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Wednesday, June 11, 2008
Buying a Car? Here's How
Buying a Car? Here's How
Auto analysts report that 2008 will be a down year for the domestic market, so dealers are eager to sell. That gives you the edge when it comes to haggling over content and price.
There are no car-buying secrets you can't discover yourself. Guides such as Consumer Reports, Strategies for Smart Car Buyers and Buying a Car for Dummies are chock-full of information, as are user-friendly websites such as autobrag.com, which offers advice about deals and dealer scams. With due diligence, research and auto financing facts at hand, you can enter the lion’s den with impunity.
Strapped for time, one savvy entrepreneur handled her entire minivan purchase by e-mail. She found a local dealer online that offered a great price on the model and features she wanted, and she e-mailed her order. Since it was the end of the month, when dealers close the books, he was eager for the sale. He e-mailed back saying that if she came in that day to sign the papers, he’d give her the deal. Although he tried to renege when she showed up, she had copies of the e-mails to prove her price.
Research selections. Be clear about the cargo space and mileage you want, along with your home and business needs. Once you've decided the size of vehicle best suited to your business, research manufacturers’ and local dealers’ sites for detailed specifications, features, options and prices. For more price quotes and to address concerns about reliability, safety and fuel economy, visit edmunds.com, cars.com, fueleconomy.gov, Kelly Blue Book, consumerreports.org and nadaguides.com .
Comparison shop. Manufacturers' sites list area dealers for your city, so you can find price quotes from multiple dealers selling the same brand and model. Former ace car salesman Don Fuller advises cross-shopping similar, competing vehicles by features first before comparing price. Car A may include an option as a standard feature, while car B does not. Some options are packaged along with other features you may not need. Compare the annual "cost to own" at intellichoice.com and cars.com. Then test drive your selections on local streets and highways for handling, performance, wind noise and overall comfort.
Financing. Consider the cost of both principal and interest and increased insurance, advises Bob Brisco, CEO of CarsDirect.com. Factor in the trade-in value of your current vehicle, plus incentives and rebates. Get a copy of your credit report because the car salesman will use it to determine which debtor tier you qualify for.
Ask your company accountant whether it’s smarter to buy or lease (we’ll cover leasing next month), and decide how you’ll pay for the vehicle: credit union, personal bank account or a loan from the automaker. Arm yourself with up-to-date local loan interest rates from bankrate.com. The website's calculator will also figure out your monthly payment range.
If you ask, many dealers will give you a few days to check for comparable interest rates even after you've signed the vehicle sales contract. As a negotiating tool, you can call Consumer Reports' New Car Price Service at 800-693-8714 to find the actual price the dealer paid the manufacturer for the vehicle, rather than the manufacturer's suggested retail price and invoice price. It’ll cost you $14, but you could save more than $5,000. Note: Some hybrids qualify for tax credits
Go over every clause in the contract with care. Watch for hidden costs: delivery fee, title, license and sales tax. Don’t fall for extended warranties, paint or fabric protection or other add-ons, says Autobrag CEO Danny Chan. Don’t tell the salesperson the monthly payment you can afford early on; he’ll simply lengthen the contract to fit it, Fuller advises.
Negotiating. We all hate this part. But as a small business owner, you already possess the skills of negotiation, so take heart. Besides, the worst is over since you’ll have armed yourself with copies of your research and had a contract faxed or e-mailed to you beforehand. Handling your purchase via computer until the test drive is a neat trick to avoid the possibility of a patronizing salesperson.
Among negotiating processes are cash-backs, incentives and rebates, so check them out online the day you are ready to purchase. But don’t buy a bigger car just to get the bigger discount. In fact, you could negotiate a lower interest rate by skipping the rebate. A dealer might call you after you’ve taken possession of the car, cautions Chan, saying the financing didn’t go through and he needs you to pay more. Don’t fall for it.
A final admonition from Fuller: Never, ever lie to the sales guy. He’s better at it than you are.
Now go buy that new car.
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Sure, we know some of you are saying the term "marriage penalty" is redundant. In fact, of all the costs associated with getting married (have you seen the cost of a wedding cake lately?), the marriage penalty can be the worst.
Here's how it works: Mr. and Mrs. Right walk down the aisle in wedded bliss and suddenly they¿re a two-income household. If both make roughly the same amount of money, they can be pushed into a higher tax bracket. That's bad, since the higher the bracket, the higher the tax. So, if both were single, they'd end up writing two smaller checks to the tax man that, if combined, would add up to less than the giant check they write in a state of wedded bliss.
Is that fair? We're not touching that, but there is a flip side that few people talk about. The marriage penalty only kicks in if both members of the couple make close to the same amount of money. If there's a big disparity in pay, there's actually a tax advantage. Call it the marriage bonus.
And, it¿s important to remember that there are other financial benefits, such as lower life-insurance rates or health care premiums, that can make up for the extra tax couples pay. So don't let Uncle Sam stop you from saying, "I do."