This will be the 1st of a 4 post upload with a step-by-step guide on searching, inspecting, and negotiating the purchase of a vehicle.
1. Preparing and Car Searching
2. Shopping & Inspection
4. Personal experience of negotiations and deal making
I’ve bought quite a few used cars for my wife and I during our lifetime and I also previously worked in the ‘negotiating’ business working directly with various attorneys across the country for 12 years; so I’ve heard all the harsh, down-and-dirty tactics that’s often used in negotiations that can be very successful on someone who might not have experience in these areas.
In addition, after a multitude of conversations with various individuals in my life, I realized there’s quite a few people that don’t quite understand the “in’s and out’s” of car buying; so I wanted to share the knowledge I’ve collected over the decades from personal experience and from other people to show you the step-by-step process I use when car searching by utilizing free resources, how to properly negotiate a deal, and ending with a car you want.
All links will be in the stickied comment below
STEP 1: KNOW YOUR BUDGET
(a) Find out what you can afford FIRST and FOREMOST! There are some great loan calculators out there to help you find out what your monthly payments will be (ex: https://www.navyfederal.org/products-services/loans/auto/car-loan-calculator/ )
(b) Include tax, tag, title and a dealer fee of $500-$1000 in your budget to give you breathing room for negotiating in your budget (this doesn’t mean you’ll pay it, but it just gives you some wiggle room to negotiate). This might make a $10,000 priced car, $11,000 on the “walk-out” price due to the tax, tag, and title. More on that in the negotiation section…
STEP 2: GET FINANCED BEFOREHAND, TRY TO AVOID FINANCING THROUGH THE DEALER.
Many banks and credit unions will finance you and provide you a ‘blank’ check upon approval up to the amount you applied for. For example, if you applied for $10,000, you’ll receive a check where the “pay to” field is blank and it’ll say “Not to exceed $10,000”. This gives you the ability to purchase a car from anyone, at any price, so long as it’s not over $10,000 (of course you could add cash on top of that if you wanted).
In addition, this provides you negotiating power at any-one dealership as they see this as “cash”, being they’ll get the money guaranteed within days when the bank approves it. This means you pose zero risk, being they don’t have to worry about you not paying back a loan through them.
On the other hand, sometimes, it might slightly hurt your negotiating power as some dealers receive special incentives or bonuses if they use their own financing companies. So they’d actually prefer you use their financing service.
But overall, I’ve found being financed beforehand has always helped me out. It gives you a bit more negotiating power more times than not and turns the car-buying process into 15 minutes or so, making it a seamless process. There are many companies out there who will finance you this way. Look around. I’d suggest this route if possible.
STEP 3: DEFINE THE BASICS OF WHAT YOU WANT/NEED IN A VEHICLE
- 2-door, 4-door sedan, SUV, truck, or van?
- 4 cylinder, V6, V8?
- Automatic or manual transmission?
- FWD, RWD, AWD?
- Looking to protect yourself or deal some damage?
- Are infotainment systems important to you?
- Is color important?
This helps you get a base down of exactly what you’re looking for.
STEP 4: DON’T BUY NEW
Cars are one of the quickest depreciating assets you can buy into. Seriously, unless a new car is already valued low and reasonable (<$15,000), this is one of the worst financial decisions you can make. Not only will you be up **** creek if the car craps out on you early in your loan term, but even if it doesn’t, you’ll quickly discover that the car is valued considerably less than what you still owe on it within months – which makes selling or trading it neigh impossible without a incurring a great loss.
Even if you can afford the monthly payment, don’t do it. Often times, if financed at the dealer, the loan period is extended out 6+ years to get you at the monthly payment you want. Thus, stick with focusing on the total price of the car & monthly payments, not just the monthly payments alone. This is just another reason to get financed beforehand…
In addition, manufactures often treat you as a “guinea pig” on new technology or workmanship that has not yet been tried and tested in the long-term. I personally avoid them at all cost.
Then, once you have a general idea of what you’re looking for...
STEP 5: SEARCH ONLINE FIRST, DON’T GO BLINDLY SEARCHING AT DEALERSHIPS
If you don’t do this part and go blindly looking for a car at dealerships one of 2 things will happen:
(a) They will often waste your time bringing you cars that you end up not liking or worse;
(b) Sell you a car because they’ve convinced you it’s in your best interest or the price was right. Then you end up with a car you’re not entirely happy or familiar with.
Most dealerships don’t want you to leave. They will often promise you the world and deliver you nothing. DON’T BUY A CAR ON THE SPOT IF YOU HAVEN’T RESEARCHED IT! PERIOD!
STEP 6: MAKE A LIST AND DON’T LIMIT YOURSELF
*This is an example list of cars I found while helping an elderly lady at my old job look for a car based on the criteria of what she wanted.
Make a list of cars that’s within your budget and meets your basic criteria from above and write them down or put them in an excel spreadsheet. Don’t worry about the details of repair cost, actual value, maintenance, etc., that will be divvied out later. Right now, our goal is just to meet basic criteria. This makes the car searching process much quicker so you don’t have to waste time researching one car at a time.
Because of this, don’t avoid certain makes or models you’ve never driven before. Every car manufacture has good models and bad ones, and sometimes a make or model you’ve never driven before might surprise you (it has for me multiple times). So don’t stick to only looking at Ford's because you grew up on them and don’t avoid Volkswagen's because it’s foreign. If you do this, you severely limit all kinds of possibilities, as every manufacture has good eggs and bad eggs. You want this basket to be as large as possible for now to give you a good picture of everything that meets the criteria of what you’re looking for.
We can iron out the details later...
STEP 7: DON'T FOCUS ON USING A SPECIFIC DEALER BECAUSE A FRIEND OR FAMILY MEMBER HAD A GOOD EXPERIENCE AND DON'T AVOID USING A DEALER BECAUSE OF BAD CUSTOMER SERVICE REVIEWS.
I’ve bought a few cars from dealerships that had bad customer service reviews and they were absolute assholes. Seriously, I got kicked out of a crappy dealership with bad reviews because of a disagreement in their asking price and my offer. But they had the car I wanted after I narrowed it down and done the research. I drove back home 2 hours, but we still ended up making a deal 2 days later over the phone.
I used them and they used me. But at the end of the day, neither of us have to ever do business together again. I got the car I wanted at a fair price, and they got their money. Mind you, I didn’t sacrifice my budget and I knew the car I was getting inside and out. But don’t do this if you’re buying new or plan on getting a warranty, because you have the potential of having to go back to them to fix any issues.
The reason I operate this way is because the dealership will have no legal obligation to you after you’ve purchased the vehicle (used vehicle in most states) and you have no legal obligation to them if you didn’t finance through them. The dealership you purchase from is only a one-step process and once you’re off their lot with your car, it’s yours to deal with – even if it breaks down on the way home. It makes the negotiation experience more stressful, but at the end of the day, I never have to see their faces again.
STEP 8: ONCE YOU’VE FINISHED YOUR LIST OF CARS THAT MEET YOUR BASIC CRITERIA, DO THE IN-DEPTH RESEARCH, STARTING WITH YOUR MOST FAVORITE.
1. Verify the value of all vehicles on your list to get a general idea of the fair market value:
a. NADA: https://www.nada.com/
b. KBB: https://www.kbb.com/
*Always use both sites as they can differ greatly
2. Search that exact year, make, and model for sale online to see what others are asking for it locally in that area. This, combined with number 1, will give you very realistic idea of what the car is valued at. If the car is not that common, it’s okay to branch out a few hundred miles.
3. Google the year, make, and model of the car and finish it with “issues”. Example: “2008 Honda Civic issues”. You’ll often run into forums or even videos of reputable mechanics on YouTube who will describe common issues they see with the car. But don’t let it deter you! Almost all cars have specific and common issues; your goal is just to ensure it’s not a game-breaker (i.e. if you find mechanics and forums saying it’s common for the transmission to die at 100,000 miles, that’d be a game-breaker. But if there’s a common issue with a fluid sensor, that’s a few hundred to repair, then now you know what to look for when inspecting that car or during your ownership of it. This is probably the most important step as I’ve avoided cars with serious common issues that I immediately marked off my list.
4. Get a general idea of the cost of parts on the car you’re interested in that most frequently needs replaced on all other common cars (i.e. alternators, brake disks, window motors, head gaskets, tires, etc.): https://www.rockauto.com/.
a. You want to pay special attention to this on German or other high-end cars as they tend to be a bit higher in some areas (Mercedez, Audi, Porsche, BMW, Volkswagen, and Opel)
5. Find customer reported complaints on the specific car you’re interested in here: https://www.carcomplaints.com/
a. But take this with a grain of salt. There’s FAR more people willing to search how to report issues with a car than there is wanting to tell people that their car is in working order. Bear in mind the popularity of the car too. If there’s 150 complaints on this site about a 2014 Toyota Corolla, an extremely popular model car, it might be safe to assume this isn’t a major concern considering there’s tens of thousands (probably more) of this model car on the road.
6. Verify the VIN of the car to ensure ALL manufacture recalls have been completed: https://vinrcl.safercar.gov/vin/ (FREE government service)
7. Verify the VIN to ensure it’s never been totaled or stolen: https://www.nicb.org/how-we-help/vincheck (FREE National Insurance Crime Bureau service)
Most dealers post the VIN on the webpage or in the photos; if you don't see it, that's a small red flag. But if you're really interested in it, call for it or go look at it and do the research from your phone.
8. If everything above checks out, then call 2 or 3 local repair shops and ask about the year, make, and model of the car(s) and ask what’s the most common issues they see and price to fix said issue(s).
Just bear in mind, EVERY car has something that’s costly to repair on it. So just because you’re quoted a hundreds of dollars to repair something simple, don’t mark it off your list immediately because you think it’s too expensive. I’ve owned a Hyundai in which multiple shops quoted me $700-$900 to replace the sparkplugs because the labor to get to the back 4 were so labor intensive (the V6 is installed sideways in that model car). Upon looking it up myself, it required multiple hours of work from a professional just to gain access to them. This equates to 1-2 days of labor for a novice to complete the same job. Yet a Volkswagen I owned I could do myself because nothing major had to be removed. Your goal is just to get a general idea of what you might have to dish out for repairs to help with your decision.
By doing all of this, you now have a targeted shopping list of cars and their locations and know as much as you can about them remotely without even going to a dealer and looking at it.
This saves you time at dealerships and most importantly, seriously limits the probability of you buying a lemon.
Bonus Tip: When searching online, search as far away as you’re willing to travel. In my small town, car prices can be thousands of dollars cheaper 2 hours away – so I search 200 miles out and I’ve bought every car there. In addition, if you follow the above steps, it won’t be a wasted trip because you can map it out beforehand and you know exactly where you’re going, the exact car you’re going to look at, and you already know its history and common issues.
Bonus Tip 2: If you’re REALLY interested in a car and everything checks out from your research, but you still have concerns (i.e. price is unusually low), buy a CarFax report if you’re able to confirm prior owner history, service, and accidents. It’s $39.99 for 1 report, $59.99 for 3, and $99.99 for 6. I’ve only done this one time because the price was unusually low, but in the end, it checked out. Alternatively, you can call up before hand and ask if they can provide a CarFax of that specific car when you get there.
In my opinion, I really don’t see this being a necessary step unless you think something is fishy or unless you just have the extra cash on hand. As you can see, you can uncover much about a car without even looking at it, and when you physically inspect that car you’ll be able to tell if it’s ever been in an accident almost every time. I’ll cover that in the next post…