THE COLOR OF MONEY
Don't buy all the hogwash when shopping for car
By Michelle Singletary
The Washington Post
I love to haggle.
I've never met a deal that I couldn't make better after a little negotiating. So when the time comes that I have to buy a car, I don't cringe. I relish the challenge.
But I'm fully aware that many consumers hate the car-buying experience. In fact, according to a recent survey in Consumer Reports, 38 percent of respondents said they did not negotiate, which is up from 30 percent two years ago.
Consumers surveyed said they assumed or were told that the dealer wouldn't haggle because of special auto pricing or financing.
Hogwash. If you want to save money, haggle till the cows come home. For those of you who are timid about negotiating or fear falling prey to the tricks of the car trade, I recommend you pick up the April car-buying issue of Consumer Reports.
The magazine does a good job outlining some of the more outrageous and underhanded practices by car dealers and salesmen.
For example, Consumer Reports advises car shoppers not to go along with dealers who like to start off the negotiation by asking you how much of a profit you think is fair.
When I went to buy my first new car at the tender age of 23, the salesman tried this on me.
"So, what do you want to pay for the car?" he asked after I had settled on buying a four-door Ford Escort.
"A dollar," I said.
"Now, come on, you don't expect me to sell that car for a dollar, do you?" he answered.
"Well, then don't waste my time asking a stupid question," I responded. The salesman laughed. But at least he knew at that point I wasn't going to play along.
As Consumer Reports so rightly points out, dealers sell cars every day. They know darn well what's a fair profit. Keep the conversation focused on the price of the car so you aren't distracted by other nonsense.
Here are some other smart-shopping strategies the magazine points out:
• Always get price information. The biggest mistake you can make is to shop for a car—used or new—without first pricing out the car you want. I like Consumer Reports' new car price service, which provides consumers with a close approximation of the actual dealer cost plus rebates and any incentives that dealers receive from manufacturers. They also have a price service for used cars.
On a 2003 Ford Taurus SE, the dealer price is listed at $24,070. But the magazine says the wholesale price is $18,362. Having that information doesn't mean you can get the wholesale price, but at least you have a more realistic reference to start your negotiation. To find out about Consumer Reports' new- or used-car price service, go to www.consumerreports.org.
• Always be prepared to walk. If you fall in love with a car and must have it no matter what, then be prepared to kiss any savings goodbye.
• If you hate haggling, recruit a tough-minded friend or family member who can do the job for you. In my family, that's me.
• If you've negotiated a good price and the dealer won't waive a modest "paperwork" or advertising surcharge, ask for free servicing or complimentary floor mats to offset the fee. I once got free mats for agreeing to let the dealer keep his logo on the back of my car.
Here are some tricks of the trade that Consumer Reports says you should look out for:
• Mandatory credit check.
If you're paying cash or have other financing, don't give a dealer your written consent for them to run a credit check. Before you sign any papers, insist that the credit-check authorization clause be stricken from the document. Keep in mind an excessive number of credit inquiries can lower your credit score, which is the number that the lenders use to determine your creditworthiness. Your credit score also can determine how much you pay in interest.
• The false credit score.
The dealer checks your credit report but lies about your score, telling you it is lower than it really is and says you don't qualify for the low-interest car loan that drew you to the dealership in the first place.
"People often think that just because they have one or two late payments, they have bad credit," said Mandy Walker, an associate editor for Consumer Reports. "Don't assume that what the salesman is telling you about your credit is true."
You can easily avoid this trap by getting your credit score before you shop for a car loan, Walker said. You can get your credit score by going to www.myfico.com.
• The mandatory extended warranty.
The finance manager says you must buy an extended warranty. The bank requires it, he says. In some states such a pitch is illegal. Lenders typically don't require an extended warranty.
Maybe you don't like to haggle. That's fine. But with all the auto promotions going on right now, at least go out there prepared.
Michelle Singletary is a writer for the Washington Post.
