (where you pay off NO principal and only pay the intrest on the full value of.)

3) Got to stick up for sales peeps here! It’s OKAY to be an a-hole -BUT- If you are buying a car near invoice, that guy/gal is getting about 50 bucks. STOP acting like he owes you his life because you spent 25K!!!! Invoice means cost. The video reminds me of some see-doo dealers… So, ask for a reasonable amount over FACTORY INVOICE (ask to see the actual “FACTORY INVOICE” that the factory sent to the dealer.) AND check The Automotive News for current dealer/rebate incentives!!!

Maybe more later … off to bed!
Anonymous

Good tips. I do want to respond to some of the comments about leasing. Leasing isn’t idiotic at all and at times can be a better option than buying. I preferring leasing for a few reasons, the main one is I like to get a new car every few years. Sure you can easily sell your car but I’ve been through that process and it’s a nightmare. With leasing you just drop return the car to the dealing and lease a newer model. A lot car companies also offer multiple options at the end of the lease one which is an option to buy the car. Monthly payments are also less than when you finance.

A lot of people claim that when you finance you are making an investment. What they don’t understand is that the second you drive the car off the lot, it depreciates in value. Cars are never go up in value, unless they’re classics.

Point is, it just matters on your personal needs and situations. Yes you can get screwed more on a lease but you just have to be smart about it.

To say leasing is stupid is like saying renting an apartment is stupid.
Anonymous

Rob was my GURU during car buying. I did everything he said, and ended up w/ a brand new 2010 Prius for UNDER invoice! I kept referring to the video for inspiration. Rob, you rule!
mgfarrelly

@14:

The real screw-job with leasing is the return. Car dealers charge hundreds of dollar for getting rid of tiny scratches, cleaning the car and maintenance. You always lose money on the deal. Leasing is a mug’s game.

If you really want to have a hassle free and easy car experience, rely on car-sharing services like Igo and Zipcar. Hassle free.