How to Buy a Car – 15 Essential Tips to Get the Best Deal

buy car keysI loathe the process of having to buy a new car. Dealing with pushy, overbearing car salesmen can be extremely frustrating. As a result, I do whatever I can to avoid buying a car. I perform all recommended DIY car maintenance checks, I keep my vehicle for as long as I can, and I consolidate my trips both to save on gas and decrease wear and tear on my car.

However, buying a car at some point in time is a reality that we all have to face. I’ve compiled a list of several important car buying steps that you should follow. Heeding the advice in this article will help you save money, get the best deal, and hopefully, reduce the amount of stress involved with purchasing a vehicle.

Important Tips for Buying a Car

1. Do Your Research

The most important thing to know before you buy a car is that knowledge is power. It’s a mistake to arrive at a car lot without first researching the car you want to buy. You can find out just about anything you want to know about a car online. Auto Trader, Consumer Reports, Kelley Blue Book, and the Yahoo! Autos section are great places to start researching cars in your price range.

Also, if you are considering buying a new car, your goal is to find the “invoice” price of the car, not the MSRP. The “invoice” price is what the dealer paid the manufacturer for the car. This research will come in handy once the price negotiations begin.

On the other hand, if you are thinking about buying a used car, research the recent resale prices for that specific car model. This data will give you major bargaining power. If you plan to trade in your current car, research market values for your vehicle, too. Knowing the value of your trade-in can also be a powerful bargaining tool.

2. Look into Pre-financing Options

Many people obtain financing from the car dealership, but this isn’t fiscally responsible. Dealership interest rates are typically much higher than loan rates obtained from banks and credit unions. Your bank or credit union is one of the best places to start researching car loan rates, and you can obtain “relationship discounts” that you won’t find anywhere else.

Although you may not find the best deals online, you can also use the Internet to review current interest rates. Websites like MoneyAisle can provide up to date information when you need to research car loans. Finally, once you obtain a quote from any financial institution, get the quote in writing. You can then present this quote to the dealership and use it as leverage to negotiate a lower interest rate.

3. Shop Around

Unless there is an emergency situation, shop around before you buy a car. I have an established rule in place whenever I shop for a car: I always make sure that I walk out of at least one dealership. This way, I always know their rock-bottom price, often given to me just before I leave. It might also make sense to explore out-of-town car dealerships. Dealerships price their vehicles differently depending upon their location.

car dealership lot

4. Negotiate Terms

To me, buying a car is either a chess match, or it’s a war. Next to buying a house, purchasing a new car is one of the most important investments you will make in life. In fact, you may be paying off this car for the next four, five, or six years.

Let the salespeople know up front that you’re not going to be taken for a ride. Do everything you can do to negotiate the car loan and knock the purchase price down. Start with a ridiculous number, and work backwards. If the salesperson gives you an offer that includes a monthly payment of a certain amount based on a 60-month loan, tell them you want the same payment with a 48-month loan.

Walk into the dealership with confidence, stick to your guns, and don’t feel bad about walking away from any offers.  It might also be helpful to practice your negotiation strategies and tactics to prepare.

5. Look at Both New and Used Cars

In the past, buying a gently used car was the best way to save money when purchasing a vehicle. A big reason behind this logic is that new cars depreciate considerably the moment they are taken home from the dealership.

Unfortunately, the supply of used cars has decreased dramatically after many were removed as part of the “Cash for Clunkers” program. In addition, more people are holding onto their cars for longer periods of time before looking for a replacement. As a result, prices for used cars have increased significantly, making new cars a more realistic option.

Ultimately, make sure to go into the buying process with an open mind, considering both new and used cars and running the numbers before making your final decision.

6. Buy Based on Purchase Price, Not on Monthly Payments

Car dealers are notorious for offering a very attractive monthly payment to potential buyers. Do not be misled. If this “wonderful” payment is attached to a 72-month loan, then it’s really not that attractive at all.

Be sure to always negotiate based on the purchase price of the car, and not the monthly payment. Also make sure that you know the “full” purchase price of any car that you buy. There could be many extra, hidden costs factored into the price including various taxes, car preparation and delivery fees, and dealership costs that you won’t know about unless you ask.

car window price

7. Utilize the Internet

Purchasing a car online is definitely an option to consider. First, you completely avoid the hassle of dealing with annoying car salesmen. And second, you could end up with a much better price. Consider this: A salesman on the showroom floor is trying to negotiate the highest price possible, since his commissions are based on a percentage of the sale price. On the other hand, an Internet sales manager typically makes a fixed salary and gets paid a bonus, based on volume.

Additionally, purchasing a car online is more convenient than visiting multiple dealerships. After all, many large dealerships put up their cars for sale online. eBay Motors is a great place to look for a car, and you can also find cars for sale on Craigslist (just be careful of common Craigslist scams).

If you do decide to buy a car online, you’ll still want to test drive the car and have it checked by a mechanic to make sure there are no issues or problems.

8. Don’t Mention Your Trade-In

You should play your cards close to you in all aspects of the car-buying process, especially when it comes to mentioning your trade-in. Do not mention your trade-in until the end of the buying process. Why? The dealer will likely use this information against you.

For example, let’s say you’re looking at a $22,000 car and the dealer’s rock-bottom price for the car you’re considering is $18,000 (although he won’t share this information with you). If you have a trade-in worth $2,000, the dealer might offer to give you the car for $20,000 plus the additional $2,000 for the trade-in, for a total purchase price of $18,000.

If you hadn’t mentioned your trade-in, you could have negotiated the price down to $18,000 and then told the dealer about the trade-in, resulting in a final purchase price of $16,000. Negotiate these two aspects of the car-buying process separately. First, negotiate the best possible deal you can get for the car you want to buy, then go to work on getting the most for your trade-in.

9. Factor in Insurance Costs

Factor costs for car insurance premiums into the purchase price of your car. The cost of insuring a car is a major factor in the overall cost of the vehicle. Get insurance premium quotes online by providing information about the car’s make and model and personal information including age, marital status, and driving record.

Sports cars have higher premiums than conventional cars, but some cars have higher insurance rates for other reasons as well. For example, the Honda Accord, Honda Civic, and the Toyota Camry are favorites among car thieves because of their higher resale values, and the insurance premiums for these cars can thus be more expensive.

10. Avoid Impulse Buying

Prevent impulse buying by conducting extensive research before you buy a vehicle. Buying a car on a whim is a risky endeavor. You might realize after it’s too late that you can’t afford the car, or you may find that the performance of the car just doesn’t meet your expectations.

By researching the make, model, and style of the car, and reviewing insurance rates and financing, you should be able to put yourself in a car that you will enjoy for many years to come.

woman buying car

11. Don’t Purchase the Add-ons

Buying a new car is a major purchase, and you may be paying it off over the next several years. If you finance the car, the overall costs for accessories will skyrocket, so keep the add-ons to a minimum. You don’t really need heated seats, and you can buy a portable GPS navigation unit online for much less than expensive built-in systems.

Rust-proofing is another add-on you don’t need despite what the salesperson might tell you. VIN etching, a rear camera, and a dealership maintenance plan are more add-ons that you don’t really need.

12. Don’t Buy the Extended Warranty

The extended car warranties offered by dealerships are expensive, and, even worse, the coverage is often very limited and doesn’t cover the costs of many types of mechanical failure in new or used cars.

If you’re buying a new car, the car should come with a manufacturer’s warranty that provides ample coverage for your vehicle. If you’re looking at a used car, keep in mind that many of them will still have valid manufacturer’s warranties.

You especially want to avoid the extended warranty if it will be financed as part of your car loan. Why? The total cost of the warranty, including interest, will be exorbitant. Your best option is to simply deposit that money in a savings account that’s earmarked for potential vehicle repairs and maintenance.

13. Always Test Drive the Car

90% of people who buy a new car test drive it first. Do not be among the other 10%. You want to test drive the car for many reasons, but comfort should be foremost in your mind. There are some cars that you just won’t feel comfortable driving. If this is the case, move on.

If you have children, bring them along on the test drive. Their comfort level is important too, and trust me, they will give you their honest assessment of the car. In addition to comfort, look for the following:

  • Idle: The car should be smooth and quiet.
  • View: Make sure the view from each of the mirrors is acceptable, and you have a straight line view of all dashboard gauges.
  • Controls: Flip on the air, locate the turn signals, and turn on the windshield wipers. Ensure that everything is easy to use. Some people find that their fingers are too big to handle certain switches, buttons, or levers in some cars.
  • Handling and Brakes: Make sure the car responds when you push the accelerator or brakes. Cars vary significantly in terms of sensitivity, and you want to choose a car that best fits your preferences.

family test drive car

14. Visit the Mechanic When Buying Used

If you’re planning to buy a used vehicle, it’s important to have the car thoroughly checked out by a mechanic before you finalize the purchase. The mechanic will inspect the car and look for unusual signs of wear and tear as well as items of potential concern.

Mechanical problems or maintenance issues that the mechanic finds may determine whether or not you buy the car, and the mechanic’s report may provide you with the necessary leverage to negotiate a lower purchase price.

15. Buy a Car You Can Afford

If you are considering buying another car before your current vehicle is paid off, you need to seriously reassess whether or not you can really afford to buy another car. You don’t want to be saddled with an upside down car loan.

A much better option is to wait until your current vehicle is paid off. Then set aside the money that used to pay for your monthly car payment in an interest-bearing account for one year, while continuing to drive your old car.

Fore example, if your previous car payment was $300 a month and you follow this strategy for just one year, you will then have more than $3,600 to use as a down payment on your next car. Just make sure that you’re not digging into your savings or your emergency fund to buy a top-of-the-line car. Buy within your means.

Final Word

In the end, buying a car is a major purchase, and it’s important to research each and every aspect of the process. Educate yourself so you can go into negotiations well-prepared to get the best deal possible on a new or used car. By following the tips outlined in this article, you’ll get the best price possible on your next car.

Do you have any other tips for buying a car? What was the process like for your last purchase?

  • carsalesman

    This is an assonine article, I have been selling cars for years and have never had a complaint of being pushy or overbearing, and I have always told people that I will be fair with them if they are fair with me. And I stick to that, people who come in and act like a jerk which is how people following this article WILL come off I will just ask to leave and having done this for as long as I have my bosses have no problem with that. However if someone comes in and asks for a fair deal that allows us to cover our overhead and for me to make a little money I will never say no. People, if you want a good deal look at things from every side, this is a business and we need a profit margin, come in and don’t get taken advantage of but also don’t be a jerk. if the lowest somebody can go is 18,000 buy for 19,000 that 1,000 dollars that 1,000 dollars is less than 10% markup and unless that car was bought for a great deal don’t expect original markup to be much higher. But 10% is more than fair it’s a whole lot less than the markup in that cheeseburger you just ate or in that coke you just bought at the gas station. And yes dealerships markup rates typically if you have great credit they will markup rates 1-2% if the rate is too high ask for a lower one and they will work for it. And not mentioning your trade is again a stupid tactic that will cause a salesman to shut down and hold on your trade to get the profit back in his or her deal. In closing be open and honest and most salesman will be the same way if your shut down and lie guess what he will be too. Common curtosey folks.

    • GozarisaGod

      Blah! The dealer isn’t your friend and neither is the car salesman. No one comes into a car dealership looking to earn your dealership “profits” this is not a charity. People come to the dealer to buy a car and get the best deal possible on it. If you can’t do that than so be it. I’m quite sure your dealer already has the prices marked up, the back end deals on financing, and the yadda yadda warranties. That’s how all dealers get that extra profit in by taking advantage of people not wise enough to know how to navigate through the dealer/salesman BS. For a buyer the less information you give a dealer the less they have to use against you. ALL salesman are full of crap don’t trust any of them. Never trust a person whose income relies on you buying something from them. They’ll tell you anything just to keep a roof over their head. You talk to them about financing they try to play the payment game. Yah low monthly stretched out over FORVER! you try to play the Money down game they try to get you to finance “hey why spend all your money”. Dealers want you to finance so they can get that back end money. Back end being higher rate they charge to get extra money out of you hidden in your payments. Don’t get caught in their trap.

      Ask them the “out the door price” for a car with tax and everything included. Ask them about the warranties and what they cover. Get a FINAL price on everything. Watch how that 12,000 dollar car become 15,000 in no time! Just with their dealer BS added to it and know this. Dealer BS cost them nothing but it costs you something. When you asks a salesman these questions they’ll get nervous and make excuses or try to make it seem as though the additional fees aren’t so bad. What they do is try to butter you in with an attractive price(to you) and not discuss the rest of the OTD fees until you’ve financed the car and are too far in the process of purchasing to say “No” or at least they’ll try to get you that far and hope your too determined to say “I think I’ve changed my mind about this vehicle”.

      Never walk into a dealer like they’re actually there to help you because they aren’t. They’re there to help themselves to your money and never forget that. This guy above me is the typical excuse for the lies of a saleman complaining about how “they need to eat too” so be happy about their screw you over “MARKUPS!”. Who cares if they starve or if the dealership doesn’t make money that’s their problem. You’re there to buy a car not make donations. If you have to lie and take advantage of unsuspecting folks to get a paycheck find a more credible job with morality.

      I’ve been on many car lots over the years and even worked for a few. The bottom line is that from sales to service the dealer is full of s**t period. Find the car you want,research it, learn what a good price is for that vehicle (blue book) and get the car at blue book or below. If it’s not blue book or below you’re not getting a deal. If you finance do it through a credit union or trustworthy bank. Try not to finance through a dealer unless you’re buying new and are getting a manufacturers promotional offer/discount which usually requires a good score to begin with so you should know your purchasing power. If you buy a used car and aren’t a mechanic TELL (not ASK) the dealer that you want your personal mechanic to take a look. They’ll give you some BS about how their service department checks every car but don’t waste your time even listening. Get the car inspected by someone who has nothing to gain from the sale of the vehicle.

      Also never ever get caught in the Salesman’s this is a “hot deal” or “this is the last one hurry and buy” nonsense. Unless your shopping for some rare classic car, or 1 of only 100 made vehicles chances are you’re buying a car that probably had 150,000 others just like it roll out the factory and chances are you can find another one at a dealer the town next over so don’t rush into it. A good game to play is find a car that matches the one you like at another dealer and pit the two dealers against each other for the best price. Just play the qoute game and make THEM compete for your business.

      When it comes to dealerships in the words of the great Leonidas “Give them nothing but take from them EVERYTHING”.

      • Chuychuybangbang

        So gozarisa, what do you do for a living? Does it provide a good or service of some kind? How do you justify making money off other people?

      • Joel Grey

        Wow that’s a lot of hostility there. I sold cars for a living a while ago also. Instead of complaining I actually help folks save money buying their next car. “I Never Wore Plaid” Joel Grey

        Cheers and Happy holidays!

    • scarhill

      I have been buying cars for decades. The one thing I know is a sales person is never a buyer’s friend. A sales person is not working to sell at a low price. The sales person is working to sell at the highest price a buyer will accept.

      Seriously, why are you comparing the cost of a cheeseburger to the cost of a new car? There is no relationship between the two. But a nice straw man.

      Do you really think it is appropriate for a dealer to mark up the interest rate for which a buyer qualifies by 1-2 percent? Over the life of a loan that can be thousands of dollars! On what planet is that fair? Why should a buyer, who has great credit, give a dealer that kind of money? That is simply deception.

      In any case, I never, ever deal with a sales person. Why should I? The sales person is not the person making the deal. I always move immediately to the sales manager, who is the person making the deal. When I speak to the sales person, I simply tell him or her my price. I always have a price a bit lower than invoice. That always gets the manager involved.

      Once I have the manager involved, I always reach a point where the manager believes I am walking. Because, as you know, a buyer never gets the best price until the dealer believes the buyer is walking. The whole process at the dealership usually takes 30 minutes or so.

      A couple of points I do agree. First. the sales person is not the enemy so they should be treated with respect. Second, there is no benefit to not disclosing a trade vehicle. Dealers are not stupid and holding back on the trade accomplishes nothing.

      When I buy, I have done all the research on line. I know the price I will pay, the value I will accept for my trade, and the financing I will accept. I tell the sales person both the price and the trade value immediately. There is no benefit to playing a long game of cat and mouse. If we agree a deal is made if not there is always another dealer.

      Finally, I never discuss finance until the deal is made. I want the dealer to believe I may buy various F&I products. Often they will sell for a bit less if they believe they will make a profit in the box. Of course, when I get to the F&I office, I tell them the rate I want and NO to any of the various menu of products they present. If I really want to have fun, I refuse to sign the menu stating I elected not to buy the products.

  • Norman Major

    You have to check the other associated costs (like gas, insurance, maintenance) before you buy. The car price tag might be cheap, but the repairs and everything might be expensive.

    I would say that buying a car that’s expensive to insure is the top mistake. The sticker price of the car might be cheap, but insurance costs could cancel them out. Look to pay no more than $25/month for insurance (check out Insurance Panda). My Honda Civic has always been a pleasure to drive and cheap to insure too.I would say that buying a car that’s expensive to insure is the top mistake. The sticker price of the car might be cheap, but insurance costs could cancel them out. Look to pay no more than $25/month for insurance (check out Insurance Panda). My Honda Civic has always been a pleasure to drive and cheap to insure too.

    Also, you can fill up at the gas tank for like $15, but again thats only for certain cars. Check out the costs with car ownership before you make that purchase.

  • respectablecarperson

    What a terrible article. I hope no one uses any of this “advice”.

  • Joel Grey

    Car salespeople are no different than any other person who works on commission. If you don’t sell, you don’t eat. It’s that simple. That does not however give you cart blanche do treat people wrong. The golden rule worked good for me. I sold cars for years. I now help folks save money buying cars. Check it out. “I Never Wore Plaid” Insider secrets from a former car salesperson. I’m Joel Grey and I can help you buy your next car.

    • scarhill

      People need to understand a car salesman is not their friend. A car salesman simply wants to sell a car, period. Therefore, anything they say must be viewed with skepticism. And no, a car salesman is not working to save the buyer money. It’s that simple.

  • Miller Auto Plaza

    Great post thanks for sharing this I will keep it in mind for the next time I pay visit to a dealer. The paying a visit to a mechanic is a great idea, they always make sure the dealer is not trying to make you overpay.

  • Yusuf Sert

    Think about for a second what the article says!!! 12. Don’t Buy the Extended Warranty, so whoever wrote this article can fix your vehicle when it is broken or Is she/he is going to be responsible paying for parts and labor cost of your vehicle. Tell me if i am wrong. I am very sure they won’t be doing any of that.

    • scarhill

      Well, I thought about it for a second.

      The simple fact is for the vast majority of people an extended service contract (only the manufacturer issues a warranty) will cost more than the cost of covered repairs paid by the contract. That was clearly stated in the article. Personally, I have purchased perhaps 30 mew vehicles and I have yet to encounter a single vehicle where an extended service contract would have paid for itself. Figuring for each of those vehicles an extended service contract would cost $1,500 each, I saved up to $45,000.

      Yes, Yusuf, you are wrong?

      Now are you an F&I representative at a dealership?

    • Joseph Cristal

      Did you read his post carefully? Hes said he does routine maintenance himself. Those prevent the need for extended warranty. So if you cant work on cars yourself obviously you should be ignoring that part of his post.

  • fullerlax

    This article is basically telling people to mistreat a sales person who is there to Help you purchase a vehicle. The dealerships hand pick the vehicles that they sell on the lot and they are typically in excellent condition. The mark-up on vehicles is 110% ethical, they clean and detail the cars, run a 150 point inspection and in some cases have to repair things. Its the same thing as buying anything in life, If you only paid what the vender paid then what’s the point of having a vender. I.e. Go to Walmart and buy a shirt — $10-$20 — a kid in Vietnam made that shirt with materials that costed $0.05. The convenience of going to the supermarket and buying things justifies the mark-up. You can’t call Honda and say “hi, I want to buy a car for wholesale.” That’s why we have dealerships dumb dumb, and the convenience justifies the mark-up. It’s more of a hassle to contact someone online Who is probably unreliable and buy a car that has no value in it.

    Sales guys can be pushy sometimes, but they want to make money and you want to buy a car. Just find a sales guy that you like and you can justify the price by how he won’t make money unless you pay it. Sales people make commission based on gross profit: profit to the dealership after expenses paid. Their commission is usually not very much so be kind to them and help them.

    • Joseph Cristal

      Do you hear yourself right now? A 110% markup is ethical? You cant be serious. You sound like a salesman to me right now.

      • Matt Thomas

        That’s not what fullerlax said. They said “The mark-up on vehicles is 110% ethical”, meaning that this person believes that the dealer markup is more-than fair and ethical. They were not referring to any particular percentage markup.

  • scarhill

    So, what is your point? Nothing you stated changes the fact a car sales person is not a buyer’s friend nor does it change the goal of any car sales person which is to sell at the highest price.

    What value does a sales person truly add to any vehicle? With the information available to anyone, there is really no need for an automobile sales person. When I buy, I simply tell the dealer’s sales person what I will pay. That always gets me to the sales manager, who is really the only person in the dealership who can negotiate. Sales people are simply middle men who I quickly eliminate from the proceedings.

    And really, what does how hard you work impact a buyer? We all choose our jobs. We buyers work as hard as you work. In the end, it is our money which you are trying so hard to get your hands on. Is it a buyers fault, you choose to sell cars?

    Are you seriously suggesting, a buyer tip the car sales person? Are you seriously attempting to compare a $30,000 purchase to a $25 meal?

    I would like to see the franchise model of selling vehicles disappear. That would eliminate several layers of profit which are the sales person’s pay, the F&I manger’s games, and the dealer profit. Simple cost accounting is when layers of profit are eliminated, people pay less.

    Let us have the OEMs sell us a vehicle at the same amount they sell to the dealer, including all the incentives and holdback. Let the dealers offer buyers the opportunity to pick the vehicle up at the factory or port of entry thus eliminating those delivery fees.

    • Doc

      this is a simple lesson in Capitalism. all of us work at jobs that are based on someone making a profit. It is easy for someone who is not directly responsible for producing or protecting profit to say the salesperson is unnecessary. The Car Business is use to people telling us that we are irrelevant. Somehow we are still selling cars.

      By all means sir, feel free to call the manufacture and demand to buy a car directly from them. Im sure honda will be happy to waive their delivery fee just for you. cause you’re special. BTW… We are at the dealership are so VERY sad to lose your business… Truly.

      • scarhill

        But Doc, you miss the point.

        The point is what value does a sales person add to the product, the vehicle? The answer is a sales person adds nothing to the value of the product.

        The sales person simply adds a layer of cost, the sales person’s compensation, to the price of the vehicle. In most cases, this is simply an unnecessary layer of cost.

        I, the customer, do not need you and I, the customer, would prefer not to pay your commission. I think most customers would agree.

        Your comment, “we are so VERY sad to lose your business” is silly and so far off target to be laughable. Without our “business” you at the dealership would be out of business. Your dealership would not last long without we, the customers.

        But perhaps you, sir, are so special as to have no need of customers. Are you so special you can sell without someone to sell to?

        Of course you “at the dealership” are still selling cars! You “at the dealership” have the franchise laws which ensure you “at the dealership” will sell cars. We buyers have no choice, yet. But we will! A red herring argument if I have ever seen one.

        Now, what does a Honda “delivery fee” have to do with the value or non value of a salesperson? Just another red herring.

        Of course, perhaps we customers could arrange to pick up a vehicle at the factory which should, I suppose, eliminate the need for the delivery fee. That might be a good idea for we, the customers.

        In summary, eliminating the current franchise system of the “Car Business” would reduce the cost of the average price of vehicles sold. Simple cost accounting, reduce costs which results in reduced prices. That would, of course, benefit most people. Though not for you “special” sales people.

        Truly.

        • Doc

          “A Red Herring is a fallacy in which an irrelevant topic is presented in order to divert attention from the original issue. The basic idea is to win an argument by leading attention away from the argument and to another topic.” Google definitions

          now that we all understand that you have taken basic writing class and defined the concept of a “red herring” let us return to the point of the sales person. The factory employs franchise stores to represent their product to assist in profitability.

          “prof·it”

          noun 1. a financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something.

          you know… that thing that pays your check too. (my first point that you tried to call a red herring… before we established what a red herring was)

          In turn the Franchise employs SALESPEOPLE to assist in profitability (see above).

          Okay before you mount your ” you just proved my point” counter offensive remember this simple logic which you will most certainly call a “strawman”: no profit = no cars.

          Value added to customer: cars in market for sale. Just like the grocery store (franchised Ford store) provides a the farmer (Ford) a place to sell milk (focus)… the milk in a centralized location (like your town instead of detroit or Japan) with completing brands (dodge) to control prices.. The store clerk ( salesperson) provides the customer with assistance in purchase, answering questions, and recommending application of product. This is the very basic explanation of why Manufacturers do not direct sell their product. A corporate retail store is not in their business model. Had you taken a Economics class you would understand that.

          One last Definition for you:

          con·de·scend·ing

          adjective. having or showing a feeling of patronizing superiority.

          this is what I have been… Not misleading. argue better next time.

        • scarhill

          Yes, you attempted a red herring. You attempted to deviate from the point which is what value does a car sales person provide to the value of a vehicle.

          Profitability. I have no problem with people earning a profit. If they did not why are they in business? My point is the auto dealership simply adds a layer of cost and profit which must be paid by the consumer and that additional layer provides no benefit to the consumer.

          The manufacturer sells the vehicle to the dealer at a price. Price, by definition, is cost plus profit. The dealer then sells the vehicle to the consumer at a price which, while including the manufacturer’s cost plus profit, includes a second layer which is the dealer’s operating cost plus profit. Of course, the dealer’s cost includes the salary or commission for the sales person, which is the original topic under discussion.

          So, hang with me, if a consumer could buy directly from the manufacturer the additional layer of dealer cost and profit would be eliminated. Therefore, it does not take a genius to see the benefit to the consumer of eliminating the dealer, a lower price.

          If you understood basic cost accounting you would understand this.

          Regardless, your comment actually supports my points completely. You have fully explained why an auto dealership increases the cost of the product for every consumer. That is my point, thank you.

          There is no compelling reason why a manufacturer cannot sell directly to the public. Many, in fact, do sell directly to the public. The only reason auto manufacturers do not sell directly is those franchising laws which auto dealers lobby so hard to maintain. You know this, whether you admit it or do not admit it.

          Now, let us discuss the documentation fees!

        • Doc

          Sure there is… they don’t want to. But since you keep referencing the franchising laws and dealer lobby, can you prove any major auto manufacturer being blocked from retailing direct? who are these manufacturers selling to the public?
          Or is your whole argument based on the “no fair” principle?

        • scarhill

          Another red herring, asking me to prove auto manufacturers are blocked from selling direct to the public. You know franchising laws require that new automobiles only be sold by dealers. Or maybe you do not know this, you seem to be an auto sales person. My experience with auto sales people is many do not seem to have much knowledge of the actual auto business. The last time I bought, I had to explain to the sales person why my credit score was higher than 850. This guy did not seem to know about the beacon score.

          But let us return to the point of the discussion, what value do sales people and dealers add to the value of the product. I have already explained the cost accounting principles involved. But what about these other non value items:

          Those documentation fees. In my state, they are currently at $300. In some states, like Florida, they are not capped and some dealers attempt to charge customers $1,000 or more. Do you really believe it cost a dealer hundreds or thousands to prepare documents? In fact, are not the documents prepared when the buyer signs the contract? Also, the cost of preparing the paperwork is just one of many dealer costs.

          Once again, basic cost accounting. The selling price includes all dealer costs plus dealer profit or loss.

          Why do dealers only attempt to separately charge documentation fees? Why do not they attempt to charge a fee for electricity, supplies, sales people salaries, etc? So what value do these fees add?

          Documentation fees are nothing more than a legal scam. This is allowed because dealers have a cadre of paid representatives who permit this charade. Do away with the franchise laws and these fake fees will disappear.

          The plethora of overpriced products pitched in the box, the F&I office. Take the extended service contract. This may cost the dealer $800 when they buy the contract from the provider. Note, the provider has already priced this product to cover their expected payout plus a profit. They dealer will then attempt to sell this $800 product to the car buyer for $2,100 or more. As a result, the buyer will pay the dealer $2,100 for a product which will pay no more than $600 on average. Just another scam!

          Or my favorite, dealer reserve. For those readers who do not know about dealer reserve, dealer reserve is when the buyer actually qualifies for an auto loan at one rate, say 3 percent, and the dealer tries to write the contract a higher rate, say 5 percent. The extra interest the buyer will pay as a result of this scam is mostly pocketed by the dealer. Over the life of the loan, that extra 2 percent in interest can be many hundreds of dollars. Just one more scam!

          There are many reasons why the current dealership model of selling new vehicles harms the public.

          Personally, I have bought vehicles directly from the manufacturer. In Europe. I have purchased both Volvo and BMW from the manufacturer in Europe. At considerable savings and a great buying experience with no sales person, just a company representative.

          Tesla is trying hard to make the franchise system of car selling go the way of the T-Rex. Let us hope they succeed, which I think they will as consumers become more educated.

          But nice try.

  • JACK STROKE

    I love this article. So amazing just worked out perfectly for me. I went into the dealership and said I dont want to buy any extended warranties. I want to test drive 4 different vehicles and I want to see what employee pricing is and then ask for another 2k off that price. AND IT WORKED!!! OMGGGG SO COOL. This article is definitely being passed on to my close amigos. Thanks budddd.

    • Crystal Akaniro

      Hey jack,

      I’m off to buy a car today and a bit nervous. Is that really all you did?

  • Bucky Nelson

    That was good points you have mentioned about the things to be kept in mind while going to purchase new car. It is important to get the details of the car dealers with whom we are willing to take services. Also you have correctly mentioned that car dealers are not our friends they only thing of sealing there products. Therefore good searching and experience of the car mufflers shops are also very important thing to be noted while going for the servicing.

  • Mark

    One more tip when buying a used car: If you want real but cheap vehicle history reports, VinAudit is the most dependable NMTIS reports provider. You can get each complete copy for just $1