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Thursday, July 08, 2010

How I bought a car and did not get screwed

Update 13:37 EST: added additional comment about the fear of soliciting bids.

One of the most important things I needed to do doing my leave of absence this summer was buy a new car. This was the first time I was going to be the sole buyer (the first two times with the aid of my father and stepfather) so I opted for competitive bidding.

There's a good chance you've seen the fantastic Ignite Talk called How To Buy a New Car (embedded at the bottom of this post.) I resolved to use the techniques in the video to purchase my next car. Here are my notes.

Selecting the car

The first important pieces of advice on buying a new car are
  • Spend two full weekends selecting your car
  • Narrow it down to exact model and features
Thanks to New Jersey Blue Laws, car dealerships are closed on Sundays, so "Two full weekends" can also mean "Four full Saturdays." But instead I did an incredible amount of research online. IMHO the two best starting points for buying a new car are Consumer Reports (paid subscription -- worth its weight in gold) and US News and World Report.

Long story short, this turned out to be an emotionally difficult process, and even resulted in selecting an entirely different vehicle the day before the purchase. It was a good decision in the end, but could be its own blog post.

Soliciting Bids

Once we selected the vehicle, I found the eight closest dealers. Here are the two tools I needed:
  1. A sticky note on the monitor that said:

    You Will Feel Like An Asshole.

    This was a reminder from the Ignite Talk. "If you don't feel like an asshole, you're not doing it right! 'Why don't you want to sign this form? Everyone signs it!' I could refer to the note while soliciting bids"

  2. A notebook.

    Before starting any calls I dedicate one page per dealer, and initialized each page with
    • Dealer Name
    • Dealer Phone
    • Dealer City
    After talking with a salesperson I added the salesman's name and additional phone phone number, if it was offered.
  3. A spreadsheet.

    Even though most of the information between the notebook and spreadsheet were the same, having two formats was useful.
    1. I used a background color in the final column to indicate the color of the car being offered. In the example above, the second offer included all sorts of extras I didn't care about, but I used them for reference.
    Some notes about soliciting bids:
    • I called eight dealers. Only five dealers called back.
    • Only one dealer complained about competitive bidding. He wanted me to call the other dealers and come back to him with a price. "Why are you haggling over one or two hundred dollars?" Just let me know your best price. Feeling like an asshole, I insisted he participate with all the other dealers. This dealer did not call back with a price.
    • One dealer gave me sticker price, and so was clearly not interested in competing.
    • Some dealers failed to give FINAL prices. Whenever a dealer gave a price, I would ask: "Is this the number I would put on a check?" Some dealers said "No", some more than once. I felt like an asshole sending them back for a new price. That meant I was doing it right.
    • Update: Starting this process was probably the most frightening part of the whole thing. I wasted about 45 minutes with additional preparation and dawdling, some of which was useful, but was mostly a delay tactic. I chose a dealer location as my first one and shaking, started the call. That the salesperson gave me no trouble boosted my confidence and the remaining process was worry-free.
    Closing the deal

    From the five bids, one bid was $500 less than the next lowest, and I was set to close with that dealer. I brought an iPod and a book, prepared for the waiting game that was closing the deal. I also prepared for the deal to fail. Amazingly, everything went according to plan, with the exception of $60 all-weather floor mats. I caved on that last item -- the next lowest bid was $500 more, so fighting over $60 didn't make sense. (The next lowest bid was $500 more, but it had more add-ons, such as a cargo net. Even without all the add-ons the next lowest bid was $350 more.)

    Truth in advertising

    The Lifehacker post introducing the video is called Buy a car without getting screwed." That's accurate. After all, the post isn't titled "By a car and screw the dealer." In the end I got a fair price (independently verified by a friend who does not believe in competitive bidding.)

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