A Consumer’s Survival Guide For New Car Buyers

My Uncle Julius was a wise man. He drove a taxi in New York City for more than 30 years and before I could even apply for a learner’s permit he would caution me with these words, “When you buy a used car you’re buying someone else’s problem.” How right he was! But financial considerations often dictated that a new car purchase was out of the question and Uncle Julius’ admonition invariably proved true.junkyards near me

Around 1973 I bought my first new car, a Dodge Dart Sport, painted taxicab yellow. I was a relatively inexperienced driver and wanted to be seen. More importantly I followed the findings in the April issue of Consumer Reports which gave that car its highest rating. It was great advice for the time. Ralph Nader’s consumer campaigns for safer autos and quality built Japanese cars were emerging from their infancy while the Big Three auto makers reigned supreme. But even with CR’s recommendation my Dodge was a dog mostly because of the inferior technology and standards of the time. Fortunately, times have changed and cars have significantly improved thanks in large measure to the combined efforts of consumer activist Ralph Nader, the influential Consumer Reports, and the competition waged by the Japanese auto industry. What hasn’t changed is the selling practices of new car dealerships and for this reason alone a Survival Guide becomes necessary for serious consumers looking to purchase a new car. This writer has been through the ringer with new car purchases and the maintenance that follows so it’s with more than 30 years experience, like my beloved Uncle Julius, that I share what I’ve learned. Be prepared to be shocked.

Automobile dealerships exist to make a profit, they should, I don’t begrudge them at all for that. It’s a very tough retail business. Markups on car sales are particularly low in contrast to retail sales of other goods. For example, a dealership buys its cars from manufacturers for several thousands of dollars less than the Manufacturer’s Suggested Retail Price (MSRP), less confidential bonuses, incentives etc. The smaller the passenger car the smaller the profit margin. I worked in the fine jewelry business right out of high school and soon learned that the markup on fine jewelry was at least 100% with merchandise moving much faster than new cars in an automobile showroom. So the bottom line is this, dealerships are going to squeeze every dime from customers to meet their exorbitant overhead, payroll, taxes etc. but they must sell cars to stay in business while consumers want the best deal possible.

My first rule of thumb is take charge of your new car purchase before you need to buy a new car. What would you do if you suddenly found yourself without your trusted wheels? If you walk into a dealership the next morning unprepared, they GOTCHYA! Today, right now, decide what size car you need should that scenario happen and do whatever is necessary to improve your credit worthiness. Forget the televised “car ad hype” and the bosomy girls at car shows. This is serious business. It’s true that the best independent researcher of any model year car is Consumer Reports. If you’re not a CR subscriber go down to your local library and seek out their latest April issue and the April issue of previous years, the annual Auto Buyer’s issue. When CR’s April issue “hits the newsstand” in early March buy and save it as a reference. It’s their most widely circulated issue and for good reason, you’ll learn which car is the most reliable, cost effective and safest in its class. Whether you like its styling or not, ego aside, this is the car you may well give preferential thought to purchasing. The safety of you and your passengers should always be your primary concern as well as the vehicle’s reliability and predicted repair record.

Never, ever, walk into a showroom and volunteer answers to questions that haven’t been asked! The less you talk, the better your negotiating position. And don’t expect to finance the car through the dealership! That’s a major GOTCHYA that will cost you dearly. ARRANGE YOUR FINANCING IN ADVANCE! COMPARISON SHOP!! Your credit score will determine your best deal. If you’re a serviceman, veteran or immediate family member contact the Pentagon Federal Credit Union and if you’re service connected contact the Navy Federal Credit Union for quotes. If you don’t qualify for either and even if you do, obtain a baseline quote from neighborhood credit unions before checking with banks, and that quote must never exceed 36 months. Credit unions are very customer friendly in the event of unexpected financial problems. Timely communications with the local credit union can prevent a repossession which is more likely to occur if you finance through the dealership or bank. For rate comparisons click on the AUTO section in bankrate.com before making your final decision. NEVER talk “trade-in.” Plan to either keep the old car or sell it privately for maximum return.

There are several different plans and schemes that purport to offer good car deals. However, only two merit your consideration. The reason others aren’t worth much is that dealers don’t compete for your business or if they “COMPETE” they set the rules to assure their best outcome. An ingenious marketing partnership today combines Costco with area dealerships and the placement of a brand new car at the entrance to Costco with a sign that reads, “Ignore the sticker price. Members pay less.” The dealer sets all the terms, especially price. In addition to this scheme a car buyer’s magazine, “Costco Auto Program” awaits customers as they exit the warehouse. No competition here, its just another version of dealerships’ showroom but psychologically the car and magazine display are in an environment where prices are consumer oriented and the subconscious suggestion is that this deal is a worthwhile purchase. It ain’t!