How I Bought a Car in 2016

When I was ten, I was furious at my dad for not taking me with him to complete the final negotiations on our 1985 Oldsmobile station wagon.  I wanted to see it all: the salesman’s harried trips to his “manager’s office.”  The walkout threat that finally closes the deal. The shady fees tacked on after the handshake.  

Thirty years later, I finally had the opportunity to buy my first car.  Having lived in New York and Cambridge during my post-college years, I either didn’t need a car, was happy with a used one off my parents’ lot, or was content with the VW Passat that my wife brought to the union.  But with the VW approaching its eleventh birthday and our second kid on the way, we beat a path to our nearest Subaru dealer.  Look up sensible in the dictionary, and you’ll see the picture above.

My ten year old self would be disappointed to know that how I went about purchasing the Subaru was exactly the opposite of how my dad bought our Oldsmobile.  Here’s how I did it:

Most important: You are buying a commodity: The Subaru Outback is a runaway success story for Fuji Heavy Industries.  Back in January 2010, Subaru moved 5,467 Outbacks in the US.  By January 2016, the number had more than doubled to 11,197 units.  Subaru has thoroughly replaced Volvo as the official car brand of New England.  I shopped Outback colors by riding my bike around my Cambridge neighborhood. 

All this being said, remember: you are buying a commodity.  Subaru is churning out hundreds of Outbacks from its Indiana factory every day. The identical car is available from any dealer.  So just as you’d shop for diapers or milk, you are shopping for the best price, period.

Identify the exact model you want to buy: Color, trimline, options, MSRP.  Know exactly what you want before heading to the negotiating table. The MSRP is a great number to confirm that you and the dealer are talking about the same vehicle.

Use Truecar to give you a price to beat: Truecar promises a much simpler way to buy a car.  Tell them the car you want, and they give you a handful of dealers willing to honor a fixed price.  But the Truecar user is paying a premium for ease of purchase.  Instead, look at the bell curve of prices that Truecar highlights.  The price you agree to pay should be either on the far left of the curve, or off the curve completely.  

Remember that the Truecar price doesn't include state sales taxes and title/tag fees, so be sure to add those in to ensure you're comparing apples-to-apples. Once you get your first itemized quote from a dealer, you'll know what your state wants to title and put a plate on your new car.

Wait until the end of the month, quarter, or year: Common sense suggests that many people aren’t buying a car in the dead of winter.  But salespeople and dealerships are still trying to hit their quotas.  I decided that the day to buy our Subaru would be the last Tuesday in January.  A bit of Googling indicated that January is the slowest month for Subaru dealers, so I was betting on the fact that a few would be anxious to cut a deal.

Call about 10-12 dealerships: That morning, I called about a dozen dealerships within a 75 mile radius of Boston.  I asked for the Internet sales department.  They are happy to take your call, because they don’t have to pay Truecar $300 for your contact information.  I described the vehicle I wanted, and asked for an “out-the-door” ITEMIZED price to be emailed to me. Mass. sales tax, dealer fees, tags, everything.  Or put another way: “What is the number on the check I will hand to you when you hand me the keys?” 

All but one dealer played ball.  The oddball told me that “the manager gives the best prices in person.”  I miss our Oldsmobile, but not the sales practices from 1985. 

The cheapest prices were from dealers far from Boston:  The out-the-door quotes I received ranged from $29,547 to $28,015.  The low bid from a New Hampshire dealer was off the Truecar chart and $1,200 less than the “invoice price” quoted by Truecar.  I was prepared to drive an hour to save thousands, but it turns out I wouldn’t need to.

Take your lowest quote to a local dealer: That afternoon, I presented my lowest quote to the salesman that had worked with us during my test drives.  I presented the opportunity to match the quote immediately and close the sale.  He initially balked, saying that his dealership doesn’t work like that. 

But there was a sale to be had, and a sale at a super low price is better than none at all.  These days, dealers earn bonus payments by hitting sales targets, so if the dealer wasn’t making much money on my deal, my sale was still contributing to his overall sales figures.

The salesman asked for the low quote in writing (I sent him a photo of the email from my iPhone), and asked for a $1000 deposit to place the order.  I asked for a signed contract to be emailed to me before any credit card information would be shared, which he reluctantly did.  Contract in hand, I gave him my credit card details. 

Deal done. Miles driven to shop price: 0. Total time spent on phone: 3 hours over one morning.

I could’ve probably knocked off a few hundred dollars more by playing dealers off each other, but I wanted to compensate our local dealer for the great test driving experience we’d had.   It was painless, as I indicated on the survey I got from the dealer a few weeks later (they earn bonuses for excellent survey results).  I also emailed thanks and regrets to the other dealers who I'd worked with earlier that day.

Keep the deal simple: Pay cash and don't have a trade-in (our beloved Passat sold in less than 24 hours off Craigslist after I took delivery of the Subaru).  If you do finance, do the deal as if you’re paying cash and have no trade-in.  Once you agree on a price, then talk financing and/or trading in your old car.  That way, the dealer can’t play one number off the other. 

Ignore the last minute upsells when you go to pickup: When I went to pick up our new car, the dealer tried to upsell an extended warranty and a car service package.  Ignore the upsell and find yourself a reliable local mechanic to service your vehicle. 

Optional: When closing the deal and before I picked up, I insisted that the dealer not place any dealer stickers on the car.  It's my car, not a free mobile billboard for the dealer.

 

One link I found particularly helpful in doing my research: http://www.automatchconsulting.com/how-to-beat-the-sellers-market.html