What are the mechanics of buying a car? (First timer here)

[Anonymous]

DH and I have an old hand-me-down car from a parent and are at the point when we need to buy a new car. We will either pay cash or get a loan through our credit union, so not interested in financing through the dealership.

My question is, what I are the mechanics of buying a new car? I have noticed that many organizations seem to partner with a company called TrueCar to help you compare prices, but that those are just estimates and a dealer will change the price when you show up. So do I basically need to go for a few dealers and negotiate the best possible price? I’m really loathing that process.

TIA for any info you can provide.

[Anonymous]

Only if saving a few dollars is important to you. I haggle with dealers but it is painful. Market is still tight so the dealers may not want to negotiate with you too much (still seller's market). Do you know exactly which model/car you want??

[Anonymous]

I’m sure many others will chime in, but:

1. The single thing you are negotiating is the out the door, on the road, taxes, tags, and everything else, absolutely final, bottom line number. None of the component parts matter because they are subject to manipulation.

2. If you plan to finance, check your bank, credit union, etc., and find out what rate they will give you. Sometimes the dealers have special financing, but the rates usually are higher and they typically use an interest calculation method that results in a higher total of all payments at the end. Dealers make money on the financing.

3. I used to use Edmunds for price estimates. Other people like True Car or Kelley’s. I’d suggest you look at them all.

4. Know your acceptable final price before you go in or contact anyone.

[Anonymous]

Something to consider is the fact dealers use financing as a significant source of revenue. They typically get paid a fee by the finance company (orcbank) and therefore might have slightly more wiggle room on price or special financing incentives such as cash-back, which is negotiated as a final out-the-door line item (before financing) in the form of a term sheet or contract initialized by purchaser and sales manager. You can then go to your credit union and refinance within a few days. Find this many times. You can also show your cards with the finance manager and ask them to match your credit union rate.

The other pitfall of the finance department is aftermarket of manufacturer “warranties” and “products” being marketed at significant markup. Extended warranties. Maintenance plans. Wheel and tire insurance. Interior protection. Exterior “protective” coatings. The finance department will try to roll them into the loan principal. In many cases, the price of an extended warranty — if you choose to go in that direction — can be negotiated. Be mindful that the new car warranty already covers the first 36 months of ownership (and longer for engine and drivetrain). Caveat emptor.

Much of the purchasing process can be accomplished online through email communications with a dedicated sales advisor who handles internet sales. Send an email to several dealers detailing your purchase requirements and requesting the OTD pricing, inclusive of taxes, tags, title and any dealership add-on fees. Dealer processing fees are capped by law in Maryland.

[Anonymous]

Get your financing in place before you decide on a car. Don't deal with the dealer's financing. Go in knowing what you will be paying and how much you can afford.

Negotiate everything online. No need to go in until you finalize a deal. We've purchased 3 cars in the past few years and never seen a person until we go in and pick up the car. So much easier and efficient this way.