Why Your Car Shopping Skills are Awful - Unhaggle

Posted by | September 02, 2015 | Shopping, Tips | No Comments

Car shopping skills, you think you got ‘em, but they aren’t something you’re born with. Buying a new car can be a stressful process – sort of like taking an exam or giving a presentation. If you are not prepared you are going to end up making mistakes and feeling silly, if not stupid.

Failure to prepare will result in a poor purchase, overspending and misinformed decision-making. You might blame the dealer for you ineptitude, but it’s not the dealer’s fault you signed the papers.

Admit it, your car shopping skills are awful. You know you want that sleek new ride, but can you confidently say that you know the exact amount you are going to pay before you drive off the lot? No? Here’s why:

You Choose Your Car at a Dealership

Traipsing into the dealership with no research backing you up is a sure-fire way to spend more than you anticipated. First off, it’s sensory overload; which car do you even pick? Then once you’ve identified the one that suits your liking, and the dealer offers you a test drive, you negotiate… but you are jumping without even knowing how high or low the bar is set.

There is the sticker price to help, but what about the warranties, service plans and add-on features? This is not simply picking soup or salad at a restaurant: each decision is worth approximately a thousand dollars. You might leave thinking you’ve got an awesome deal, but the thing is, you were just blinded by the thought of a new car, and the dealer had guided you along through one expensive decision to the next.

Never choose your car at the dealership. Come prepared. Know what you are going to get and why you are getting it.

You Don’t Research the Invoice Price

Do you know the difference between the manufacturer’s suggested retail price (MSRP) and the dealer’s invoice price? If there is a car you want, you should know both those numbers before you even head out to the dealership.

The MSRP aka the sticker price is not the amount the dealership bought the car for; it’s the price with the highest amount of markup a customer should pay. If a car has a sticker price of $30,000, you know you won’t pay more than that. However, if you are smart, you’d want to know the invoice price, which is what the dealership paid. Knowing both those numbers will give you a baseline to negotiate.

If that $30,000 car has a dealer’s invoice price of $25,000, you know the range to negotiate. The thing is, unlike the MSRP, the invoice price is not usually posted. You’ll need to do a bit of digging first.

You Don’t Account for the Dealer Margin

When negotiating, remember that car dealers have to eat too. If you are focused strictly on your own desire, the dealer has you beat. They know what you want and therefore they know which buttons to push. On the other hand, if you understand their objectives – to sell you a car with profit – then you can level the playing field.

Dealerships make money through front-end car sales and back-end sales such as warranties, administrative work and so on. Know what they are offering and the prices they charge. Then ask yourself if you can get those services and features somewhere else for less.

You Don’t Know About the Mandatory Dealer Fees (or What They Are)

“Wait? Extra fees?”

Don’t be too surprised if you’ve never heard of mandatory dealer fees; many car buyers before you were confused after looking at their charges to see additional fees too. Suddenly, your car shopping skills don’t seem so proficient, huh?

The key is for you to know what fees are mandatory and what fees are not. Here’s a tip: Question any documentation fees, shipping and handling fees or dealer prep fees. These types of fees may be cloaked under some other name and you should not fall prey to them. Dealerships that issue these fees are essentially getting you to pay for overhead material such as papers and pens, in addition to marketing materials that they actually get reimbursed for by manufacturers.

Review the documents in writing clearly before any purchase, make sure the dealer explains what each extra fee is for (and if any of them sound suspicious, ask another dealership or expert), compare the final price of the vehicle to that in other dealerships, and most importantly, take your time. Here’s a complete breakdown of dealer fees.

You Don’t Calculate the Drive Away Price in Advance

Once your new car leaves the dealership, it starts depreciating rapidly. In about a minute after you’ve driven it, it’ll be worth approximately 11 per cent less.

Ultimately, a car is an investment, and you should think of it as such. What separates good investors from mere gamblers? Research and a whole lot of foresight. As time passes, your vehicle’s value will drop. Don’t be surprised when you are selling your once-new car for a fraction of the price.

Depreciation has nothing to do with the car’s reliability or performance – it’s usually the result of external factors such as gas prices and vehicle popularity. You want to avoid the problem before it hits you hard, and that’s why understanding the future value of your car is so important initially. Another solution to counter depreciation will be to keep your car for as long as possible.

You Don’t Estimate Your Monthly Payments

If you are financing a vehicle there are many numbers to look at. You have your car loans in check, but you’ll also need to figure out fuel, maintenance, insurance and so on. Owning a car means keeping up with monthly payments, and you’d want to make sure they are as precise as possible so nothing catches you off guard.

Unhaggle offers a handy guide to help you calculate the monthly payments. Click here to check it out before making a purchase.

You Don’t Negotiate the Right Way (or At All)

When we think of negotiating, we often think of one-upping the opposition. When it comes to car shopping it’s not about beating anyone, it’s about coming to a fair agreement for both yourself and the car salespeople working.

The best way to go about negotiating isn’t to treat it like some staring contest, but to understand of the product and the people selling it. If you know the ins and outs of the car you want (price, features, etc.) and you’ve reached a reasonable price within your budget, below the MSRP, all you have to do is let the dealer know that you are confident and educated.

The price you’ve concluded on took time to reach and if you are polite, they’ll respect that. They might try to make counter-offers to test you, but don’t be fazed. Hold out, and if they don’t give in, respectfully decline and approach another dealership. If it’s fair for both parties, you’re negotiating the right way.

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About Unhaggle

Unhaggle is Canada's leading automotive pricing resource that helps thousands of consumers find great new car deals. Access a FREE invoice cost report to see all the latest car prices, incentives and rebates and join more than 300,000 happy customers who saved over $100,000,000 and 3,000,000 hours of free time when buying their new cars with Unhaggle!

About Elliot Chan

Elliot is a content writer at Unhaggle. Writing blog posts, reviews and anything else car related, he explores interesting and engaging automotive topics. If Elliot had a choice, he would be cruising down the street in a Cadillac CTS. But if you really want him to dream big, he would say that there is nothing better than living large in a Bentley Continental GT Convertible. He’s classy like that.

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