Memoirs of A 2009 Car Shopper

September 15, 2009 by darrell.holmes
Filed under: Blog Entries, Family, Personal Finance

BrowsingUsedCars

by Darrell Holmes

Note: In no way is this posting meant to be the comprehensive guide to how you should purchase a car. This is one person’s offerings of how he chose to go about purchasing a car. For more detailed information go to edmunds.com or Yahoo Autos.

At the end of 2008, I lost my job in outside sales. For the previous 8 years I had been blessed with the luxuries of having a company vehicle, expense accounts, cell phone, and company computers all included as part of benefits packages with different manufacturers’ I represented. As painful as it was to lose my laptop and cell phones, one of the most difficult adjustments was losing my vehicle. My wife and I were positioning ourselves to purchase something that we would own to accommodate our growing family, but the loss of my job and worst economic depression since the 1920s threw an obvious wrench in our plans. Things came around and here are seven thoughts I’d like to pass along that may help you in future car purchasing decisions.

1. Start shopping early.

As I mentioned before, we started looking at different options around 1 year in advance. Chances are the more time you spend researching your purchase before you actually buy the better your chances are of finding a car that fits your needs along with meeting your budget. Unfortunately, too many times we’re forced into making buying decisions by circumstances. If you’re currently having car trouble or anticipate you may be looking at a new car within the next 24 months it can’t hurt to start looking now. Manufacturers change and tweak models every year even sometimes discontinuing models. Still, starting early should give you enough options and offerings to help you decide what are needs and wants in a potential model. You should also begin saving money every month towards a potential down payment and CHECK YOUR CREDIT SCORE!

2. Make a list of needs/wants.

Very early in your car shopping experience you should sit down with any others who may have input on your purchase and decide what things are necessary for your future vehicle to have. Primary factors to consider first would be things like seating capacity, miles per gallon, manufacturer’s warranties, crash test ratings, what type of suspension is standard, engine performance, towing capabilities, resale values, and how well the vehicle performs in longitudinal satisfaction studies. If you are college-aged and not looking to grow a family any time soon you may not need an SUV that can seat 7 adults. That is, unless you coach a little league team and often take your players to games out of town. Conversely, you may be a parent of 8 children but you’re a divorcee who is also an empty nester. In this situation you may find that you only need a subcompact to get around town. In addition to these factors, keep current trends in the back of your mind without allowing those trends to supercede all of your other important points.

3. Compile a list of potential makes and models.

Lists, lists, and more lists! Trust me; these lists may end up saving you a couple thousands of dollars! Once you have made your list of must-haves along with wanna-haves you can start looking at a variety of makes and models. Chances are as you add and subtract to this “Model” list it will help you realize what is and isn’t important on your “Features” list. One note that I believe is very crucial in this part of your search is not to be a car snob. Give every model within the category of vehicles you’re looking at a serious look over. There are a variety of websites where you can research and compare similar vehicles all from the comfort of your laptop. Consider www.edmunds.com, autos.yahoo.com, autos.com, nadaguides.com, and consumerreports.com. You can also see videos online for a variety of vehicles in performance tests such as 0-60 timed takeoffs, 60-0 braking distance, slalom, etc. Everyone will take different amounts of time to do this search but there should be no rush in making this list. My own list started somewhere around 10 vehicles and we tried to scrutinize everything we could without standing in front of each vehicle every single day.

4. Begin narrowing down your list.

Now is a time when it becomes important to scrutinize every vehicle on your list with special attention on those at the top of your list. Read reviews about them online, ask other owners about likes and dislikes, spend some time at dealers paying attention to things like seating space and cargo capacity, etc. If you have the opportunity, spend a couple of weekends in rentals of models that you don’t know a lot about. It’s amazing how quickly a list of 11 or so cars can become a list of 3 just by doing earnest research. One note to keep in mind is to not be emotional about any particular brand or make. For most of us, we purchase a new vehicle with the thought of how that purchase will improve our lives. You owe it to yourself to not make that purchase based on a random thought or feeling that can easily change once you find a feature or shortcoming you didn’t anticipate or know about.

5. Make Your Final Top 3

Around 4-6 months before making your purchase you should have a Top 3 list. Each vehicle on this list should do an adequate job of meeting the needs you originally compiled. After you have made this list, you should begin researching purchase vs. lease, monthly payments, potential loan options, rebates and savings, etc. You should also consider factors such as “cost-to-own” which can vary considerably even among cars in the same category. Some websites consider variables like vehicle reliability and cost of replacement items like tires or airbags to create a cost-to-own ratio. This can be a valuable tool to compare vehicles against one another.

6. Setup Financing with a Financial Institution

This is where I part ways with some. I received a much more competitive loan offer from my local credit union than anything the dealer’s financing or even my bank was willing to offer. I always keep track of my credit score and knew about what type of rate I should expect. This will also give you more bargaining ability at time of signing.

7. Close the Deal

You’ve done the research. You know what you want, how much you’re willing to pay for it, and you’ve decided now is the time to get it. When you find yourself at the dealership on that fateful day remember that YOU have all the power. My own goal was to save as much money for my family as possible. I recognized and respected that car salesmen have families and must make a living as well. I know how much money the dealer had in the deal and how much they made. I am comfortable with where we settled which is the goal of any negotiation. However, to get to that point took us walking away from a deal once, getting competitive quotes from around 7 dealerships for several miles away, and going back to the original dealer once they agreed to our terms. One thing to keep in mind is to not be threatening or insulting. You’ll never get the deal or service you’re looking for by degrading the people trying to help you. Conversely, if you feel as though the dealer or salesperson is using tactics that you don’t agree with then walk away. You don’t owe them your business but they do owe you respect and honorable customer service.

Finally…

Remember, to start researching early and often, search based on your needs first and the cost second, and make sure that the salespeople meet you where you need to be. If you do get financing from the dealer, don’t get fooled by numbers tricks like 66 or 72 month financing. Everyone’s financial situation is different, but if you need anything more than 6 years to pay off a vehicle consider finding a vehicle that satisfies your needs in a lower price range. Remember, most powertrain warranties will only cover 5 years. Do you really want to continue paying money on a car several years after you no longer have warranted coverage?

Most of all, ENJOY your car search. There are few joys similar to bring home a brand new car, particularly one that you know you got a great deal on! Happy shopping!