When I was Internet Manager for a major car dealer, I could usually tell long before the deal was completed if someone was going to get a good deal or not. The savvy car shopper who got the best price always had their homework done. They knew—beyond a shadow of a doubt—the price they wanted to pay for the new car, along with the value of their trade, and even the interest rate on their loan. It’s my experience that if a customer walks into a dealership ill-prepared, well, to be blunt, the salesperson and their managers will have them for lunch. After all, it's not only uncomfortable negotiating blind, but it's not very efficient.
Most consumers only buy a handful of vehicles in a lifetime. Yet, car salespeople negotiate car deals from morning until night. They not only receive special training, but it’s the rare dealership that doesn’t pay their sales staff by commission, which mean sales staff sell or they don’t eat. Talk about pressure to perform. When you put all this together, the odds are stacked against the customer.
The great equalizer
The Internet has come to the rescue of car buyers. The Internet is the consumer’s best friend and acts as an equalizer, leveling the playing field with professional car dealers. However, despite its benefits, there are still many car buyers who walk into their local dealership and proclaim, “HELP! I need a car now.” They haven’t done their homework, they are ill-prepared, and they are at the mercy of the dealership.
There is a growing array of tools on the Internet for car buyers to use. You not only can visually see inside and outside of most models online, but you can read consumer and professional reviews of the vehicles on your short list. (My favorite professional reviews are at TheCarConnection.com.) The more information you get, the less the chance of making a mistake in your vehicle selection.
Once you know the make and model of the vehicle you want to buy, you need to establish a target price. Try clicking through the New Cars or Used Cars links at the top of this page. Or go to TrueCar.com, Edmunds.com, or KBB.com to see what you should be paying for new or pre-owned vehicles. You can also use these websites to determine your trade’s value.
You also need to pay attention to the interest rate you’ll pay on your car loan. Dealers like to add a point or two on your loan because this directly translates into more gross profit for them. You can side-step this added cost by being pre-approved on your car loan at your bank or credit union. If the dealer can’t at least meet your pre-approved interest rate, finance your vehicle with the financial institution offering the lowest rate. Remember that there are many online lenders that offer pre-approval with the simple click of your mouse.
Buying cars, trucks, and SUVs is too often a reflection of the Wild West where it’s survival of the fittest. This is where you need to be prepared or you can expect to pay hundreds, if not thousands of dollars more than necessary.
It’s become easier in recent years to be prepared, and for car buyers to make better deals with automotive dealers. Yet, not all consumers are using the tools available to them. Be smart. Be prepared. Use the Internet when buying your next new or used car.