topic Re: What are the steps to buying a car? in Auto Loans

What are the steps to buying a car?

Schoolbuskid — Thu, 31 Jul 2008 22:47:18 GMT

When i first walk into the dealership what is the first thing i should do, how do i negotiate invoice, when should i tell them about scores, etc?

Thanks, i want to try and get the best price possible! Should i also tell them to only pull from a certain credit bureau? I know some lenders pull whatever they want to! Also should one even be shopping with auto chargeoff/repo?

My mom is still in the market for a new vehicle, so i kinda want to be prepared!

Re: What are the steps to buying a car?

Anonymous — Fri, 01 Aug 2008 01:51:12 GMT

First know what you want to buy, what you can afford and do your research on the car.... and stay out of the dealerships on Saturdays as your mother should have already learned. Go with financing already established then prepare to neg price. Has her mortgage loan already closed? Go to edmunds and get info on the car she wants to buy.... you can ask what cra they pull from but you can't demand they pull a specific cra.... go back to ftc.gov and read the auto consumer protection info.....

Re: What are the steps to buying a car?

Anonymous — Fri, 01 Aug 2008 01:56:56 GMT

@Anonymous wrote:
First know what you want to buy, what you can afford and do your research on the car.... and stay out of the dealerships on Saturdays as your mother should have already learned. Go with financing already established then prepare to neg price. Has her mortgage loan already closed? Go to edmunds and get info on the car she wants to buy.... you can ask what cra they pull from but you can't demand they pull a specific cra.... go back to ftc.gov and read the auto consumer protection info.....

Why??? If you don't mind me asking ...

Re: What are the steps to buying a car?

Schoolbuskid — Fri, 01 Aug 2008 02:19:32 GMT

Bran9192 wrote:
First know what you want to buy, what you can afford and do your research on the car.... and stay out of the dealerships on Saturdays as your mother should have already learned. Go with financing already established then prepare to neg price. Has her mortgage loan already closed? Go to edmunds and get info on the car she wants to buy.... you can ask what cra they pull from but you can't demand they pull a specific cra.... go back to ftc.gov and read the auto consumer protection info.....

Yea she still like the Hyundai Sonata, we tried through honda she was approved but with the trade in her payment would have been like 600 a month...and they would not disclose what her interest rate was!

Trust me i am good friends with EDMUNDS! Thanks Bran!

Yea shes closed on the house she is ULTRA excited, she just closed July 13th or 14th. They have the brick foundation already and they are beginning to build with the wood!

Message Edited by Schoolbuskid on 07-31-2008 07:19 PM

Re: What are the steps to buying a car?

Anonymous — Fri, 01 Aug 2008 03:19:24 GMT

Ok so your mother closed on her construction loan for a new build, correct? Does she plan to wait for auto purchase until the home is complete and after she converts the construction loan to a mortgage loan which will require another closing & credit pull? First of all don't neg your trade in until after you have agreed on a sale price of the vehicle! I would also suggest you submit online bids to multiple dealers before going to the dealership! The last place people look for information on car purchases is the ftc website and usually after they have been burned by a dealership.... If a mod could be so kind to possibly copy & add a sticky to the top of the auto loan forum it may help others when making auto purchases?

Buying A New Car

A new car is second only to a home as the most expensive purchase many consumers make. According to the National Automobile Dealers Association, the average price of a new car sold in the United States is $28,400. That’s why it’s important to know how to make a smart deal.

Buying Your New Car

Think about what car model and options you want and how much you’re willing to spend. Do some research. You’ll be less likely to feel pressured into making a hasty or expensive decision at the showroom and more likely to get a better deal.

Consider these suggestions:

Check publications at a library or bookstore, or on the Internet, that discuss new car features and prices. These may provide information on the dealer’s costs for specific models and options.
Shop around to get the best possible price by comparing models and prices in ads and at dealer showrooms. You also may want to contact car-buying services and broker-buying services to make comparisons.
Plan to negotiate on price. Dealers may be willing to bargain on their profit margin, often between 10 and 20 percent. Usually, this is the difference between the manufacturer’s suggested retail price (MSRP) and the invoice price. Because the price is a factor in the dealer’s calculations regardless of whether you pay cash or finance your car — and also affects your monthly payments — negotiating the price can save you money.
Consider ordering your new car if you don’t see what you want on the dealer’s lot. This may involve a delay, but cars on the lot may have options you don’t want — and that can raise the price. However, dealers often want to sell their current inventory quickly, so you may be able to negotiate a good deal if an in-stock car meets your needs.

Learning the Terms

Negotiations often have a vocabulary of their own. Here are some terms you may hear when you’re talking price.Invoice Price is the manufacturer’s initial charge to the dealer. This usually is higher than the dealer’s final cost because dealers receive rebates, allowances, discounts, and incentive awards. Generally, the invoice price should include freight (also known as destination and delivery). If you’re buying a car based on the invoice price (for example, “at invoice,” “$100 below invoice,” “two percent above invoice”) and if freight is already included, make sure freight isn’t added again to the sales contract.

Base Price is the cost of the car without options, but includes standard equipment and factory warranty. This price is printed on the Monroney sticker.
Monroney Sticker Price (MSRP) shows the base price, the manufacturer’s installed options with the manufacturer’s suggested retail price, the manufac-turer’s transportation charge, and the fuel economy (mileage). Affixed to the car window, this label is required by federal law, and may be removed only by the purchaser.
Dealer Sticker Price, usually on a supplemental sticker, is the Monroney sticker price plus the suggested retail price of dealer-installed options, such as additional dealer markup (ADM) or additional dealer profit (ADP), dealer preparation, and undercoating.

Financing Your New Car

If you decide to finance your car, be aware that the financing obtained by the dealer, even if the dealer contacts lenders on your behalf, may not be the best deal you can get. Contact lenders directly. Compare the financing they offer you with the financing the dealer offers you. Because offers vary, shop around for the best deal, comparing the annual percentage rate (APR) and the length of the loan. When negotiating to finance a car, be wary of focusing only on the monthly payment. The total amount you will pay depends on the price of the car you negotiate, the APR, and the length of the loan.

Sometimes, dealers offer very low financing rates for specific cars or models, but may not be willing to negotiate on the price of these cars. To qualify for the special rates, you may be required to make a large down payment. With these conditions, you may find that it’s sometimes more affordable to pay higher financing charges on a car that is lower in price or to buy a car that requires a smaller down payment.

Before you sign a contract to purchase or finance the car, consider the terms of the financing and evaluate whether it is affordable. Before you drive off the lot, be sure to have a copy of the contract that both you and the dealer have signed and be sure that all blanks are filled in.

Some dealers and lenders may ask you to buy credit insurance to pay off your loan if you should die or become disabled. Before you buy credit insurance, consider the cost, and whether it’s worthwhile. Check your existing policies to avoid duplicating benefits. Credit insurance is not required by federal law. If your dealer requires you to buy credit insurance for car financing, it must be included in the cost of credit. That is, it must be reflected in the APR. Your state Attorney General also may have requirements about credit insurance. Check with your state Insurance Commissioner or state consumer protection agency.

Trading in Your Old Car

Discuss the possibility of a trade-in only after you’ve negotiated the best possible price for your new car and after you’ve researched the value of your old car. Check the library for reference books or magazines that can tell you how much it is worth. This information may help you get a better price from the dealer. Though it may take longer to sell your car yourself, you generally will get more money than if you trade it in.

Considering a Service Contract

Service contracts that you may buy with a new car provide for the repair of certain parts or problems. These contracts are offered by manufacturers, dealers, or independent companies and may or may not provide coverage beyond the manufac-turer’s warranty. Remember that a warranty is included in the price of the car while a service contract costs extra.

Before deciding to purchase a service contract, read it carefully and consider these questions:

What’s the difference between the coverage under the warranty and the coverage under the service contract?
What repairs are covered?
Is routine maintenance covered?
Who pays for the labor? The parts?
Who performs the repairs? Can repairs be made elsewhere?
How long does the service contract last?
What are the cancellation and refund policies?

To File a Complaint

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Re: What are the steps to buying a car?

Anonymous — Fri, 01 Aug 2008 03:24:02 GMT

Wonderin, if you are in the market for an auto loan and trying to seek financing with the dealership then you don't want to make a purchase on Saturday as "most" financial instituions are closed on weekends. So your less likely to get a better apr on Saturdays with limited banks to work with. If you have financing in hand then it's not that big of a deal....

Re: What are the steps to buying a car?

Anonymous — Fri, 01 Aug 2008 04:09:51 GMT

@Anonymous wrote:
Wonderin, if you are in the market for an auto loan and trying to seek financing with the dealership then you don't want to make a purchase on Saturday as "most" financial instituions are closed on weekends. So your less likely to get a better apr on Saturdays with limited banks to work with. If you have financing in hand then it's not that big of a deal....

Ah!! Gotcha!!

I thought it was because (wild guess on my part) on weekends, they're driven to make that sale due to quotas or something (I know less about the car business than I do about brain surgery on T-Rexes!!).

That makes perfect sense!!

We've always had financing in hand, though. We're too scared stupid to have a LO run our credit only to find that we're denied. We like to have all the info we can when we make a BIG purchase like that -- especially if NOT having the info means humiliation!!!

Re: What are the steps to buying a car?

Schoolbuskid — Fri, 01 Aug 2008 14:21:32 GMT

Ok so your mother closed on her construction loan for a new build, correct? YES, i dont know if its a construction or how that works!

Does she plan to wait for auto purchase until the home is complete and after she converts the construction loan to a mortgage loan which will require another closing & credit pull? She wants to buy a car before the mortgage loan begins to report!

Don't neg your trade in until after you have agreed on a sale price of the vehicle! I would also suggest you submit online bids to multiple dealers before going to the dealership! So basically tell them what kind of price im looking for and go from there?

The last place people look for information on car purchases is the ftc website and usually after they have been burned by a dealership.... If a mod could be so kind to possibly copy & add a sticky to the top of the auto loan forum it may help others when making auto purchases? Thanks Bran!

Re: What are the steps to buying a car?

Anonymous — Fri, 01 Aug 2008 16:01:12 GMT

Don't tell them the price you want to be at............Just know the price you want is the Invoice....When I bought my last car I printed out the stuff off of CarsDirect (which can tell you the Invoice price with various options and can tell you what the Dealers in your area are paying for the vehicles)

Test drive the vehicle let them rant and rave about it, then when you sit down they are going to try and get you to sign an authorization to run your credit....don't do that yet. Go in knowing your FICO scores already and just tell them what they are......

Wait for them to come back with a price, then say well when I was on CarsDirect it says dealers in the area are paying around X amount so I wanted to know what the Invoice is on this vehicle. If they get offended when you ask to see the Invoice or don't do it willingly then you don't want to work with them. They will stall and fight with you about paying Invoice, but if you hold out long enough they usually give in.

Once you get them to agree on the price, then go for trade in, then go for the APR you want....and then when they agree to the terms (as long as your FICO is what you say it is) then let them run your credit, draw up the papers, sign and go home.

Don't buy a Service Contract, Don't buy the Extended Warranty....All new vehicles allow you to purchase an extended warranty at the end of the Factory warranty and by then you can probably pay cash for it. and Buy GAP Insurance through your carrier, not the Dealership.

Good Luck!

Re: What are the steps to buying a car?

Schoolbuskid — Fri, 01 Aug 2008 16:38:48 GMT

Ok... i like that game plan, the scores are what we say they are, but im worried that it wont be good enough, most lenders here in north carolina pull Equifax, which is my mom's worst score! Thats what i think is hurting us!

I spoke with a finance mgr. a while ago, i mentioned that my mom had a close to 7 year old repo, she said that shouldnt be a hugh factor, thats another thing i am worrying about!

Thanks Everyone!

Re: What are the steps to buying a car?

Schoolbuskid — Sat, 02 Aug 2008 03:16:19 GMT

I have 3 dealerships competing for business, so far i found one dealership offering 16478 for an 09 Sonata GLS, and 18338 for a 09 Sonata SE.

Another dealership is offering 17587 for GLS, and 19587 for SE.

And the third is offering 17900 for GLS and 20900 for SE.

Its obvious who we should choose!

Re: What are the steps to buying a car?

Anonymous — Sat, 02 Aug 2008 03:53:29 GMT

You might want to e-mail back the other two high bidders and state/share the lowest price your received, and tell them you will purchase from them if they can guarantee a lower price with no additional add ons or processing fees, plus tax, title, and license. Good luck!

Re: What are the steps to buying a car?

Schoolbuskid — Sat, 02 Aug 2008 04:00:57 GMT

yea that is a good idea i wasnt even thinking about that, i just figured that we would go with the lowest, but i see its all about negotiating!

Re: What are the steps to buying a car?

Anonymous — Tue, 05 Aug 2008 21:51:09 GMT

SBK.... of each of the quotes you have, does include ALL dealer fees? The Lower sale price

isn't always best... take into consideration dealer fee's ( doc, admin etc.) , add on's & how far you have to go get the car... also make sure you are comparing apples to apples... options, appearance pin stripping, mud gards etc..

I have 3 dealerships competing for business, so far i found one dealership offering 16478 for an 09 Sonata GLS, and 18338 for a 09 Sonata SE.

Another dealership is offering 17587 for GLS, and 19587 for SE.

And the third is offering 17900 for GLS and 20900 for SE.

Its obvious who we should choose!

Message Edited by Bran9192 on 08-05-2008 02:51 PM

Re: What are the steps to buying a car?

Schoolbuskid — Wed, 06 Aug 2008 15:28:17 GMT

Yea my mom decided not to buy a car right even though the dealership we first went to, where we got in a pickle keeps calling her trying to get her to buy a car...we thought everything was said and done!

I think they are still pushing for financing, and i have noticed two extra inquiries on her EQ report!

Re: What are the steps to buying a car?

Tons_of_Debt — Wed, 06 Aug 2008 18:12:51 GMT

I've often found it's best not to disclose how you're going to finance until you're ready to go. A friend of mine has terrible credit but substantial wealth and was able to get the dealership to give her the invoice price thinking they were going to get a substantial kickback on dealer-based financing. How surprised were they when she wrote a check for the price of the car!!!

Re: What are the steps to buying a car?

Anonymous — Fri, 15 Aug 2008 13:42:54 GMT

Just another word of advice. If you can wait until the very last day of the month or the first day of the month to buy a car. All car brands have monthly numbers competitions. Usuakky around this time, they are not as worried about price but more about getting another car out the door to make higher numbers before they close out the month.

Also never offer any information up front to the sales person, such as what payment would fit in your budget. Like others have said research what you can afford, get interest rates from your bank, and always buy GAP insurance if you are not putting money down or rolling over a previous loan. Also GAP should really only cost you less than $300. DO NOT PAY MORE THAN THAT!!!

Re: What are the steps to buying a car?

Anonymous — Tue, 23 Sep 2008 18:55:27 GMT

@Anonymous wrote:
Just another word of advice. If you can wait until the very last day of the month or the first day of the month to buy a car. All car brands have monthly numbers competitions. Usuakky around this time, they are not as worried about price but more about getting another car out the door to make higher numbers before they close out the month.

Also never offer any information up front to the sales person, such as what payment would fit in your budget. Like others have said research what you can afford, get interest rates from your bank, and always buy GAP insurance if you are not putting money down or rolling over a previous loan. Also GAP should really only cost you less than $300. DO NOT PAY MORE THAN THAT!!!

Regarding that GAP Insurance, you say it should cost no more than $300.00. Is that figure per month or per year? I'm not understanding the cost, although I'm aware it covers the "Gap" of $$ between the value & balance left on the loan.

Re: What are the steps to buying a car?

Anonymous — Wed, 24 Sep 2008 00:37:46 GMT

Most dealers charge $500 or $600 for GAP Insurance and roll that amount into your financing and it is good for the life of the loan.

GAP Insurance is also offered by your Insurance carrier at about $9 to $12 per 6 month policy term.

I always suggest buying GAP coverage thru your insurance carrier, although things to check on with them are 1) Is there a max age you can carry the GAP coverage? and 2) Is there a max payout on the GAP for example some say 120% of Fair Market Value (which may not cover the full loan)

I'd be hard pressed to find a dealership that would sell GAP for less than $500.

And yes it covers the difference between what the Insurance company says your car is worth and what you actually owe on the loan in the event of a total loss(less deductible if you buy it through your insurance company).

Re: What are the steps to buying a car?

Anonymous — Wed, 24 Sep 2008 12:39:05 GMT

NEVER disclose what you want your pmt to be...

Figure out what you expect your int. rate to be, & how many years you want the financing for and work to find a car pmt that fits those numbers... ONLY disclose to the dealership how many years financing, the max price (incl tax tag & title) of the purchase....

Once they know what pmt/mo you want, they start wiggling you higher.. "only" $25-45 more per month can be THOUSANDS more over the life of the loan... and there's a huge diff btw financing that am't for 3 yrs, versus 6 years.

No one really drives a car for 6 years anyway, and the longer out you finance, the longer it will be that you're upside-down on it.

Also, that $25-50 more than you planned on paying, that they talk you into... means $25-50 less per month that you could have been putting towards principle, but now you can't.