How I (sort of) Talked my Dealer Down to 0% Interest
My first time buying a car was absolute hell. I came on the used car lot to pick up a Toyota and left with a 2000 Dodge Neon, which later became known as the Dodge Death Trap. It was the first car I ever bought with my own credit (such as it was). It was a mostly reliable car, until I finally paid it off by transferring the last of my 14% interest loan to a 0% credit card.
It overheated. Not too badly at first, then just on hot days’¦ or when it rained ‘¦ or in traffic. The solution was always to pour more coolant into its insatiably hungry engine and keep an eye on the temp. Taking it in to Jiffy Lube for a coolant flush seemed to work for a little while. I put the car in neutral at stop lights and when it got hot vented the heat through floorboards of my car. In the summer.
Finally in 2007, as it was warming up, I’d had enough. Repair was one option but I’d had the car for five years and truthfully hated driving it. Automobile repair is worse than the dentist for me and once a car really starts to break I don’t feel safe driving it. It was time to buy a car.
I wanted the cheapest, most reliable car with good gas mileage. According to Consumer Reports that was a Toyota Corolla. All I had to do was pick the color.
As I drove to the dealership, my coolant tank lid was now just some tin foil with rubber bands around it. The car started to overheat, as if it knew our final moments were at hand. It was the longest drive of my life, uphill with frequent stops and I prayed, which for an atheist is the equivalent of blasphemy, that I could make it to the lot. Once I parked, I knew I was in the worst spot for negotiation’”I was not ready to walk away from the deal.
But this time I did well.
First, I did my own calculations on monthly payments. The car was advertised as 16K so I did the math over three years. There are an insane number of fees on car purchases and you will never pay what online payment calculators say but, it gives you a lowball number. Bonus if you used the calculator on another dealers site.
Second, I’d shopped around and found a lower price somewhere else. Anywhere really. They’ll find a way to match it. If they can’t then you’re in the wrong place.
Third, I turned down the extended warranty. Toyotas are very reliable and manufacturer’s warranty covers almost everything anyway. The dealer tried to dissuade me from my decision unsuccessfully. But then he cut me a deal–Miraculously my monthly payment plummeted to less than $300 for 36 months. The warranty was going to be “free”. The dealers must make crazy commission off of these.
Fourth, I took the price with the extended warranty. Then a week later I went back to the dealership and returned it. When you do this, the amount is applied towards the balance of the loan. In effect it was equal to the amount of interest I would have paid, and then some.
I’m sure QC readers have lots of great tips when it comes to driving a hard bargain at the auto dealer. How do y’all wrangle the best deals on new cars?
Good for you! Most of my car purchases have been less deliberate than that. I do my homework on the car, but not on the price. Thanks for the tips for next time.
I swore, unless I’m buying another Saturn or perhaps buying a BMW, that I will not set foot in a dealership. Fax around method for me. Decide exactly what model and features I want, fax off a request to each local dealership, and then let the bids roll in. Take the lowest one, fire off a second round of faxes, and then choose the lowest price and go there to sign the paperwork.
Last time I went car shopping I went to a Toyota dealer and, despite my being more than willing to spend plenty of money and wait long enough for a new Prius, I had such a horrible customer service experience I vowed to never buy from them.
I put a lot more value into customer service than I do in price. Honestly, for most cars (Japanese makes, at least) there is SO much competition that there is actually VERY little mark up on new vehicles (used is another story all together) I’m ok with the dealership making a little bit of money on me because I know how much the sales people make – sometimes it’s just 20% of the total gross profit. So if the dealership makes 1000 on a new vehicle, The sales person gets maybe $200. Usually, they’ve spent quite some time with me, either on email or the phone, and then at least a couple hours at the dealership. Maybe they spend less than that but the transaction goes SO smoothly that I’m ok with them actually making a living for themselves. I want to work with a dealership that has employees that can take care of their families. Having worked in the industry I know the days of huge markups and HUGE commissions are long gone.
Erica, Great idea with the faxing. My new car experience was much better than when i bought used and the dealership was actually quite pleasant.
J, $200 bucks for a couple hours sounds like good money to me. 😛
No offense Mike, but we generally don’t have qualms paying more for that for good legal service or medical care and that’s a zillion times more expensive. I don’t think even $20 bucks an hour for a great service experience is too much to ask for. Especially when I know that most sales people only sell a few cars a week.
Well….. I recently bought a new car. I knew I was going to buy a Honda. Been driving Hondas ever since my experience with a lemon Ford Tempo back in the mid 80’s. I did my research … checked blue book price for my old car so I knew what it was worth trade-in and what the dealer could get for it. Also knew what I could sell it outright for but I really wanted to deal with the dealer. Cos you know in the past I haven’t done so well and I wanted to redeem myself.
First offer they made me for my car was predictably an offer you would make to a woman who you didn’t think was savvy. It actually ticked me off. I told the salesman it was an insult… which it was.
To make a long story short …. when I walked in I wanted $5500 trade on my car and 6% interest on the loan for the new one….. I walked out with $4500 trade on my car ($5000was bluebook trade price) and 5.24% interest on the new car loan. I have a beautiful new 2008 Honda Fit and I’m loving it. And I think I did as well as anyone could on the dealing. I came out ok and I think the dealership/salesman did too .