Purchase New Car

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Purchase New Car

Postby Transition » Sun Dec 23, 2012 7:57 pm

What is the best approach to saleman when purchasing a new car???? How can I find out the actual cost to the dealership?
This information will allow me to negotiate from that price.
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Re: Purchase New Car

Postby tibbitts » Sun Dec 23, 2012 8:30 pm

I'm not sure why people feel compelled to know this information. When you buy a high-end camera or AV system do you feel compelled to know what it cost the retailer? When you have a medical procedure, do you feel compelled to know how much all the supplies cost the hospital - or how much the doctor paid for medical school? When you buy a new house, do you demand an accounting of the price of every component and all the labor that went into building it?

Obviously there are many sources for approximate dealer costs for vehicles, but you're wanting a 100% certain answer and you're never going to get it. The exact marginal benefit to the dealer in selling that one vehicle to you is just not something you can know.

It's fine to get a general idea of dealer cost and what other people are paying for a car, just as you'd look for "comps" when buying a house, but the precision you're looking for is really dwarfed by all the other financial decisions you make with far less accurate information.

I once tried negotiating for a vehicle based on information from one of the usual sources, and couldn't understand why the dealer wouldn't agree to the price I wanted. A couple of months later, the source corrected the price. It turned out I was trying for a price that really was too low.

Paul
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Re: Purchase New Car

Postby windaar » Sun Dec 23, 2012 8:56 pm

People want this info because unlike most consumer purchases we make, car prices are negotiated, so buyers want as much info as possible. Consumer Reports is a fine resource for this info (nominal fee) and has a lot of good advice on the new car buying process. Another current BH thread is discussing this same topic.
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Re: Purchase New Car

Postby linuxuser » Sun Dec 23, 2012 9:04 pm

windaar wrote:People want this info because unlike most consumer purchases we make, car prices are negotiated, so buyers want as much info as possible. Consumer Reports is a fine resource for this info (nominal fee) and has a lot of good advice on the new car buying process. Another current BH thread is discussing this same topic.


I once bought a new Mazda and must have told a co-worker how much I paid for it. I was young.
Anyway, I found out that his friend who he told, got the same car for $150 less.

In the grand scheme of things financial, losing that $150 isn't much compared to the cost of not investing in index funds earlier.
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Re: Purchase New Car

Postby tibbitts » Sun Dec 23, 2012 9:31 pm

windaar wrote:People want this info because unlike most consumer purchases we make, car prices are negotiated, so buyers want as much info as possible. Consumer Reports is a fine resource for this info (nominal fee) and has a lot of good advice on the new car buying process. Another current BH thread is discussing this same topic.

I think most bogleheads would challenge the notion that other purchases can't be negotiated. We've had countless threads about negotiating phone, cable, and internet services, for example. And we've had discussions of home buying strategies, but nothing totally fixated on the price one level back in the retail chain the way vehicle purchasing is.

Paul
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Re: Purchase New Car

Postby tibbitts » Sun Dec 23, 2012 9:34 pm

linuxuser wrote:
windaar wrote:People want this info because unlike most consumer purchases we make, car prices are negotiated, so buyers want as much info as possible. Consumer Reports is a fine resource for this info (nominal fee) and has a lot of good advice on the new car buying process. Another current BH thread is discussing this same topic.


I once bought a new Mazda and must have told a co-worker how much I paid for it. I was young.
Anyway, I found out that his friend who he told, got the same car for $150 less.

In the grand scheme of things financial, losing that $150 isn't much compared to the cost of not investing in index funds earlier.

That's really my point: you can't always be the person getting the $150 better deal. It's just not that precise a function, regardless of what the wholesale prices and incentives may be. You could have offered $150 less and never have gotten that car.

Paul
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Re: Purchase New Car

Postby bottlecap » Sun Dec 23, 2012 9:58 pm

tibbitts wrote:I'm not sure why people feel compelled to know this information. When you buy a high-end camera or AV system do you feel compelled to know what it cost the retailer? When you have a medical procedure, do you feel compelled to know how much all the supplies cost the hospital - or how much the doctor paid for medical school? When you buy a new house, do you demand an accounting of the price of every component and all the labor that went into building it?

Obviously there are many sources for approximate dealer costs for vehicles, but you're wanting a 100% certain answer and you're never going to get it. The exact marginal benefit to the dealer in selling that one vehicle to you is just not something you can know.

It's fine to get a general idea of dealer cost and what other people are paying for a car, just as you'd look for "comps" when buying a house, but the precision you're looking for is really dwarfed by all the other financial decisions you make with far less accurate information.

I once tried negotiating for a vehicle based on information from one of the usual sources, and couldn't understand why the dealer wouldn't agree to the price I wanted. A couple of months later, the source corrected the price. It turned out I was trying for a price that really was too low.

Paul


So? This is how car sales work. With information, you can protect yourself. Does it guarantee you the best possible price? No. But why wouldn't you want to educatw yourself about a major purchase where negotiating with information helps you 95 times out of 100? Why would a question like this bother you?

OP, the internet is your friend. You should be able to ball park the invoice with all the information available. On popular models, the invoice price probably matter much less, if at all.

JT
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Re: Purchase New Car

Postby harrychan » Sun Dec 23, 2012 10:36 pm

Internet and e-mail is your friend. Arm that along with sites like truecar.com. I usually first determine which car I want and get an idea with truecar.com. I then send e-mails to different dealers within the area asking for their best price and forwarding them the truecar.com price. It worked really well the last time I bought a car earlier this year.
This is not legal or certified financial advice but you know that already.
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Re: Purchase New Car

Postby hudson » Mon Dec 24, 2012 6:59 pm

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Re: Purchase New Car

Postby gt4715b » Mon Dec 24, 2012 8:08 pm

tibbitts wrote:I'm not sure why people feel compelled to know this information. When you buy a high-end camera or AV system do you feel compelled to know what it cost the retailer? When you have a medical procedure, do you feel compelled to know how much all the supplies cost the hospital - or how much the doctor paid for medical school? When you buy a new house, do you demand an accounting of the price of every component and all the labor that went into building it?

Paul


I agree that the actual cost to dealer isn't that important to know, but rather a sense of the average current sales price in one's area (and the spread). People probably do get too focused on the former, when the latter is what is really important. There are websites that allow you to get this information. With that knowledge in hand a good way to go is to get 3-5 dealers online best price on the exact car that you want. There's no reason nowadays to do the haggling at the dealership and have to put up with the normal annoying sales process.
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Re: Purchase New Car

Postby magellan » Tue Dec 25, 2012 7:33 pm

This thread is a bit long, but has a lot of good info on buying a new car.

DW and I recently upgraded her Rav4 and I emailed 5-6 dealers within 75 miles that had the car she wanted in stock. We probably didn't beat the very lowest price that a top negotiator might have gotten, but I'm confident we paid a reasonable price. IMO, this approach is a great way to buy a new car without any negotiation and with minimal dealer shenanigans.

Jim
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Re: Purchase New Car

Postby LadyGeek » Tue Dec 25, 2012 9:25 pm

This thread is now in the Personal Consumer Issues forum (cars).

This is a common question, try searching the forum: buying car site:bogleheads.org - Google Search
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Re: Purchase New Car

Postby mike143 » Wed Dec 26, 2012 11:00 pm

http://www.truecar.com is a good start for pricing.

For strategy I would say this is a good start: How to buy a new car, FWF style

Cheapest lending right now is Pentagon Federal at 1.49%. We refinanced my wife's car from 1.99% with Honda to 1.49% with PenFed.
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Re: Purchase New Car

Postby thebogledude » Wed Dec 26, 2012 11:36 pm

I like Mark Cuban's approach on Shark Tank. If he sees an opportunity he'll tell the person "I'll give you a number and you say yes or no." and that's it, no going back and fourth.
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Re: Purchase New Car

Postby johnep » Thu Dec 27, 2012 9:53 am

CR and others provide good pricing information but I have never found a source that was precise. There always seems to special rebates or other promotions for dealers than are unbeknownst to consumers. What has worked best for me is to lock in on the exact type of car, model, and features I want and price shop at multiple dealers. Some dealers will give you a firm price via Internet and others want to haggle. IMO, you will likely get your best price by negotiating, but you need to know what a reasonable price is (get quote from other dealers). The greatest power you have is to get up and walk out the door. If you are thousands of dollars apart, they will let you go. If you are a few hundred apart, probably not. You need your best poker face for their games. I cannot successfully negotiate when my wife is with me because they always play to her and once she wants a car, they know it.

I am told the profit margins from new cars are small but the profit margins from extended warranties, financing and all the other optional nonsense are huge. Every time I buy a car, I explain upfront that I do not want these and do not want to hear their sales pitches, usually to no avail.
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Re: Purchase New Car

Postby Dog_Papa » Thu Dec 27, 2012 11:31 pm

Transition wrote:What is the best approach to saleman when purchasing a new car???? How can I find out the actual cost to the dealership?
This information will allow me to negotiate from that price.

Before I buy a new car or light truck, I do my own market analysis of the current market price of the car. Edmund's or True Car can help with that. I then e-mail
dealers and ask if they can give me a better deal, than I figure I can really get. If I get the deal on e-mail, that I want. I then go in and buy the car. When you add
variables like a trade-in and financing. You have a more complex transaction.

This is were dealers make their money. Selling your old car yourself, is one way to eliminate one variable. Go to a bank and get financing as well. Then all you have
is the price of the car. And don't believe this nonsense about invoice, cars are sold less than invoice all the time. What kind of car are you going to buy? Have you
been looking at dealer web sites to see if that car is every run as a special?
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