Shop Till You Drop

Confusion Of Choice  It can be overwhelming to be confronted with a hundred different companies offering the same products.  Likewise, it takes a while to get used to the fact that buying does not stop at the close of business day, and it is not bound inside stores:  it is everywhere at all times.  This guide is intended to simplify the process of buying in the United States.    

NEW CARS

Consumer Reports:  The New Car-buyer’s Bible

Consumer Reportsis a magazine and a web site run by the Consumer’s Union (CU) (www.consumerreports.org).  The CU is not affiliated with any of the companies it reviews.  CU samples all kinds of products, not just cars, and reports on their quality and value in several key areas.  Study after study has shown that the shoppers who spend the most time investigating their alternatives are the happiest with their new cars.  The important car-shopping criteria are:  Reliability, Safety, Price, Comfort, and Style.  CU can be accessed at www.consumerreports.org.  There are more services available to you if you become a CU member (you can join on their web site).  They are an excellent resource for determining which brand is right for you.    

Your weapon to beat the car dealer

The Internet has revolutionized the automobile industry by giving consumers information they never had access to before.  The most important piece of information you will find about a car is the dealer invoice price.  (Do not confuse this with the stickers on the car window).  The invoice price  is the price that the dealer pays for the car from the manufacturer.  The dealer then sells the car at a certain percentage above this price.  When dealing with a car salesperson, make him aware that you know the dealer invoice price.  Also keep in mind that there is some profit for the dealer at the basic invoice price. This gives you tremendous power.  This puts the dealer in the position of struggling to keep you on the lot.  You can access this information in several places.  Kelly Blue Book (www.kbb.com) is the most authoritative because it is the tool the dealer uses.  In addition to the dealer invoice, it gives information on the Manufacturer Suggested Retail Price (MSRP—the price recommended by the manufacturer which includes substantial profit for the dealer), incentives and rebates, insurance links and much more.  Edmunds (www.edmunds.com) includes several reviews from recent car buyers of the purchases they have made.  Autobytel at www.autobytel.com or Cars Direct at www.carsdirect.com allow you to see the available features of several makes and models and compare their pricing.  J. D. Power and Associates (www.jdpa.com) is a marketing firm that provides information on several products, and are particularly respected in the automobile industry.

Be aware of how your dealer operates.  Car buying is in many ways an anomaly for Americans.  For almost all consumer products, the merchant sets the price for the product, and the consumer decides whether to buy it or not.  Car buying, however, involves bargaining.  The sticker price is often just an estimate.  The dealer will then lead you into his office and the haggling will then begin.  This is by far the most widely disliked aspect of car buying.  There is a growing trend towards what is called One Price Dealerships.  This seeks to make car buying more like other shopping in the United States.  With a One Price Dealer, there is no haggling.  The price listed on the car is final, with the options (air conditioning, radio, etc. listed in a menu fashion to be added to the base price).  If you do not like bargaining, this is a very good alternative.

Leasing v. Buying

Some people love leasing, as a lower-cost alternative to buying a new car.  Others hate it because they don’t feel that sense of ownership, and they are constantly worrying about the mileage.  All leases have a maximum number of miles allowed over the period of the Lease.  If you go above that maximum, there is a charge for each additional mile!  Talk to some people that have done it to get an idea of what is best for you.

Test the cars.  You can gain a great deal of valuable information from magazines and the Internet, but keep in mind that your car will be a part of your life for a long time.  You want a car that fits your needs and will be comfortable for you. 

Negotiation

Once you have done your research, you are ready to start making a deal.  Keep in mind the dealer’s profit.  In addition to the profit that is built into the invoice price, the dealer may be receiving added bonuses from the manufacturer for meeting sales quotas.  (Because of these quotas, it is sometimes advisable to conduct your car buying towards the end of a month when a dealer is trying to reach a sales quota.)

The dealer will ask you for an offer.  What are you willing to pay for the car?  Depending on your invoice cost price research, scarcity of the model, manufacturers loans or rebates, either:

(a)       Tell the dealer you are not going to haggle and demand to know his best price.  Inform him that you will go elsewhere and if you find a better deal from another dealer, you won’t give him the opportunity to improve on his deal; or

(b)       Don’t be embarrassed to go in with a very low price, and put pressure on the dealer for him to negotiate upwards.

USED CARS

The Kelly Blue book, the most important tool for buying and selling used cars

It will let you know what cars are worth.   Visit www.kbb.com, enter the make, model and year of the car, its condition, and features, and it will tell you how much a car is worth.  Kelly Blue Book reflects both the retail and wholesale prices of cars.  It is possible to buy vehicles below the retail and wholesale value in the book.  Everything is negotiable.

There is an increased risk of buying a defective car (lemon), so it is even more critical to do your homework.  Many dealers will offer some limited guarantee on their used cars.   It is sometimes possible to buy extended warranties on used cars depending on the age of the vehicle.

Person-to-person car buying

You can cut out the dealership altogether by purchasing a used car from a private individual.  This can be beneficial to both parties.  The seller can get more money than he would by trading the car in to a dealer, and the buyer gets a better deal than he would from a dealer.  Before you buy, run the license through your state's Department of Motor Vehicles (DMV) to make sure you are buying from the real owner.  Also, have a mechanic check out the car to make sure the car is in good condition.

INTERNET SHOPPING

In the United States convenience is a priority.  This is why the Internet explosion has so profoundly affected the way Americans shop.  With a few keystrokes, consumers can make purchases that would have previously taken hours out of their day.  It is getting to the point where everything you can buy, can now be bought via the Internet. 

Credit Card Security

People seem to be overcoming their initial reluctance to put their credit card number on-line.  As long as you are on a secure site (your location will show as https instead of http), the danger of your number being stolen is remote.  You stand a greater risk handing your credit card to the waiter at a restaurant.

You may want to read the site’s privacy of information link, which they are required to post.  This will let you know whether they will sell your purchase history to other companies, which may result in an explosion of junk mail. 

The convenience of on-line shopping.   An Internet company does not have the costs associated with stocking and staffing a retail store, so they are able to offer substantial discounts.  These discounts often cancel out the costs of shipping and handling, so that an on-line purchase is less expensive and more convenient than a retail store purchase.  It is easy to see why the Internet has revolutionized the retail industry

Window-shopping on the Internet

The Internet is not only a great tool for buying; many people are using it for browsing.  There are few retail stores that have knowledgeable salespeople.  You can find more information on a company’s web site than you can at their store.  Often by clicking on a product you can get its detailed specifications.  For this reason, you can gather the information you need at your computer, then go to the store to make the purchase from a salesperson who may know less about the product than you do.