THE COLOR OF MONEY
Simple tips make car buying more enjoyable, less costly
By Michelle Singletary
Philip Reed, the consumer advice editor at Edmunds.com, an online car-buying service, was my guest on a recent online chat. Here are excerpts of some of his answers to leftover questions.
Q: Is it generally a good deal to accept what the dealer says is the invoice price at face value?
A: You should ask to see the invoice, but keep in mind that if there are incentives or rebates on the vehicle, invoice price may not be the best baseline. Check if there is customer or dealer cash available.
Q: What is the best course of action in negotiating with an auto dealer who advertises a "no haggle" price? Is negotiating still in the cards?
A: Salespeople aim to sell cars, so if you make an interesting offer, they will usually listen. If the "no haggle" price is near the car's true market value, you should consider buying it as is, but be sure to read the contract carefully to make sure there is nothing else baked into the deal. Pay close attention to the offer for your trade-in, if you have one, as that will always be negotiable.
Q: I will have to buy a new car in the next year or two and am thinking of either a Toyota or Honda hybrid. However, given the rising gas prices, are dealers charging a premium for them? Also, what do you do — other than walk out the door — if a dealer quotes you one price over the phone and then raises it when you get in the showroom?
A: Right now, the Toyota Prius is commanding a premium and has a long waiting list while the Honda Civic Hybrid and Honda Insight are selling below sticker price. And new hybrids are coming out soon, including the Ford Escape, Honda Accord, Lexus RX 400h and Toyota Highlander. Demand promises to be high for these vehicles, and we recommend waiting a bit after launch to buy them to give the prices a chance to settle.
In response to your second question, you should always get a price quote in writing. Have it e-mailed or faxed to you and ensure it includes everything you discussed.
Q: What do you think of car-buying services such as the ones offered by warehouse clubs and some credit unions?
A: You will pay for the convenience, but only about $300 more than the best deal you likely could have gotten on your own. This could be well worth it, especially if you don't like to haggle.
Q: I have a 1999 Ford Escort with about 88,000 miles on it. I love this car, and I will drive it until it drives no more. The condition is fair, some minor dents, and I'm not the cleanest person. I have full insurance on it now, but considering the age and condition I was going to only purchase the insurance required by law, which would be cheaper. Is this a good idea?
A: Absolutely. As a vehicle ages, it becomes very cost-effective to drop the collision and theft insurance. Only buy what is required by state law. You can check what your state requires at www.edmunds.com/advice/insurance/articles/43773/article.
Q: Why would a dealer let you see the invoice? If they say no, then what?
A: Competition among dealerships — as well as Internet-savvy consumers — has created an environment where dealers will now typically show a buyer the invoice for the vehicle in question. If a dealership refuses, walk out, indicating you'd rather have a more open transaction.
Q: With rising fuel costs, do you think car makers will offer more rebates on SUVs?
A: In May, SUV incentives averaged $297 per vehicle higher than a year ago, while the industry average incentive was $25 lower.
Q: The last time I bought a car, after the test drive the saleswoman told me her manager wouldn't quote me a price unless I was prepared to buy today. What is the correct answer to this?
A: Say, "You just lost my business."
Listen to Michelle Singletary discuss personal finance every Tuesday on NPR's "Day to Day." To hear her reports online go to www.npr.org. Readers can write to her care of The Washington Post, 1150 15th St., N.W., Washington, D.C. 20071. Her e-mail address is singletarym@washpost.com.
