If you’re trying to buy a car right now, you’re probably experiencing a world of frustration, between lack of inventory and crazy–tall prices. There are some useful tips to navigate this market, but you should know that much of the conventional wisdom no longer applies in our overheated car market. And some common tips could hurt you when buying a car today.
I’ve seen articles on the Internet that offer “top tips” for dealing with car dealers. While some of the advice still applies, like doing your research before visiting the dealership or getting pre-approved for a loan, a lot of that old trusted advice will only work if you take a time machine back to the “buyer’s market.” of 2018, when inventory was plentiful and dealer surcharges they were a rarity.
These are the worst recycled car buying tips I’ve seen on the internet, all of which need to be recalibrated for today’s market.
For a long time, buyers and advice blogs have been obsessed with the idea of knowing the “invoice price” of a new car. The invoice price is the amount the dealer pays the factory, typically 5 to 8 percent below MSRP. I’ve always found this advice strange, because even if a buyer knows how much the dealer paid for the car, that number by itself doesn’t give the buyer any leverage in convincing the dealer to discount the vehicle.
While there are still some rare instances of getting discounts on cars today, for the most part, in 2022 the MSRP is a best case scenario on any remotely desirable car model. I run dozens of new car deals every month., and I’ve seen a pattern emerge. Dealers that have cars available for purchase right now are usually those who add marks, hence they have a sitting inventory. Dealers willing to sell at competitive prices almost always pre-sell their inventory several months before the cars arrive. So if you have the luxury of time on your side, you’re more likely to get a better deal, but it will take some hunting and some faith that the car you want will make it to the dealership and you won’t. tied up in supply chain woe
I can’t tell you how many people I’ve talked to who say the same thing: “I just tell the seller the total price I’m willing to pay, and if they can’t make it, I’m out.” On the surface, this sounds like solid advice, but this tactic involves some important assumptions that may or may not be valid.
First, the “direct price” strategy assumes that you have correctly calculated the total transaction price that includes local taxes and DMV fees. (Unless you do this for a living, you probably won’t get the number right off the top of your head.) Second, this tactic assumes that your target price is achievable for the market. Given the current sky-high demand, that’s unlikely. Ultimately, this approach assumes your dealer has the car you want in stock and is willing to meet your target price.
Another complicating factor: this trading method only works in person. So you may drive all the way to the dealership, only to find out that the car you want isn’t in stock (unbelievably likely at this point) or that your target starting price is inaccurate or even remotely realistic in today’s market. . In short, you have wasted a lot of time and come back empty handed. A more efficient tactic is to call or email a few dealers and ask what is actually available and what the total price of the car you want would be.
In today’s market, the only way to understand what an achievable price target is is to compare actual offerings on actual cars. But keep in mind that when shopping around, you need to know when to take advantage of an opportunity when it arises, rather than wait for a theoretical “best price.” Often, I see a pretty good deal come in, but the customer wants to wait for an even better price; that offer never materializes, and the good offer is snatched up by someone else.
Given how quickly inventory moves right now, if a distributor can get what they want at a price they feel is fair, probably worth jumping over.
This follows along with the “direct price” approach. Most buyers know that the final sale price of a car will include a number of additional charges. Some of these are unavoidable, such as sales tax and registration/DMV fees. Others, however, are pure profit generators for dealers. While the Federal Trade Commission proposes new rules to minimize these shenanigansRight now, many car buyers are still hit with unexpected fees.
Should you push back? bogus charges such as “reconditioning fees”? Absolutely! But remember that in today’s high-demand market, buyers don’t have the leverage that we once did. You can demand what you want, but with so many people eager to buy a new car, often the dealer will let you walk and you’ll just find another sucker.
Sometimes it’s best not to get caught up in the nitty-gritty details and just accept the most competitive offer. If Dealer A has the car you want, with a $5,000 markup but no bogus charges, but Dealer B has it at MSRP with $1,000 in overpriced accessories, neither situation is ideal, but one is clearly better than the other.
You’ve probably heard this one: “Don’t tell the dealer you want to trade in your current car until you have the final price on the car you want to buy.” Overall, it’s not terrible advice, and it stems from a valid concern that a dealer will offer you a high price on your trade-in, but will make up for it by removing any discount on the new car price (or vice versa, a deep discount and a bargain). low commercial).
Here in 2022, the situation is a bit different. Dealers are desperate to buy used cars, and many of them are paying top dollar to increase their used car inventory. I’ve seen a few cases where telling the dealer that a trade-in might be on the table convinced a more competitive deal, or got a new car customer to the front of the line for a factory order (because, again, if you really want a specific car with specific equipment, you are ordering and waiting). I’ve also seen deals where the trade offer was so high that it offset the dealer’s markup on the new car, making the net deal worth it.
If you’re afraid of getting a low offer on your trade, it’s trivially easy to get an offer from caravan, Carmax either Vroom, and use it as leverage in your conversation with your local dealer. Keep in mind that some states will give you a tax break when you trade in a car, meaning you only pay sales tax on the price of the new car minus the trade offer. So even if your local dealer is priced lower than online car marketplaces, the tax savings could make it a wash.
still possible get a good deal in today’s car market. You just have to understand that every deal is relative, and what might have seemed like a sucker buy a year ago might be your best bet today. Your chances of success are directly related to your flexibility and patience. And if you’re not in a hurry to buy a new car, now is a good time to get up to date with the preventive maintenance of your current vehicle. Because in today’s market, the best buying advice is probably to “keep your current car until the market calms down.”
Tom McParland is a contributing writer for Jalopnik and directs AutomatchConsulting.com. He takes the hassle out of buying or leasing a car. Do you have a question about buying a car? Send it to Tom@AutomatchConsulting.com
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