Common Car Buying Myths & Misconceptions:
Fact vs. Fiction
Here at AutoHeroes we know firsthand how confusing it can be for consumers
to discriminate between fact and fiction when it comes to buying a new car.
Below we aim to shed some light on a few of the most common car buying myths
and offer practical advice on how to deal with them.
Car Buying Myth #1
I got the invoice price of the car I want off the Internet so I am sure
to get a better price from the dealer.
Knowing as much as you can about the car that you want to buy is the
first trick to getting the best price on a car, but having that information
doesn't necessarily mean you can just walk into a dealership and demand
to pay invoice, because the consumer doesn't dictate prices in the automotive
world. Dealerships and the Internet don't set prices either.
So, what does dictate automobile pricing? The answer is supply and demand.
Let's take a look at two scenarios. First, you want to buy a car that
has a sticker price of $30,000 and you know the invoice is $26,500. However,
there are 4 people on a waiting list for the car you want. Is the dealership
going to offer you a discount? The answer is no. Why should the dealer
offer a discount on a car that they know they could sell for sticker price?
Another scenario: you want to buy the same car with the same sticker and
invoice prices, but there is an abundance of vehicles on the dealer's
lot. Now you have the ability to bargain, because dealerships need to
move cars that are not selling, even at very slim profits. So, when researching
prices for cars online or in the paper, try to get an idea for how "in
demand" your desired automobile is.
Car Buying Myth #2
All extended warranties and road hazard packages are scams offered by
the dealership just to make more money.
There's some truth here; most packages offered by the dealership are
sold at inflated prices. Let's look at them one by one...
Extended Warranties
An extended warranty is sometimes a great idea, especially if you are
buying a used car. However, the extended warranties offered through the
dealership are usually overpriced. To combat their prices, find out what
warranties they offer (years / mileage) and compare them with other warranty
companies (warrantydirect.com
is a good one). Then you can either get the warranty through the 3rd party,
or use their lower price as a bargaining chip to get the dealer to drop
their price.
Road Hazard Insurance
Road hazard insurance (or wheel and tire insurance) looks like a rip-off,
but depending on the car, it can be a bargain. During the winter here
in New England we get potholes in our roads that can swallow a car's wheel
whole. Let's say you are driving a pickup truck with big tires and you
hit that pothole. You probably won't hurt your tire or rim. However, let's
say you are driving a sports car equipped with 17" wheels and high
performance tires, and you hit the same pothole. It is very likely that
you are going to blow your tire and damage your rim. Those tires can cost
as much as $300.00, but that is nothing compared to the rim which could
cost as much as $700.00 from the dealership. So if you live in an area
with potholes or other road hazards that can eat your wheels, take a look
at what replacing a tire and wheel on your new car would cost, and then
decide if the price on road hazard insurance is worth it.
Interior Protection
Another option that looks like a rip-off is interior protection and treatments.
What you get is a chemical treatment applied to the leather or fabric
in your car to prevent stains. You could apply a can of Scotchguard yourself
for a fraction of what the dealer will charge, but the manufacturer of
that aerosol spray is not going to replace your interior if it does get
stained. Most dealers' protection packages include a guarantee against
stains. This is a great deal for families because if the stain prevention
treatment doesn't work, you get a new interior. However, remember to read
the fine print and make sure that the replacement part of the package
isn't too restrictive. If you are buying a minivan to haul around the
kids, it's only a matter of time before someone spills an ice cream or
a soda.
Car Buying Myth #3
Financing through the dealer is always more expensive that getting outside
financing.
Financing though the dealer can be more expensive than financing your
car through a 3rd party, but it doesn't have to be. If you are going to
finance your next car, check out what 3rd party rates are available. Check
out what finance rates your credit union or bank offers. Also check out
online lenders like aaa.com
and dcu.com to see what
rates they have. Figure out what the lowest financing rate available is,
and that's your bargaining chip.
When you are ready to finance your car through the dealer, ask them what
the best rate they can offer you on your loan is, but do NOT tell them
about your bargaining chip... yet. There are two things that can happen:
The dealer may offer you a rate that is LOWER than your bargaining chip
rate. In this case, take the deal since you can get the lowest rate through
the dealer. However, if the dealer is offering you a rate that is HIGHER
than your bargaining chip, simply tell them "I can finance through
(insert name of 3rd party lender here) for (inset your bargaining chip
rate), can you beat that rate?" If they match it or beat it, then
you have a choice of financing with the dealer or with the 3rd party.
However, if the dealer doesn't budge, you can finance the car through
the 3rd party and get the better rate.
Car Buying Myth # 4
The best pricing on cars is always at the end of the month.
Ninety percent of the time buying a car at the end of the month can give
the consumer more bargaining power when negotiating the price of a car.
However, there are other times when prices can drop. Starting in January,
dealerships in colder climates can have very slow months if the weather
is bad. The average person does not want to walk around outside in 10
degree weather or after a raging snowstorm. Bad weather hurts dealership
sales (except for SUV's which are popular in the winter) so if you are
planning on buying, go in at the end or January and see if the dealer
is desperate to move some volume.
Depending on the manufacturer, model years change sometime in the summer
or fall. If a dealership has too many 2006 models when July rolls around
and they know that the 2007's are showing up in August, they must move
those 2006 models. End of model year sales can provide great deals, but
be wary of dealer advertisements that try to get you into the showroom.
Inventory at the end of a model year can be slim, so you might not find
the vehicle you want in the color you like. If you plan on buying at the
end of the model year, you must be flexible on what color and options
you want on your vehicle.
The last opportunity to save during the calendar year comes during the
holidays and right up until December 31st. Dealerships can do very slow
business in December when most of the public is concerned with gifts,
holiday parties and travel. At the end of December dealerships will discount
vehicles on their lots to try and move a few more cars before the new
year. Sometimes waiting to buy a car until the very last minute can pay
off.
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