Car buying tips

If you are in the market for a Honda in the Houston area, I highly recommend contacting Ali Fard at Russell & Smith Honda. We just replaced our 10 yr. old Honda Odyssey with a CRV and couldn’t be happier with it. I was dreading the car buying process because of all the games the salespeople typically play. I know how to get good deals but that doesn’t mean the process is enjoyable.

But this was different. Ali was extremely responsive, gave me a detailed drive-out quote via email with the best offer in town and took a lot of time to show us all the features of the new vehicle. It was, by far, the best car buying experience I’ve had.

The guy who did the paperwork didn’t try to high pressure me on any additions or extended warranties. I was in and out of his office in about 10 minutes.

Top three tips to get your best deal

1. Do your homework on Edmunds. They have great information on what people are really paying. The “True Market Value” prices are good to aim at and you can even beat them.

2. Go through the Internet salesperson at the dealership.

3. Be very clear about what you want. I always emphasize that all I care about is price (a Honda is a Honda, and I get my service done at Christian Brothers Automotive, not the dealership) and that I don’t like surprises. They are heavily rated and compensated based on customer satisfaction ratings so I make it clear that price and a lack of surprises will yield the highest satisfaction for me.

Some other things to think about

Unless your current car is costing too much in terms of repairs, seriously consider holding onto it.  It is the least expensive car you’ll ever own.

Consider getting your current car detailed.  For roughly $150 (typically much less than a monthly payment), it will look like new and help curb your craving for a new car.

Don’t just buy a new car to get better gas mileage.  Do a little math and you’ll find out that it will take years to pay back your investment.

Buy low maintenance cars and hold them a long time.  We aim at 10 years.

Check out Dealer Rater to understand who you’ll be dealing with.

Don’t buy high-tech extras like DVDs and GPS systems.  They cost 4-5 times what portable versions do and will be outdated quickly.  They cost a lot to fix if they break.  You also can’t transfer them to other vehicles.

Don’t look too eager when talking to a salesman.  You must be ready to walk away.  They get serious about negotiations when you are walking out.

Make your best deal on the price, then tell them you don’t like surprises and you’re sure that they won’t add in any charges such as “advertising fees” when they do the final paperwork.  Those should be part of the negotiated price, but they often sneak them in later.  A guy did that to me and I told him the deal was off unless he removed the $250 charge.  He did.

Don’t let them tell you they are “only” making $25 (or whatever) on the car.  That is a silly partial truth they use to describe the intercompany profit when one division of Honda, for example, sells to another division.  It is meaningless, especially when they try it on a CPA / finance executive with 25+ years of experience.

Go through the fleet dealer at the dealership if you can.  Most dealerships have a sub-group that sells to businesses who buy multiple cars.  Those buyers don’t have time for the gamesmanship of spending a whole day negotiating over each car.  The prices tend to be lower and non-negotiable.  Individuals obviously don’t buy a whole fleet of cars but sometimes a group like a credit union will combine the purchasing power to get fleet deals. You can submit what you want on the web and within an hour you’ll have lots of quotes.

Save up and pay cash.  When you tell them you’re ready to write a check when they agree to your price it gives you negotiating leverage.

8 thoughts on “Car buying tips”

  1. Good ideas. A few questions, then some comments – Why did you buy a new car and what did you do with the old one? Did you meet your criteria of holding on or not buying for better gas mileage. Did you consider a new-ish used car? A lot of financial people advise this, let someone else take the deprecation.

    I typically buy new vehicles. The last time around I bought new-ish. No regrets either way, next time I’m not sure what I’ll do. I keep cars for 10+ years (my wife only about 7 because she drives a lot) and when you look at it, those first 2 years of depreciation fade away 8+ years later.

    As for being ready to pay cash, I used to agree with you, but now I think that’s of limited value. Most dealers get paid for financing through the bank of their choice, so that may give you some leverage. The last deal I got, I financed and then paid it off before the first payment was due.

    I put part of my down payment on credit card – to get extra points from the credit card vendor. The car deal limited the amount I could put on there, I wish I had negotiated that better but by the time I got to that point, I was tired.

    I seemed to get to a closing point quicker because I shopped late in the day. It wasn’t on purpose, it was when my wife could get off. But they were ready to close the deal and go home.

    For new and new-ish cars, make a list of things to fix. Don’t negotiate these, just say something like “and when will these be fixed?”

    And I always ask them, just before signing “you are going to fill it up with gas, right?”

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    1. Great questions, Randy.

      Why did you buy a new car and what did you do with the old one?

      We were on a 10 year plan so in essence we were right on track. But the Odyssey needed $1,500 of repairs for an oil and transmission leak and I didn’t want to fund those. Plus, with that plus the battery going out my wife had lost confidence. We donated the old one instead of trying to sell it. I made sure the organization knew what was wrong so they could fix it.

      Did you meet your criteria of holding on or not buying for better gas mileage.

      We were glad to get a good mileage vehicle with the CRV, but that wasn’t an overriding criterion. We wanted something with a little room but with the girls in college we don’t need a van / SUV type.

      Having said that, the mileage is good, especially on Econo mode (we’re getting 26+ with a mix of highway and city).

      Did you consider a new-ish used car? A lot of financial people advise this, let someone else take the deprecation.

      I get that logic, but I do splurge and go new since we keep them so long. We get just what we want. Sounds like you go with the same strategy. And in the past when I considered a “new used” Honda the prices weren’t much lower than new.

      As for being ready to pay cash, I used to agree with you, but now I think that’s of limited value. Most dealers get paid for financing through the bank of their choice, so that may give you some leverage. The last deal I got, I financed and then paid it off before the first payment was due.

      If it helps get a better deal then I’d be all for it. I just like the simplicity and freedom of having no debt. It is all about beating the cycle when you are younger. Get one paid off then save for the next one. I did a hybrid-Dave Ramsey model (long before he came on the scene). If you must make a payment, at least do it on something less expensive so you can get it paid off while there is still life, then save like crazy. Once you beat the cycle then you just make payments to yourself by saving. I have a standard monthly Quicken entry that “accrues” savings into auto, home, etc. funds. The money is all in the same pot but it is virtually set aside for repairs, insurance, etc.

      I put part of my down payment on credit card – to get extra points from the credit card vendor. The car deal limited the amount I could put on there, I wish I had negotiated that better but by the time I got to that point, I was tired.

      Good strategy!

      I seemed to get to a closing point quicker because I shopped late in the day. It wasn’t on purpose, it was when my wife could get off. But they were ready to close the deal and go home.

      They do seem to have an end-of-month fixation. Not sure if that is real or not.

      For new and new-ish cars, make a list of things to fix. Don’t negotiate these, just say something like “and when will these be fixed?”

      Good point. Just like in buying a house, make sure it is 100% the way you want it before giving them $$.

      And I always ask them, just before signing “you are going to fill it up with gas, right?”

      Ha! They beat me to that and had it filled up.

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  2. Good points, Neil.

    I bought a used car last fall and LOVE it. The “extras” – leather seats, Special Edition styling, wood trim, premium sound, traction control, sunroof and moonroof, etc. – only cost me another $500 or so. The dealership gave me a decent warranty. My mechanic inspected the car before I bought it. One of the little gadgets tells me how fast the car had been driven (on the average) – and that was about 19 mph. I looked up the previous owner – some old lady one town over.

    I came in with estimates from Edmunds, NALA (I think it’s NALA), and Kelly Blue Book. Printed out estimates, with the features of the car. I assumed that it was in great condition (as per my mechanic’s report), got them to fix a few things, and got a price I was happy with.

    It was worthwhile to wait to find that car and pay in cash. Hopefully, I can save up for the next one instead of paying for a loan on this one. My friends think I’m nuts (but also think that my car is gorgeous and that I got a great deal).

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  3. I too agree with buying and holding on long term. My Honda CR/V is a 2001 model. I had the A/C blow around year 2. When I stated that it seemed a bit unusually for the a/c compressor to fracture like that scattering small pieces of metal throughout the system requiring the entire system to be replaced, including hosing, Honda replace the entire system for free. Very good customer service!

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  4. One other thought — Consider getting your current car detailed. For roughly $150 (typically much less than a monthly payment), it will look like new and help curb your craving for a new car. I did that today on my 3 yr. old Civic and am really happy with it.

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