# New Car Buying Strategy



## Tom Dl (Feb 15, 2011)

When I bought my first car, I bought one of those tell-all books by an industry insider that explained the dance on buying cars. There are a bunch of issues, but on the basics of the negotiation, the main dealer strategy at the time was to determine what your main issue was, and quote you the best price on your trade-in, rate, sticker price, etc... then adjust the other items to come in at the same profit for the dealership. But times change, and in particular leasing is now a much larger part of the strategy, I am not even sure they have a strategy when it comes to selling cars to cash paying customers. Two cars back I was sitting in the office having bought a car, and they had a blackboard on the wall with all the deals for the next two weeks only one out of 20 + some, was a cash deal.


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## sprocket1200 (Aug 21, 2009)

best strategy is don't buy it new!
and always pay cash!!


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## Ponderling (Mar 1, 2013)

Yes, start saving for the next car as soon as present one is bought, and pay in full in cash. 

For GTA, consider Haldimand Motors. A bit out of the way. No dicker. I am not emotionally equipped to effectively dicker with an experienced car salesman, particularly an hour away from home.

No salesman to bug you while looking at the cars. Ask for a bunch of keys, and come back after you have looked the vehicles over. 

I have bought last two vehicles there. Excellent web site. No time wasted when you get there. You give them catalog numbers, they copy your d/l and off you go test drive and look them over.

Good selection - usually 500 cars and 100 light trucks in stock, most a few years old off lease.

Close your deal, they disclose what they have to do to bring them in line -tires, brakes, etc. They call you in 5-10 days to pick up your car.


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## Danny (Oct 17, 2012)

The last few new cars i bought i got a quote through automobile protection assoc. http://apa.ca/ If you know what vehicle you are interested in you can get a quote from them and then bring it to a dealership and show them and ask them to match it. Both times they did..No haggling nice and easy... the quote you get is all broke down with what the dealer pays for the vehicle any facory incentives are put in. Brakes down that the dealership will make about 300 profit on the deal..


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## My Own Advisor (Sep 24, 2012)

I actually enjoy negotiating for a car. I love haggling. If I'm not comfortable with the price, their (dealers) loss.


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## rikk (May 28, 2012)

My Own Advisor said:


> I actually enjoy negotiating for a car. I love haggling. If I'm not comfortable with the price, their (dealers) loss.


Klingons don't negotiate ... :smile-new: ... I figure out the vehicle I want (could take a few months), buy used, check the price across the net, take the vehicle for a ride, demand something e.g. new tires including spare ... and yes, I don't finance  Anyone remember the movie "Fargo" ??? Last vehicle I'm just signing the papers and the sales manager with whom I'm doing the final papers brings up the "undercoating" thing ... I'm practically rolling on the floor. I ask have you seen Fargo, no, he hasn't seen Fargo (1996) ... I suggest he see it. And if anyone's buying a car and hasn't, you should just for those scenes ... hilarious.


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## lonewolf (Jun 12, 2012)

Sprocket

Sometimes not often buying new is a better deal. In 2005 I bought a pontic sunfire new, the dealer was giving $ 6000 off my mom gave me some GM points she racked up on her credit card that she was not going to use. I ended up paying 10,800 for a new car that I was certain of the condition which was new.


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## Addy (Mar 12, 2010)

We have almost always bought used, but "new" used - as in a year or two old. Generally we get the vehicle for close to half what we would have paid new.

Although, when we do buy new, we ALWAYS go through a broker. If anyone is looking for a new ford and can get to the GTA I know where you will get the best price without haggle in case anyone is interested.


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## Cal (Jun 17, 2009)

I know it has been mentioned on here before, but the auto dealers pay for the cars insurance on the first of every month. So it makes them a little hungrier for the sale towards the end of the month.

I bought 1 new car, had it for about 10 months, until it was stolen and written off during a bank machine theft. I will probably never buy another new car. Have been driving the same used car I got after the theft for 11 years now.


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## Emma (May 18, 2013)

Addy said:


> We have almost always bought used, but "new" used - as in a year or two old. Generally we get the vehicle for close to half what we would have paid new.
> 
> Although, when we do buy new, we ALWAYS go through a broker. If anyone is looking for a new ford and can get to the GTA I know where you will get the best price without haggle in case anyone is interested.


Might be looking in the Fall so please give us the Broker's name.


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## Sustainable PF (Nov 5, 2010)

I highly recommend importing from the US. Do your homework on warranty validity once the vehicle crosses the border. Save 20%-30% easy. We got our Outback in Victor NY. 
The process may seem "long" but it really wasn't difficult to execute: http://sustainablepersonalfinance.com/new-car-import-diy-save-thousands/


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## m3s (Apr 3, 2010)

rikk said:


> Anyone remember the movie "Fargo" ??? Last vehicle I'm just signing the papers and the sales manager with whom I'm doing the final papers brings up the "undercoating" thing ... I'm practically rolling on the floor. I ask have you seen Fargo, no, he hasn't seen Fargo (1996) ... I suggest he see it. And if anyone's buying a car and hasn't, you should just for those scenes ... hilarious.


I started typing Fargo into youtube and Fargo undercoating came up as the first suggestion. Gotta love youtube






Edit: If you are foolish enough to buy a new car, check their math. I looked at a friend's statement after he bought a brand new car and they conveniently slipped insurance in there. Loan insurance is something all the banks like to slip in there quietly without people knowing. Heck I checked the math on my mortgage statement and even it was wrong. The amortization conveniently didn't match up with the % and principal.

The only time I would buy a new car is if I had spare cash available after all my higher priorities were covered... Even then I could probably find a nicer used one for a better deal


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## fraser (May 15, 2010)

My BIL and sister have purchased two cars in the US. A Volvo and a Mazda. They saved a great deal of money.
My understanding was that at one point some Toyota dealers were buying product in the US and bringing it north.


Just make sure that the warranties will be honoured in Canada. There is a website that list the cars that are very easy to bring into Canada, ie no modifications required other than a quick inspection certificate easily obtainable from Canadian Tire for about $40. They hit it just right...when CAD was 1.05 US.


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## b_foot (Dec 16, 2010)

Yes, sometimes buying new is cheaper than used. When I was shopping for CRV about 1.5 years ago, the price difference between a used (1-2 years old) and a new is negligible. 

I also enjoy negotiating the price. I did my research online and came up with a price I'm willing to pay and the trim/features. What I did when buying that CRV was writing down the price and the features I want on a piece of paper along with my number. I dropped the piece of paper to the sales agent telling him if he is interested in selling me at that price, call me. The sales agent told me that's a stretch, I thanked him and left. He called me about 5-10 minutes later when I was on my way home. I went back to the dealer and came out with a sales agreement at the price I wrote down on the piece of paper. My advice, do not attempt to move the price at all. If they wouldn't budge, leave and do more research. I ended up paying about $600 above invoice price. 





lonewolf said:


> Sprocket
> 
> Sometimes not often buying new is a better deal. In 2005 I bought a pontic sunfire new, the dealer was giving $ 6000 off my mom gave me some GM points she racked up on her credit card that she was not going to use. I ended up paying 10,800 for a new car that I was certain of the condition which was new.


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## sprocket1200 (Aug 21, 2009)

and now what is it worth and how well does it drive??

2002 bmw convertible here, paid less than $8,000. it'll dance and sing around that Gm product for years to come....!!


lonewolf said:


> Sprocket
> 
> Sometimes not often buying new is a better deal. In 2005 I bought a pontic sunfire new, the dealer was giving $ 6000 off my mom gave me some GM points she racked up on her credit card that she was not going to use. I ended up paying 10,800 for a new car that I was certain of the condition which was new.


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## Hawkdog (Oct 26, 2012)

sprocket1200 said:


> and now what is it worth and how well does it drive??
> 
> 2002 bmw convertible here, paid less than $8,000. it'll dance and sing around that Gm product for years to come....!!


we just traded in our our 4runner and bought a 2013 Rav4, love it, gets about third better fuel economy. paid cash on the difference.


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## Greenback (Mar 16, 2013)

Here is a useful pricing guide:
http://www.vmrcanada.com/canada_makes.htm


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## sprocket1200 (Aug 21, 2009)

Hawkdog said:


> we just traded in our our 4runner and bought a 2013 Rav4, love it, gets about third better fuel economy. paid cash on the difference.


The depreciation on the new car is costing way more than the fuel savings (let alone the sales taxes that were paid) and the new car is not nearly as safe!


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## sprocket1200 (Aug 21, 2009)

b_foot said:


> Yes, sometimes buying new is cheaper than used. When I was shopping for CRV about 1.5 years ago, the price difference between a used (1-2 years old) and a new is negligible.
> 
> I also enjoy negotiating the price. I did my research online and came up with a price I'm willing to pay and the trim/features. What I did when buying that CRV was writing down the price and the features I want on a piece of paper along with my number. I dropped the piece of paper to the sales agent telling him if he is interested in selling me at that price, call me. The sales agent told me that's a stretch, I thanked him and left. He called me about 5-10 minutes later when I was on my way home. I went back to the dealer and came out with a sales agreement at the price I wrote down on the piece of paper. My advice, do not attempt to move the price at all. If they wouldn't budge, leave and do more research. I ended up paying about $600 above invoice price.


1-2 years old is still new...


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## m3s (Apr 3, 2010)

MoneyGal posted a really interesting article in another thread.

It makes me want to go and just mess with a sleazy salesman. What confuses me about the article though is he mentions the "Caucasians making internet purchases" but then goes on to write extraneous pages of advice on how to to get a good deal "for both your and the salesmen" :rolleyes2: He quickly glossed over the fact that you can apparently just skip the salesmen all together. It was a really interesting "behind-the-scenes" read though. When I was younger and bored, sometimes we would try to convince young salesmen to let us demo new cars for fun. Just making up stories to mess with them. It's surprising how little they actually know about cars... it's all about pressure and money. I'll never buy a new car when you can buy a much better used one for half the price of an econobox, but I certainly won't buy a new one from a salesman. Interesting what he said about leasing.. I always figured they must be making off like bandits



MoneyGal said:


> OT but there's a long, great article on Edmunds.com about the process of buying and selling used cars - written by a guy who went undercover as a used car salesman in order to write it.
> 
> http://www.edmunds.com/car-buying/confessions-of-a-car-salesman.html



It reminds me a lot of the Arab carpet salesmen. Now these guys put the car salesmen to shame. You can't possibly avoid them so you might as well use them from time to time. Now my friend is a door-to-door salesmen and recently posted on FB that you're an *** if you waste their time, but I mean common I can either be outright rude or waste a bit of their time. So I often get some small talk and local help or free tea from the most persistent ones even making it clear I'm just looking. I have Arab friends so I know well the price of a carpet, so I always tell them their price is crazy and just leave. The thing is they are trying to make a week or month's salary on 1 carpet instead of selling more. Like car salesmen trying to make a day or week's in only one sale. When you walk away they always end up offering less and less. If I buy a carpet though I just go to the source and pay the girl who spent months making it, and actually knows about it.


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## fraser (May 15, 2010)

Our strategy now is to buy a low mileage four year old high end Toyota or Honda product. The trick is to get a clean one. Last time we had three that we were told were accident free...we ran the reports and found out otherwise. The last one that we purchased had 42K on the clock and was half the cost of the new model.


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## warrdogg (Feb 8, 2013)

I kept my last vehicle 12+ years before getting a new one last year. I have decided to buy a new vehicle in 11 years when I retire. I want to pay cash for it so I have started to put aside $50 every week in my ING account on top of the regular money I save for Retirement every month. Do you think HISA is the best place for this type of savings?


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## Sampson (Apr 3, 2009)

yes.


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## Andrew (May 22, 2009)

If you are buying a new car you can find out what the dealer's wholesale cost is through CarCostCanada.com. It costs $15 per vehicle I think, but well worth it. You'll know how much room the dealership has to negotiate with you.


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## jcgd (Oct 30, 2011)

There's also a guy on Red Flag Deals that will tell you the wholesale cost if you ask in his thread.


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## My Own Advisor (Sep 24, 2012)

We're on a 15-year cycle for new cars. Got 2.5 years to go and I can get a new ride.


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## jcgd (Oct 30, 2011)

Sorta on topic... when do you pay cash, when do you finance or when do you do a bit of both? Would there be a situation where you could get cheap financing (0.99%) and could invest the cash in GICs or something and arbitrage the difference, or are those low teaser rates really attainable? And are there any reasons you'd want to pay cash even if you could pay less interest than you could earn?


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## My Own Advisor (Sep 24, 2012)

Rightly or wrongly, we bought our newest car at 0%, hadn't had a new car in 12 years. Yes, we paid for a new car vs. a 1-2 year old vehicle but we wanted it.

I'm not sure I would pay cash for a car if I could get it for 0%, maybe put a sizable down payment on it though, like 50% someday. We're not in a financial position to put that kind of cash down on a car yet. Maybe when the mortgage is paid off.


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## Spudd (Oct 11, 2011)

I've heard that they increase the price you pay, if you take the cheap financing, vs. if you pay cash. I have no experience in this, though.


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## warrdogg (Feb 8, 2013)

When I bought my truck there was a price and incentive for cash buyers and there was a different price for financiers. I didn't have the all the cash so I placed a large down payment and paid it off in 1 year. I agree that if I had a 0% deal I wouldn't dump all my cash onto the vehicle unless there was a cheaper price for cash buyers.


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## Plugging Along (Jan 3, 2011)

We just bought a car last month, the offered free o.5% financing. We asked how much for cash, it was over a7% savings off the price. 

There is usually a catch.


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## MrMatt (Dec 21, 2011)

Plugging Along said:


> We just bought a car last month, the offered free o.5% financing. We asked how much for cash, it was over a7% savings off the price.
> 
> There is usually a catch.


FYI sometimes the way the incentives are structured they can't give you the 7% off cash price. However since the financing is typically done at a bank, they'll just go get the same 7% loan, and discount it to be the same as 0%. You can then go and pay it off, getting the lower cash price.


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## Maybe Later (Feb 19, 2011)

The 0% deals often are packaged with a cash discount. I went in to check on one a month ago after seeing all the 0% posters plastered all over the dealership. It was 0% on a term up to 84 months or $5000 cash discount on this particular vehicle which cost less than $50k. (10%+ discount)


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## jcgd (Oct 30, 2011)

So the free/cheap financing costs 5-10% of the purchase price. I new there had to be a catch.


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## Plugging Along (Jan 3, 2011)

MrMatt said:


> FYI sometimes the way the incentives are structured they can't give you the 7% off cash price. However since the financing is typically done at a bank, they'll just go get the same 7% loan, and discount it to be the same as 0%. You can then go and pay it off, getting the lower cash price.


I can't answer for any one. My experience is June was we negotiated a new car price, they gave us a number that was there 'lowest' but we could get the 0.5% financing at this price. We said, how about if we pay cash, they said here's that price then. It was about 7% difference. That seemed like a big % to me, but maybe it was because it was a cheap vehicle. I know last time we negotiated a cash price on our luxury vehicle it only worked out to just under 3%, almost the same dollar though.


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## Plugging Along (Jan 3, 2011)

jcgd said:


> So the free/cheap financing costs 5-10% of the purchase price. I new there had to be a catch.


we have found that the cash price was usually cheaper. We even have negotiated cash price on smaller purchases such as furniture (still got an invoice). We asked how much if I use my credit card, vs. straight cash. I would get up to 2% off. That must be their fees. Also, that only seemed to work on small independent places.


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## Cal (Jun 17, 2009)

Was just talking w a Hyundai sales manager......Will probably pay cash....when we do finally cave an buy a car, but they will let us put $3000 on a cc which we will probably do as well, just to get some travel points.

I am driving a 2002 Sebring, and am hoping to get through the winter with it. I don't really want to put any more $ into it at this point.


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## the-royal-mail (Dec 11, 2009)

Dealers have all the angles covered. There seems to be a misperception out there that you can easily approach any dealer with $30K in a suitcase and drive away with the car. It's not that simple. Many of them advertise a price, and then give you $1000 off that price if you finance. Also, once you finance you are subject to whatever bank they financed the loan for you & their rules. The last two cars I bought, had a rule that the loan would not be paid in full before 3 months after the start date of the loan. So I bought and financed the car, played the game and then cleared off the loan in large chunks over the 3 months that followed. No car payments after 3 months. 

This is one benefit to having cash on hand, gives you flexibility to do stuff like this.


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## andrewf (Mar 1, 2010)

Maybe Later said:


> The 0% deals often are packaged with a cash discount. I went in to check on one a month ago after seeing all the 0% posters plastered all over the dealership. It was 0% on a term up to 84 months or $5000 cash discount on this particular vehicle which cost less than $50k. (10%+ discount)


The stated interest rate is always bogus. You have to calculate the implied interest rate by equating the present value of the loan payment to the cash on delivery price (after rebates). You then determine whether that rate of interest is appealing to you as a risk-free after-tax return. For me, it worked out to about 3.5% return when I bought a few years ago, which was enough for me to pay cash.


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## GalacticPineapple (Feb 28, 2013)

Buying new is a waste of money imo. The best deals are good-quality cars that are 2-3 years old, have had one owner, no accidents, and under 50k.

If you choose to buy new, find the exact make/model/trim you want. Then go to a city large enough to have two dealerships that sell your brand. Go to dealership A and tell them that you are ready to buy a car with cash that day. Tell them you are also getting a quote at dealership B. Ask them their best price. Then go to dealership B and do the same thing.


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## Sampson (Apr 3, 2009)

Spudd said:


> I've heard that they increase the price you pay, if you take the cheap financing, vs. if you pay cash. I have no experience in this, though.


No.

They have incentive to enroll you in the financing, but you should first negotiate the price of the car, flat. Then discuss options/incentives for financing afterwards.

The dealership negotiates with you for the car itself, and the corporate head gets benefits from financing options - corporate offices often give incentives to dealerships to push one financing option, but the two things are separable.


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## fraser (May 15, 2010)

And at the very end comes the 'business manger' who will try to sell you everything that the others did not. Extended warranty packages or a rustproofing/paint coat offerings will be at the top of their list.

You can get the latter by going to a shop that does this for the dealership-at half the price.

When we bought our Camry 17 years ago, the business agent was very distressed that we did not buy the $1000. (or anything else) extended warranty.  300K KM later with no issues, I was glad that I declined.


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