April 23--Aside from buying a home or a college education, buying a car can be the largest purchase made by a consumer. It makes sense to do your homework.
Consumer Reports does some of the work for you. The nonprofit consumer advocacy group, which accepts no advertising or corporate sponsorship, buys every car it tests, totaling $2.7 million on approximately 80 new vehicles per year. Consumer Reports, which has been testing cars for more than 75 years, mirrors the steps a buyer would take during the car shopping process, going so far as traveling several states away from its home state of Connecticut to buy a car from a dealer who would not recognize one of the 28 people who comprise the Autos coverage.
One frequent car buyer is Jon Linkov, deputy autos editor at Consumer Reports. The 42-year-old has amassed plenty of car-shopping knowledge, buying on average four to five new cars a year and 50 to 60 vehicles over his 13 years with CR.
The major difference between Linkov and other car shoppers is he pays cash, and he knows it'll be sold back to the market within a year or so. Here are Linkov's seven tips to optimize your car-buying experience.
1. Check credit and loan rates first.
Find out your credit rating (check out this article on CR on how to get it for free) then go to your local bank, credit union, even bankrate.com to get an idea what loan rates are and what you qualify for. Lower credit scores mean you'll pay more. "You'll get a worse rate at local or regional banks," Linkov advises. "Credit unions have lower costs because they don't take on risky people."
Nearly four of five new-vehicle buyers arranged their loan through dealers, Rick Popely wrote last year. Dealers are allowed to mark up interest rates on loans they arrange, so ask around and make sure you know what you're paying for. Popely suggests shopping for a loan first before shopping for a car.
2. Separate negotiating the loan from negotiating the car.
"Negotiate separately any finance terms from the vehicle price," he says. "You can give a dealer a number and they'll meet that number, but it might be for a seven-year loan and you'll be paying for that vehicle when it's run out of its warranty two times over."
When it comes to discussing the car, Linkov recommends that shoppers negotiate and you should never pay MSRP.
"There's always room between incentives, dealer holdbacks (money paid by some automakers to dealerships once a car is sold, typically 1 to 3 percent of MSRP), and the dealer wants to move the car," Linkov said. The longer a car sits on a dealer lot the worse it is for the dealership because they're paying interest and insurance on the car, Linkov says. "Dealers make their money on parts, service and finance and insurance division. They don't make a ton on MSRP."
3. Rethink add-ons.
Those little goodies offered at closing time that sound essential but don't add much value are called add-ons, and Linkov is skeptical of their value. "You don't need Scotch guarding on seats, you don't need undercarriage coating--cars are very durable these days--you don't need simonizing, just get some spray wax and coat it every 3 months."
The latest add-on is Vin-etch, where the dealer will etch your vehicle information number (VIN) on windows or windshields so if it's stolen and the VIN is scraped, it can still be identified as yours. The visibility and difficulty of replacing the windows is a deterrent to vehicle theft. "They'll charge $150-$200 when you can get a kit online and do it for $15," he says.
4. Consider service plans carefully.
The finance and insurance departments of some dealers may offer a service plan bundling together routine maintenance that might make sense for some cars but not others. If it's a Mercedes-Benz, which costs $100 for an oil change, Linkov says, and there's a service plan for $400 covering a year or two of oil changes, then it makes sense. Do the cost of ownership math, which many car shopping sites provide for free.
5. Be wary of extended warranties.
"What we say at CR is buy a reliable car with a proven reliability history and take that $1,300 [saved from an extended warranty] and put it in the bank," Linkov says. "You can always add an extended warranty on the car down the road.
"What you're doing with an extended warranty is hoping your car is unreliable and breaks down so you can get the money. It's much better to buy a reliable car in the first place."
6. Always feel free to walk.
"If you fall in love with a new car on the sales floor, it makes it hard to walk away. If you're not comfortable, comeback. If the deal is good, the deal will be good the next day or the day after. Any time they say the deal is only good today, walk away it may be a bad experience."
7. Avoid dire straits.
Don't wait until you need the car desperately to go shopping. "If your car is on its last legs, start researching now, don't wait 'til it dies on you in the middle of rush hour on Wacker," Linkov says. "You won't be negotiating from a place of power."
rduffer@tribpub.com
