Chapter 4: Where to Buy a Car

It's Gotta Be New

New cars are sold through dealers — but what kind of dealers? There are several types, each with its own personality and numerous sales techniques. Get to know the types, then decide which particular seller you're most comfortable with.

The Traditional Dealer

Traditional new-car dealers typically will be willing to haggle over the price of a car. They can be intimidating or extremely affable, but much of your perception of them probably will depend upon how comfortable you are with negotiations.

No-Hagglers

Many no-haggling dealerships cropped up in the 1990s to serve customers who prefer not to barter over price. But no-hagglers aren't new. The idea of selling cars at one — and only one — price was first presented by dealers who sold cars that were so sought after the dealers felt they shouldn't have to negotiate. If a buyer didn't like the price, the dealer could always find someone else who did.

The no-hagglers of the '90s are a little different, however. The one-price strategy still works best for dealers selling high-demand vehicles. But today's greater demand for customer service has added a new dimension to car sales. Customers want good service, plus the option not to haggle, while still getting a good price.

No-hagglers may offer a standard discount below the sticker price and hold the price steady for all customers. The set price allows the dealership to make a decent profit, yet it reassures the customer that he or she isn't being taken for a ride. This allows a friendly relationship between the customer and the salesperson.

One no-haggling salesperson, who called himself a "service technician," said, "I steer you into the correct vehicle. I'm not just trying to sell you anything. I want you to find the `right seat.'"

Be aware that no-hagglers may negotiate loans and may push extended warranties, rustproofing, credit life insurance, service contracts and other back-end extras, as discussed in the next chapter.

Auto Brokers

If you want to shop price without doing the work yourself, you can hire an auto broker. Brokers may or may not get you the best deal. They are found through some credit unions, banks, discount clubs and auto clubs such as the American Automobile Association. They may work with a handful of dealers or a single dealer. Sometimes they make their money by splitting the manufacturer's holdback with a dealer. A holdback is a set amount of money the manufacturer refunds to the dealer when a car is sold.

To find out if a broker is reputable, talk to car buyers who have used the service. And call the Better Business Bureau to see if the broker has a good rating.

Selecting Used-Car Sellers

More than half of the people who buy used cars buy them from private individuals — and half of those individuals are friends or family members. Other used cars are usually found through ads in the classified section of the newspaper, on bulletin boards, or you may see a used car with a home-made sign in the window.

Curbstoners

Watch out for pros posing as private car sellers. These curbstoners run classified ads, just like private sellers, but often ask to meet at a parking lot so you won't know where they live. They take advantage of buyers by overcharging for cars, often by rolling back odometers to increase the car's apparent value or by selling previously wrecked and rebuilt cars. Call the past owners who appear on the title to double-check the mileage. And be wary if a seller's phone number appears more than once in the classifieds. That's the sign of a pro.

Dealers, used-car lots, rental car agencies, auto brokers and auctions all sell used cars, too. There are major pros and cons to buying from each.

Private Sales

Pros: If you know the seller, chances are good you'll be able to get honest answers about how the car was driven and kept up. The owner will usually sell the car for less than its retail value because he or she has no overhead and only small advertising fees.

Cons: If you don't know the seller, you might not get honest answers about how the car was driven and maintained. Ask for repair receipts. And be sure to check that the seller is indeed the owner. If not, the seller could be what's called a "curbstoner" — a used-car sales pro who pretends to be a private seller and more likely than not specializes in fleecing his or her customers. You can run into title and licensing problems when you buy from anyone other than the owner. If you suspect the private seller is a salesperson posing as the car's owner, ask to see the title of the car. If the name on the title is different from the seller's, walk away.

Phone Inquiries

Ask private sellers the following questions over the phone to save you unnecessary trips to look at cars. Honest sellers will tell the truth about these, however, a curbstoner will lie about them, so be wary.

1. What condition is the car in?

2. Why are you selling it?

3. Are you the original owner?

4. How long have you owned the car?

5. Have you maintained the car according to the manufacturer's schedule in the owner's manual? How often has the oil been changed?

6. Do you have repair receipts I can look at? Where did you usually take the car for service?

7. Where did you buy the car?

8. Do you sell many cars?

9. Where did you generally drive the car — in the city, on long trips?

10. What is the mileage?

11. Has the car ever been painted? If so, why?

12. Has the car ever been recalled? If so, may I see verification that the problem was corrected?

13. Would you object if I took the car to my mechanic for inspection?

14. Is there anything I'd need to do to put the car in tip-top condition?

15. Are there any liens on the car? (If so, the owner still owes money on the car and you could get stuck paying what's owed if you buy the car.)

New-Car Dealers

Pros: They usually have a wide selection of higher-priced used-car models because they only keep the best cars. The others go to auctions or used-car lots. Because they have service facilities, they're more likely to have made repairs on the car than have other types of sellers.

Cons: Used cars from new-car dealerships may be more expensive.

Questions to Ask a Dealer About a Used Car

1. Where did you get the car?

2. What condition is the car in?

3. Does it have any major defects?

4. Has the car ever been in an accident?

5. Has the car ever been painted?

6. What is the mileage? What steps have you taken to confirm the accuracy of the odometer reading?

7. Has the car ever been recalled? If so, may I see verification that the problem was corrected?

8. Has the car ever been bought back by the manufacturer as a lemon?

9. What repairs did you have done to it?

10. Would you object if I took the car to my mechanic for inspection?

Used-Car Lots

Pros: Besides offering a broad selection, used car lots often offer a number of less expensive, older model vehicles.

Cons: Used-car dealers often buy the castoff cars from new dealers. They also buy from auctions or purchase used cars from lease fleets, taxi companies or police departments.

Used-car lots often don't have a service department to repair cars; instead, these operations tend to sell cars "as is." Even so, under Minnesota law, a used-car dealer must give you a warranty unless the car is excluded from the law for such reasons as having more than 75,000 miles on it or costing less than $3,000. See Chapter 8 for a detailed description of the law.

The dealer may also offer to sell you a service contract to cover the cost of repairs. This serves as insurance against having to pay through the nose for repairs. But read any service contract carefully so you know the deductible amount and exactly which repairs are covered.

Rental Car Agencies

Pros: Some people believe rental cars are a good deal because they're usually rented by business people for short trips to the airport or meetings, as well as for vacationers' longer, but less wearing road trips. Rental cars usually are serviced regularly, with records of their maintenance history.

Cons: You don't have any way of knowing who has driven the car before you buy it. You don't know if the car was abused by one or more of the drivers who previously rented it. That's why the Minnesota Automobile Dealers Association members have adopted a standard to disclose when cars for sale are previous rentals. That way, you can make up your own mind about whether you want to purchase a previous rental vehicle. Rental cars may also cost slightly more than cars purchased from private sellers.

Auctions

Pros: You can get a good deal if you really know cars and are an avid fixer-upper.

Cons: Mostly professionals bid at auctions, so auctions can be intimidating for the average car buyer. Some auctions won't admit private parties.

What Should I Know About Air Bag Safety?

More than 70 million air bags are installed in vehicles on the roads today. Air bags have saved an estimated 1,700 lives as of the end of 1996. There has been an 11 percent reduction in driver fatalities in passenger cars equipped with air bags, and a 30 percent decrease in fatal injuries in head-on collisions in vehicles equipped with air bags. So what's the problem?

An air bag activates at a force of over 200 miles per hour, posing a risk to children and small adults. Nineteen adults have been killed by the driver-side air bag, and 31 children have been killed by the passenger side air bag (most of the adults and children were unrestrained and nine of the children were in rear-facing infant car seats).

What is being done about this problem? The federal government through its rule-making procedures and automobile manufacturers with the use of new technology are working to address this problem.

The bottom line:

• All passengers must wear seat belts.

• Rear-facing infant seats should never be placed in the front seat.

• Children under age 12 should never sit in the front seat.

• All other passengers in the front seat should place the seat as far back as possible to limit injuries from air bags.

For more information, contact the National Highway Traffic Safety Administration at 1-800-424-9393 or visit its Web site at http://www.nhtsa.dot.gov/.
Chapter 5: Negotiate From the Driver's Seat
Most Americans would probably rather have a root canal than haggle over the price of a car. In survey after survey, two-thirds of car buyers report that they "hate" the negotiation process. But be consoled if you're negotiating the price for a car: The margin for error isn't all that great. Most dealers mark up cars as little as 10 percent for a low-end model and up to 25 percent for a luxury car. That's nothing compared with markups of more than 100 percent for clothing and jewelry.

The time when some people lose the negotiating game is at the "back-end" of the deal. They assume the vital negotiations are over when they leave the lot or showroom floor to iron out financing details. All those options, including service contracts, rustproofing, paint sealants, credit life insurance and credit disability insurance, may be the real moneymakers for the dealer.