The Best Way to Buy Your Next Car
By Bill Goldberg, Principal, Auto Advisors
I’ve spent the majority of my life working with car dealers, and I’ve dedicated my professional career to helping credit union members find and purchase their ideal vehicle. Here are some things to consider when you need your next car:
- Do your own research. The dealer would prefer you visit them as unprepared as possible. This allows them to be the authority on your car search. Of course, this is silly. You need to conduct your own research before you step foot on a dealer’s lot. Know which vehicles are on your short list, know the options, and know reasonable prices for those cars.
- Stand firm and DON’T negotiate. Trust me, no matter how good you think you are at negotiating, the dealer is better. The dealer knows exactly what to say for you to think you’ve gotten the better of him in negotiation when in fact, they’ve made their money. Even if you walk out with a purchase price “at invoice” the dealer is making money somewhere!
- Know your trade-in. If you have a trade-in, know it’s value before talking to a dealer. Online tools like Kelly Blue Book and NADA are good, but the only way to truly know the value is to visit a local used car dealer (or a large national used dealer like CarMax) and ask for the “buy price”. This price is what they would give you for your car if you weren’t buying another one. (Basically, they are going to be very honest because they can’t make money in another part of the transaction.
- Almost always buy GAP insurance, and NEVER buy it from the dealer. GAP insurance covers the difference between what you owe on your car loan and what your car is actually worth. It’s a critical piece of every car loan, except in the rare case when your car is worth more than you owe. The credit union offers the same (or better) GAP insurance policy for HUNDREDS less than the dealer. (This also goes for extended warranty products!)
- Get pre-approved by your credit union BEFORE you shop. The dealer makes more money in the finance office than on the sales floor, and they’re experts at convincing consumers to take their loan offers. Get pre-approved by the credit union before you shop, and make it clear to the dealer that you will only get your loan through St. Paul Federal. By doing that, you’re much more likely to get a better deal.