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Car Shopping Hacks
Tips on keeping cool when buying a car face-to-face
If you’re like most people, you walk into a dealership ready to say no to the salesman. You’ve practiced your polite if not firm decline in the parking lot. However, you’re planning to buy a car, right? If not at this dealership, another one. So instead of going into the process standoffish, be informed. That way, you can negotiate well and come out of your experience with a great car for a great deal. And you may even find yourself smiling from the experience.
I promise there are car salespeople who care about your needs. The way to spot them is simple. Once you and your salesperson shake hands over the car you picked out, you’ll get escorted to a little room to actually handle the money portion with a person known as the finance and insurance manager. They present extra stuff for you to buy in addition to the car. While the car is handled by (and provides a commission for) the salesperson, the rest is the finance manager’s business. Some of what they are selling is very important, like an extended warranty, for example. Some of what they are selling is not so important, like all those carwashes.
My advice is to be wary of salespeople and finance managers who don’t have a good working relationship. A salesperson badmouthing his F&I Manager probably isn’t the best teammate.
Instead, look for salespeople who make an effort to introduce you to the finance manager before they close the deal, or those who suggest (keyword: pitch) certain add-ons that he thinks would benefit you. This way you have an idea of what you think is important to buy before you get into the box, and you have a better understanding of what you’re negotiating.
Like I said, there are some useful things to consider purchasing from the finance manager.
One excellent purchase is GAP Insurance. Groan— insurance? So boring. I know, I know. And some might think it’s not worth the dollars. But this insurance works differently than your regular auto insurance in that it covers the difference between the actual cash value of the car and the balance still owed on your loan or lease. What on earth does that mean? I’ll give you an example. For this example, you have to understand that car depreciation exists, and your new car will never depreciate faster than when you drive it off the lot. It generally gets about 11% less valuable in the first minute you own it. To give you some perspective, your car will depreciate another 10% in the first year. Yikes.
So, say you hop into your new car and while you’re checking yourself out in the rearview mirror as you drive off the lot, you get hit. Your car has significantly depreciated in the moment you drove it off the lot. And you’re still responsible for the entirety of that loan you just signed. And your auto insurance won’t be enough to cover it. Why? Because your regular auto insurance is designed to pay the lender the vehicle's current cash value— not the current loan balance. BLARG.
GAP Insurance literally covers that gap. (Get it?) What it actually stands for is Guaranteed Auto Protection, but it’s very clever, huh? It may not seem necessary until you find yourself in a bind and actually need it.
Referrals are car salespeople’s bread and butter. They are hoping when you get home, your mom and your best friend and your mailman all see how much you like your brand spankin’ new car and want to buy one just like it.
When you finish the deal with a salesperson, ask him if he offers any kind of referrals packages. This could mean cash in your pocket if someone you know buys a car from him, or maybe just free services when your car needs maintenance. Either way it benefits you and all you have to do is hype up your car (which will be easy under the influence of that new car smell).
Not only does this help you in the short term but it also keeps that relationship with your salesperson alive for when you’re ready to buy another car in say, five to eight years. Then you don’t have to go through the rigmarole of meeting a new salesperson, haggling about what you want. Instead this person knows you, knows what you like, and is far more likely to take care of you.
Go Into a Dealership!
A salesperson’s specialty is selling to you in person. Yes, the Internet has changed the way you shop for…well, everything. These days, you’ll do a bunch of research online, walk into a dealership, and tell the person at the front desk the VIN number of the exact car you want. But, if you do that, you miss the face-to-face interactions that make car buying and selling successful.
You may find out that you’re interested in certain add-ons you didn’t know about. Or you may realize you really like your salesperson and want to help him out in the future. Or hey, you may find out that you don’t know it all and there is actually a different car better suited for your budget and taste.
At the end of the day, regardless of how much research you do, these guys will always know more about buying a car than you, so why not put your second largest life purchase (first being your house) in expert hands?