Fair warning: 30 minute read on how to buy a car like a stylish person – knowing what you are doing in every situation

The entire car selling industry in North America is based on dishonesty throughout the sales process. From the initial offer to financing options, presentation to extended warranties you absolutely don’t need. Many car dealers will happily offer you a brand new vehicle that was actually flood damaged or a former rental car with relatively low mileage involved in a major accident, repaired without disclosure, hidden for a year and then presented to you as the best deal on the market. They don’t even blink knowing that your safety and the safety of your loved ones may be severely comprised if you drive that car.

An honest car dealer is practically an oxymoron. If you find a rare gem excluded from this category consider it the world’s eighth wonder. We were super lucky the last time.

The goal of this blogpost is to arm you against Sauron with knowledge of their silver-tongued yet shamelessly insidious sales strategies and despicable tactics so that you will minimize your disappointment leading to self-blame, guilt, and regret.

I’ll take you step by step through the entire process of car shopping – from the initial selection process to sealing the sweet deal on your next car. I’ll point out the pointless perks, pitfalls, and pressure moments. When you know about them in advance, you will easily recognize them and won’t fall for fake fees and useless warranties you would hardly ever find comforting to have.

You being in charge of the deal instead of the salesperson can get you blacklisted. Car dealers talk. They may try various tricks on you. When you ‘misbehave’ – meaning walk away from a bad deal at one dealership, the next sleazy salesman asks you if you have been at that dealership and tells you the car you were interested in at his dealership was ‘just’ sold but they will text you Monday, if the buyer doesn’t get approved for financing.

Both of you know that car was not sold at the time of your initial visit on Saturday. The dealer does text you on Monday like they said they would and that the car is available for you and asks when you will be coming to see it. If this sales strategy is supposed to create increased desirability and urgency while at the same time intensifying your appetite for the car, well, it fails miserably. It’s a trick.

Nevertheless, don’t get discouraged. There are plenty of cars in the city and if you are patient and armed with knowledge, you will drive what you want without being made a fool of and parting with your money to finance the dealer’s next getaway without realizing it.

Let’s dive in.

The entire car selling industry in North America is based on dishonesty throughout the sales process. From the initial offer to financing options, presentation to extended warranties you absolutely don’t need. Many car dealers will happily offer you a brand new vehicle that was actually flood damaged or a former rental car with relatively low mileage involved in a major accident, repaired without disclosure, hidden for a year and then presented to you as the best deal on the market. They don’t even blink knowing that your safety and the safety of your loved ones may be severely comprised if you drive that car.

An honest car dealer is practically an oxymoron. If you find a rare gem excluded from this category consider it the world’s eighth wonder. We were super lucky the last time.

The goal of this blogpost is to arm you against Sauron with knowledge of their silver-tongued yet shamelessly insidious sales strategies and despicable tactics so that you will minimize your disappointment leading to self-blame, guilt, and regret.

I’ll take you step by step through the entire process of car shopping – from the initial selection process to sealing the sweet deal on your next car. I’ll point out the pointless perks, pitfalls, and pressure moments. When you know about them in advance, you will easily recognize them and won’t fall for fake fees and useless warranties you would hardly ever find comforting to have.

You being in charge of the deal instead of the salesperson can get you blacklisted. Car dealers talk. They may try various tricks on you. When you ‘misbehave’ – meaning walk away from a bad deal at one dealership, the next sleazy salesman asks you if you have been at that dealership and tells you the car you were interested in at his dealership was ‘just’ sold but they will text you Monday, if the buyer doesn’t get approved for financing.

Both of you know that car was not sold at the time of your initial visit on Saturday. The dealer does text you on Monday like they said they would and that the car is available for you and asks when you will be coming to see it. If this sales strategy is supposed to create increased desirability and urgency while at the same time intensifying your appetite for the car, well, it fails miserably. It’s a trick.

Nevertheless, don’t get discouraged. There are plenty of cars in the city and if you are patient and armed with knowledge, you will drive what you want without being made a fool of and parting with your money to finance the dealer’s next getaway without realizing it.

Let’s dive in.

This process is the longest one of them all. Many people skip it and go straight to the dealership, being played like a fiddle only to cry over high service bills months or years later. While it may be tempting to skip this step in reading as well and go straight to the STEP 4 Dos and Don’ts of Car Shopping, I have one comment: the less specific you are with your choices, the more chance you give the car dealers to do as they please with you and sell you a car they need to sell, not the one you want to drive.

Now that we are clear on this, it’s time to do the due diligence – patiently.

First of all, establish the main purpose of the car. Is it a need or a want? In case of the latter, the best time to buy a car is when you don’t need one. If you are not in a hurry, you will have enough time to do thorough research. As a result, you will select a car without compromising your criteria and overpaying.

About two years ago, I suggested to my husband that we start car shopping again. You know, to get an idea of what the next perfect family vehicle for us would be once his full size fully loaded sedan with high mileage desires to retire.

“We don’t need three cars,” was his reply.

Sure, but given how his (up until recently highly reliable and super low maintenance) car was getting older, demonstrating disagreement with various noisy protests every now and then, I wanted to have the advantage of not feeling pressure when the time came and his car would either become a money pit (when the repair costs would outweigh the actual value of the car) or simply stop working.

Lo and behold, his car did die in summer of 2022. Ironically, it was peak time when used cars cost nearly the same as the new ones or more. The new ones were unavailable due to shortage of microchips. Microchips were unavailable due to COVID lockdowns or god knows what. Long story short, we found ourselves in a situation where we needed a car and had limited time to acquire one because the inventory of new cars was just as limited. This was the situation I wanted to avoid.

Should my darling listened to me for once, we would have bought a new car two years ago, had a worry-free two years due to the bumper to bumper warranty on a new vehicle, and traded it in two years later for possibly an even higher price than we would have bought it for. We could have upgraded and drive a fancier car now without losing a dime. Alas…

Even if you are not in dire need of a car, the following set of steps, tips, examples, and lessons can help you avoid unnecessary expenses and come out of every negotiation as a winner.

Determine your two or three main criteria for your next car.

Are you looking for something reliable that you will drive until eternity or do you want to drive an A-to-B sort of a car to bridge a short time period until you find what you really want?
Do you want a family car that fulfills the most recent safety criteria or is the noisy speedy ride of your dreams?

I don’t know about you but our criteria have always been:

1. Safety

2. Reliability

3. Practicality

4. Aesthetic appeal

5. Features

This step alone could take 20 000 pages of text but I will boil it down to a few bullet points.

Safety in our terms means a sedan for the following four reasons:

– sits low on the road so there is lower risk of rolling in case of an accident or a super strong wind unlike SUVs or vans

– has 10 airbags, which is more than any type of vehicle typically has even in 2022

– has a very strong frame that remains almost untouched during standard crash tests

– the rear seats are at least one meter in front of the back bumper in case of being hit from the back, which no other type of car offers (unless you have no passengers sitting in the rear seats of any other car)

This is the phase when we watch countless crash test videos on YouTube to narrow down our initial choices. We spend days, sometimes weeks researching how a car behaves in a crash from the front, side, and rear. We inspect every impact, we observe how the figures in the tested cars move upon impacts and evaluate the safety of any given vehicle.

We listen to additional comments from the automobile safety engineers who know more about car safety than anybody else. In addition, we read forums where real surviving drivers share their unfortunate experiences. This is how we learned that a moonroof or even worse a full moonroof is, technically, a safety hazard in case of a free falling rock (we go to the mountains often), rolling off the road, strong hail, or any sort of accident. Not to mention that it’s a potential money pit. What’s worse, sometimes they don’t have the particular glass to replace your moonroof so you have to wait weeks to have it replaced. No, thank you.

Honestly, who needs to look up through the moonroof when you drive? Nobody. Who needs to look up through the moonroof when you are in a rear passenger seat? To see what? The clouds? If so, for how long?

To sum up, not worth the extra expense, not to mention the safety hazard.

We always compare several cars we are interested in to choose the ones with the highest safety score. We also watch crash tests of cars we are not interested in to feel superior about how smart we are for not choosing the safety hazard ones. Joking aside, this is the biggest step for us and we spend the most time on this one in the pre-selection process before we actually start searching for a car and visiting dealerships or private sellers.

Why waste time shopping for an unsafe vehicle, if safety is what matters the most to us?

Your primary criteria may be different so feel free to take this step later. However, skipping altogether might be a hazard for you and your loved ones or those you transport in your car.

The simpler (and stronger) the engine, the longer it lasts. This is when we research the cars with the highest mileage. For many recent years Toyota, Honda, some GMs, stronger Chevrolets, some bigger Fords, (surprisingly) Hyundai at certain instances, and (still) Mercedes have proven that their engineers still know what they are doing and build strong engines that last.

Also, listening to knowledgeable and experienced car mechanics helps us with further narrowing down our choices. We don’t want to drive the car that likes to be in a car shop more than on the road.

This phase also takes weeks of research. To save you time, I highly recommend subscribing to Scotty Kilmer on YouTube. He has over 5 million subscribers. His videos are interwoven with humour and unoverlookable hand gesturing as much as with Scotty’s expert advice. Watching him will help you get perspective or even solve your current car problem. All his videos combined have over a billion views but judge his credibility for yourself.

There are a few car YouTubers whose advice is pure fear mongering for clicks. Always read the discussions below the videos to see how accurately the YouTuber describes the vehicles you are interested in.

In this phase you have to take into consideration the primary use of your car (city driving vs. long distances), the climate you live in (humidity, temperature range), the road conditions etc. Choose the car that best fits your daily needs.

As much as I might like, say, Alpha Romeo, a car built in Italy for scenic drives in Tuscany, wouldn’t last long in -35°C or -40°C on Canadian prairies, where we live. Besides, I neither want nor need a car that I cannot drive for 6 months of any given year.

Well, I am no car expert. Even though I drive carefully and gently, I need a car that, ideally, has a long manufacturer warranty and requires just an oil change every 5000 km and filling in the required liquids – gas (which sounds funny in this context), wiper fluid, antifreeze in the winter (, which is always too long here in Canada), and a few other things that my husband checks regularly because I have no clue.

If the longevity of a car is as important to you as it is to us, you already know that it’s a win in either case – keeping the car for as long as it drives or reselling it for a decent price at any time due to its high value. The depreciation factor is the lowest in the most reliable cars. Think Toyota or Honda.

Once again, the low maintenance factor plays a role in this criterion alongside the accessibility and affordability of parts when potentially needed.

Even though I would love to drive a mid or full size Mercedes due to the safety and reliability of the brand, the practicality factor lowers the overall value for us. Not only is the service for Mercedes much more expensive (oil change for Toyota vs. Mercedes is 1:3 or 1:4), the parts imported from Germany may be inaccessible at times. Therefore, my car could be in the shop longer than expected and I would end up paying more than intended because Mercedes has special Mercedes tools, specially trained Mercedes mechanics, who charge special Mercedes prices for their special Mercedes services. (I’ll cross that bridge once I sell at least 200,000 copies of one of my books or 100,000 memberships to my online Summer School of Style or other digital products I created, say Phenomenal Photoshoot.)

The real difference is the overall maintenance expense in the long run. I am talking about the first and, mostly, the second 100 000 km when you need to replace the timing belt (or a timing chain) to prevent the future engine failure. Paying that for a Mercedes and a Toyota is a matter of thousands of dollars difference. I would much rather spend this kind of money on the university tuition for our girls, investing in mentorship for my business, traveling around Europe or exploring Alaska.

Notwithstanding, we still research how many of the cars that we like get stolen each year because the hassle around a stolen vehicle is anything but practical. In our selection process, we do all we can to eliminate this matter. Here you just need to Google ‘most stolen cars in [your province / state]’ and you will find facts. We live in Alberta. That’s one of the three prairie provinces in Canada. Luckily for us, the most stolen vehicles in Alberta, according to various websites that keep track of such things, are trucks – naturally. We don’t like trucks, we don’t drive trucks, so we don’t worry as much about our future vehicle being stolen in 1, 2, 3. 

Ahhh, now the real fun starts. Due to the primary safety criteria, most car brands are out of the question in the first round. Adding reliability and practicality factors reduces our choices even further. We typically end up with two or three car brands that offer safe, reliable, and relatively common vehicles with potentially smooth service.

This time around, we are open to two categories of cars:

1. Brand new Toyota Camry (or Corolla)

2. Gently used

A) Toyota Avalon 2018 – 2022 (they won’t make these anymore – they stopped producing them in 2022 after 28 years)

B) gently used Chevrolet Impala 2015 – 2019 (they don’t make these anymore either – 2019 was the last year of production of this full size fully loaded sedan that drives super smoothly and sits on the road like it is glued to it, metaphorically speaking)

C) gently used Chevrolet Malibu (2015 and a bit older because all Malibus after 2015 have a 1.5 L engine. 2015 was the last year with the 2.5 L engine).

D) gently used Honda Accord because it’s Honda.

E) gently used Lexus because they are the most reliable cars on the market. While it can still be on the higher price end for used cars, Lexus undeniably offers a lot of mileage, which is the opposite of, say a used BMW.

Most older full sized ergo higher rate cars have an appealing design, interesting colours, and they come with many useful features. Unless I’d specifically dislike a colour, which has never happened at this level, I’d take anything. While I do have colour preferences, I focus on the connection of the colour with the type and style of the vehicle. There are so many basic white cars in Canada. Too many! And black. And grey. And charcoal. And, in a better case, silver. Neutral colours only. Boring!

Not only that! These basic neutral colours are the easiest to spray on a repaired car, which means hiding repairs after previous damages that can compromise the powertrain or worse, the airbags.

I prefer intriguing complex pearl colours like aquamarine blue, strawberry red, midnight blue, blue violet, aubergine/eggplant, espresso, almond cream, or deep green.

Let’s talk about the last criteria.

Here I couldn’t care less. As long as the car drives, has at least 2.5 l engine, an automatic transmission, seats, doors and a windshield, I am fine. That’s all I need.

Younger people often focus on features. Sometimes they are helpful but oftentimes they are plain annoying, especially the talking and the beeping ones.

The features that I prefer are mostly comfort related – 6 way power adjustable heated seats and at least 17″ alloy wheels to softer ride on the broken city roads. You see, we have the 90 °C temperature span where I live. The warmest I remember was +39°C (, which is hot as hell in Fahrenheit). The coldest I’ve ever lived through was -50°C (, which is bona fide North Pole in Fahrenheit). Every summer the city repairs the holy roads that were heavily tested in the prior winter only to be tested again after the summer ends. The smaller the wheels the bumpier the ride. No, thank you.

I also have my reasons for requiring heated seats – I am a woman living in a very cold climate. A Siberia of sorts in winter. The North Pole on occasion. Even if I start my car remotely – twice in the winter – to defrost the engine (even if plugged-in), the transmission, and the steering mechanism, the seats are always cold. Unless I park in a heated garage.

I distinctly remember one particular day in winter a few years ago when I was getting ready to pick up the girls from school. I started the car, put about 15 layers of clothing on, my polar expedition mitts, sat in the car and – after making peace with the fact that I am going to drive a freezer – I attempted to drive it. The steering wheel was so cold that I couldn’t hold it properly. I couldn’t hold it at all! I had never been so cold in a car in my entire life.

Canada is fun!

Anyway, features like premium audio, ‘drive in your own lane, woman!’, and other intelligent features don’t do much for me.
They may be undeniably useful in a crisis or for young drivers. I still believe that’s it’s better to sleep enough beforehand, pay attention, and drive the damn car rather than letting it tell you what to do.

Once we tested a fully loaded super sport car with every electronic feature known to man in 2022 and my teenage (!) daughter uttered: “I don’t enjoy driving it. It’s like a video game.” Well, maybe that’s why the guy was selling it. Or because of the 1.5 l turbo engine, which is way too small for a 1.5 ton car. Wouldn’t you agree?

My husband, who has been driving for over 4 decades and has repaired a car or two in his life, shook his head at the combination, which completely underpowers the vehicles: “Why do they install a vacuum cleaner engine in a tank?”

I find it quite unfortunate that leather seats typically come with the stupid moonroof in the same upgraded package. I will take leather seats over the risky feature I don’t need and don’t want any day. However, here I will have to compromise.

You have probably noticed that up until this point I haven’t even mentioned price. I was talking about money but not the price limit for a car. The reason is simple. Everything has its advantages and disadvantages. We always look at the car we intend to buy as a whole – in a span of 10 – 20 years.

Let me show you what I mean. In the last 20 years, we have had four cars – 3 used and one new. We drove the first 3 to the ground until they were no longer drivable and therefore sellable or they were on the verge of becoming a money pit.

My husband calculated the price we paid for each car plus the repair costs, and divided it by the years we’ve been driving each of them.

The first one cost us $686 annually, the second car required one substantial repair so it was more – $1084 annually, the third was a super bargain – very low price for the mileage – only $670.

The 4th car – the only car we bought new has been serving us excellently for a few years so far. The annual cost has been $4000 per year so far. If we have it for another 5 years without a major repair, it will be $2333 per year. For another 10 it will be $1647.

This is why we focus on reliability and longevity of the cars. We buy them to drive them, not to sell them for a profit (or at a loss) and get a new one.

If you are interested in why we were buying inexpensive used cars and not something fancier I’ll tell you that that’s a very good question.

We didn’t come to Canada with much and we were careful not to spend it on unnecessary things. Besides, we don’t drive that much. Why would we spend 60 thousand on a car mostly sitting on a driveway when we average less than 7000 km per year. What a silly thing to do!

When the girls were in elementary school, the average speed I managed to have on the dashboard was 27 km/h. That’s what driving mostly to and from school through other school zones does.

(We have a 30 km/h speed limit around school zones,

40 km/h in neighbourhoods and

50 km/h in the city unless posted otherwise.)

Did I need a 5.7 liter and 1000 cylinder engine for it? No, I didn’t. That’s your answer.

From a financial perspective, a family car is never an asset but a liability, unless it makes you money. Therefore, we never intended to spend more than necessary while enjoying maximum comfort and safety – full sized cars, strong frames, leather seats, airbags, and strong engines. Who cares that the cars weren’t new? We have been on countless trips and have seen some of the most beautiful places instead. A car is not an investment, the experiences are.

Alright, let’s talk about numbers.

A new Toyota Camry would cost us about $35 000. It will come with a 5 year guarantee on the most expensive elements of the car – the engine and the transmission. Nowadays cars are built to run smoothly for at least the first three to five years, which is the duration of the manufacturer warranty. The cars improve every year so the probability of unexpected repairs in the first years is relatively low. Especially for those in the mid to high price bracket. It’s safe to say that with a brand new car you will be worry free for at least 5 years. Well, almost.

Keep in mind that the manufacturer guarantee depreciates.

In the fifth year the guarantee covers only 20% of whatever will need to be repaired, not a 100%. That happens only in the first year.

Then 80% in the second year,

60% in the third year,

40% in the fourth year and

20% in the fifth year.

You’ve driven the car for a few years so why would the manufacturer cover 100% of your transmission?

Another matter to consider is the sad fact that the second you leave the dealership, your new car is no longer new. The moment a new car leaves the dealership, its price instantly drops by 10-15%. For some cars even more. This lasts for about a month. Then the value decreases. In the first year, a new car depreciates by 20%.

In the first five years, a new car loses a bit less than 10% of its value. After 5 years, your car is worth less than 50% of the price you paid for it when it was new.

For a $35,000 Toyota Camry, it means $15,000 dollars after only five years. However, not quite. Toyota has become a highly reputable brand with just as high of a market penetration. Remember when we were discussing the reliability factor and researched the highest mileage cars on the North American continent (in STEP 2 – Reliability criteria)? Toyota ranks so high that if we ever decide to sell it at any point, the value would still be relatively high. And so would the price. I still wouldn’t call it an investment but it does come close. Perhaps, ‘investment in safe and reliable transportation’ will do.

Ok, so our future cars have been selected. Now let the hunt commence!

You will love this one. I based this step mostly on what I have learned from Ray and Zach Shefska (dad and his son, respectively). I have to give them credit and highly praise their YouTube channel Your Advocate Alliance (YAA stands for Your Advocate Alliance) due to its brilliance filled with every imaginable piece of advice on buying a car. I have watched countless videos they have been posting since 2019. I extracted the most important points for you here.

By following brilliant tips you will shop

– more confidently because you’ll be armed with knowledge

– much faster because your knowledge will save your time negotiating the best (ergo the lowest) price for your vehicle and you will save thousands of dollars at the end of the deal.

I strongly encourage you to watch their videos that are the most relevant to your car shopping needs. Here is their link: https://www.youtube.com/c/YourAdvocateAllianceYAA/about

We will start with the dos.

1. Know your financial limitations

2. Have a few specific cars in mind

3. Always do your financing HW first before you set foot into a dealership

4. Always ask for the OTD (out the door) price, which includes everything – the tax, the unavoidable non-negotiable mandatory government fees etc.

5. Negotiate everything that is taxable.

6. Ask them: Is this the best interest rate (APR – annual percentage rate) you can give me? Sometimes they advertise lower rate than they give you. Screenshot or print out their advertisement beforehand and show it to them.

7. Get a quote for your trade-in from other sources (vroom, carvana) beforehand, print it out or screenshot it and have it read only when you finalize the price. (More on the trade-in later.)

1. Don’t show excitement for a specific car but be polite.

2. Never tell them how you will pay (cash vs. financing) before it’s time to negotiate.

3. Never tell them how much you can pay/have paid (previously) monthly.

4. Never disclose that you have a trade-in until you have the final price for your new car settled.

5. Don’t finance a car for longer than 5 years.

6. Don’t buy used cars from a dealer, unless you have absolutely no access to cash to buy from a private owner.

Almost 90% of buyers finance their cars, so there is no shame in doing the same thing.

Banks don’t loan for longer than 8 years. The typical loan is 3-5 years. Math doesn’t care about your desires or sentiments. Be reasonable but don’t limit yourself too strictly. Sometimes a bit of flexibility can give you a better car, better payment options or lower APR (annual percentage rate).

Remember the golden rule of car shopping: “Everything that’s taxable is negotiable.” Ray Shefska from www.joinyaa.com

In the process of buying the car, you will do two sorts of negotiations:

A. One with the car dealer, with whom you will set the out the door price for your car.

B. One with the finance manager, who may / will pressure you into extended warranties, accessories, and high interest rates.

1. The selling price of the car – with the car dealer – because the dealership can go as low as to the MSRP (Manufacturer’s Suggested Retail Price) and still make money.

2. The interest rate (annual percentage rate APR) – with the finance manager

3. The extended warranty price, accessories, parts, service (with the finance manager as well), should you be interested in any of it. More about extended warranties later.

The dealership makes money in every single one of these points

– the front end (car price)

and

– the back end (extended warranties, accessories, service, parts & financing). If you don’t negotiate and spend those extra few thousand dollars, the dealer will go to Hawaii with his family and you won’t.

Buy rate (the interest rate) is what the lender (bank or credit union) will charge the dealership.
Sell rate is what the dealership will charge you.

The lower the difference between the buy rate and the sell rate the better for you. It can range anywhere between a few hundred to a few thousand dollars overall. Your goal is to make the difference as small as humanly possible because this is what you will end up paying in 3-5 years.

Always ask: “Is your quote the buy rate?”

Alternatively, ask them if their quote is a buy rate or sell rate. Ideally, you will ask with a straight face: “May I see the buy rate for my approval?”

Any dealer will be surprised, if not downright shocked but definitely extremely displeased, that you know the term. He may refuse to disclose this information to you because, in truth, he doesn’t have to tell you. It’s not a transparent business dealing but you cannot demand it. What you can do is thank them for their help, turn around and walk away.

The goal of the finance manager at this stage is simple: product penetration = pressuring you to buy the entire plan of the extended warranty, which you absolutely don’t need.

The extended warranty is typically presented in packages. The finance manager will probably start with the highest package that includes everything – the gap coverage, the key loss coverage, the wheel protection, the kitchen sink and a peacock feather.

The finance manager will deflect (from any of your questions) & redirect (to the payment) without giving the actual numbers when negotiating the adds-on a.k.a. extended warranties.

Gap insurance protects you in the event of your vehicle being totaled or stolen. Lease/loan coverage typically has limitations on how much it will payout, such as 25% over the determined ACV (actual cash value) of your vehicle. Both are minus your deductible. Gap insurance will pay the difference between the amount you still owe on a vehicle and actual cash value (ACV) paid out by your car insurance company.

Gap coverage Qs to ask the finance manager:
1. Does it cover 150%?
2. Does it pay my deductibles for me?

They will be constantly offering you a variety of additional upsells a.k.a. extended warranty, the majority of which you don’t need. Any extended warranty is just extra money that will go to the dealer from your pocket.

Your goal in the process of negotiation with the finance manager is twofold:

1A. To lower your interest rate

1B. To exclude any sort of extended warranties you don’t need from your final bill.

2A. To sign the purchase order / bill of sale at a price acceptable for you.

2B. To shop feeling empowered and leave the dealership knowing you were in charge.

The extended warranties for new vehicles differ from those for used vehicle.

Extended warranties, especially for used vehicles, are presented to create a (false!) need for them and to confuse you so that you cave and let the f manager include them in your total bill. If you do cave, you will end up paying a couple hundred dollars more monthly and a few thousand annually – for no reason.

Let them talk and then ask them to specify every single offer in the package. Naturally, they will try to use their tactics to ‘deflect & redirect’, which means that they will do their best to avoid answering any of your questions and turn your focus on the things that they want you to buy.

Ask them to itemize each part of the package – what exactly it includes, for how long, for how much. The finance manager will most likely be very reluctant to provide this information. The more specific your questions, the more they sweat because they understand that they have an educated and well prepared customer in front of them. They will try answering questions you didn’t ask instead.

Repeat your specific questions until their answer is satisfactory. Whatever the price they initially throw at you, it will be way over the top. If you are interested in any part of the package, ask for a better price. They can go as low as 50% of the original proposed price and still make money off you. Keep that in mind during the negotiating process.

Remember, it’s your money and you can always walk out. Politely ask them to stop pressuring you. Most reasonable managers will understand your signal. The arrogant ones will lose the deal. Their loss. Always ask the finance manager: “What’s my base payment?”

Base payment is the total sum of money you will pay for the car including extended warranties (if applicable), taxes, government fees etc.

Never mention that you are going to finance through outside financing until you have settled on the out the door price and have it in writing.

With CUDL (Credit Union Direct Lending), the dealer can verify the loan pre-approval and electronically submit the paperwork to your credit union in seconds.

Note: Not all dealerships work directly with CUDL. Check it beforehand.

Steps:

1. Go to credit union to get your pre-approval for a car loan

2. Find the car

3. Fill in all the paperwork in the finance office in a dealership

OR:

1. Apply for a car loan at your bank (online – 3 min) or in person.

1a. You may want to ask for a large loan discount.

1b. Ask what interest rate (APR – annual percentage rate) they offer you. If they don’t give it to you, your pre-approval is technically worthless.  It’s not a loan commitment.

1c. Never mention to a dealer that you intend to finance your car with the outside lender before you negotiate the OTD (out the door) price with the car dealer and before you talk to the finance manager afterwards.

2. Once you get approved at your bank or the credit union, pick up your check from the bank the next day.

3. Ask your bank about direct deposit option (from your bank to the dealership), which is the equivalent to CUDL.

4. Go to the dealership and tell them that you got this check from your bank or credit union but never before it’s time to negotiate the financing with the finance manager. Tell them that you are pre-approved and ask them to beat that APR.

5. The dealership may offer you a better deal after they run your credit check, to which you have to give them your approval.

5a. This is why you need to know the interest your bank offered you (1b.) so that you can compare it with the dealership offer.

6. If the dealership does give you a better offer, still negotiate. Get unnecessary fees off their offer (if you haven’t negotiated them already – extended warranties) and ask them to throw in floor mats or services or whatever you might find valuable.

Sometimes dealers have the leverage to negotiate better terms with the same credit union or bank that approved your car loan. It can be 1% or even 2% lower. If that’s the case, save yourself some money and go with the dealership offer. At the end of the day, you’ll have to make the payments to someone. Let it be the one who gave you a better deal.

In your negotiations, be pleasant but firm. Technically, the finance manager should be displeased with your knowledge and preparedness. That’s a good sign. If the negotiations do not go your way, be ready to thank them politely, wish them well and leave. Walking out of a bad deal is a blessing.

What you need to know: the dealership is still making money off your loan, no matter how exciting their offer may seem.

If the bank offers you, say 3.99% APR (Annual Percentage Rate) and the dealership gives you 5.99% APR and you go with the dealership’s offer, whatever the overall difference in payments would be, goes to the dealer directly from your pocket.

Some dealerships will tell you than they don’t accept any outside financing. While technically, a dealership is not required to accept an outside financing, it’s not the best strategy for their business.

At any rate, if you are not ready to walk away and you like the vehicle they offer, you can accept their financing and before/as soon as you get their first statement, refinance it. You don’t have to keep the loan for more than 30, 60 or 90 days, even if the finance manager at the dealership tells you that you do.

Another possible scenario is that the dealer will tell you that you can get such and such (say $5000 rebate) only if you finance through them – the dealership. I’d say, take the offer and refinance it asap through the credit union. It is a double financing situation but it saves you money.

Rebates that require captive lending (say, $5000 rebate on your car only if you finance through them) are listed on the manufacturer’s website. Look for it for the particular model of the vehicle you are interested in before you talk to the dealer.

Timing is key. Ideally, you can wait for the opportune moment to purchase your dream chariot for an incredible price. Well, there are three windows of opportunity:

1. Christmas week – the entire time period right after Christmas and New Year’s Eve. This is the best time to get the best deal. Dealerships want to up their numbers before the year ends so they may offer you unimaginable deals and discounts. It can be pretty crowded in a dealership at this time so be prepared. 

2. January and February. Most people don’t buy anything in the first few weeks or first couple of months of the year. While you may not get as great deals as you would have at the end of December, you can still negotiate as their sales numbers will be rather low anyway. 

3. At the end of a month. Even if you have to buy a car throughout the year, the end of the month can give you options you may not have in the first week of a month. Monthly sales goals need to be met so use your chance when you can.

First

1. Get the OTD (out the door) price on the car you intend to buy that includes all fees.

2. Ask for the

a) dealer’s discount of the vehicle

b) manufacturer’s rebate if applicable.

Ask about all the fees. Itemize them. Divide them between the non-negotiable non-taxable government fees and the other fees that are taxable ergo negotiable!

3. Ask for MSRP (Manufacturer’s Suggested Retail Price)

After you agree on the price

4. Offer them your trade-in vehicle for sale

Here you must realize that as you want the cheapest price possible for your new car, the dealership wants the cheapest price possible for your used car.

4a. Have a written offer from other places where you have previously offered your car (vroom, Autotrader, other dealerships, etc.) Share the best offer you got. The dealership will, naturally, try to give you a lower offer so after they do, show them what others offer

Or

4b. Tell them that while you understand that they want to buy your trade-in for as low of a price as possible, you are willing to go a couple of hundreds lower than your best offer outside the dealership but not thousands. If that is the case, you will sell your trade-in car elsewhere.

Note: you may get tax credit for your trade-in because you had already paid tax on it when you first bought it. Not all states offer it. In Canada, you will only pay the tax of the price difference between the new car and your trade-in.

You may get a better deal outside of the dealership even after the tax credit so decide what’s best for you.

Once you are sure about your choice of vehicle, you can put a fully refundable deposit (typically $1000) and then go and pick up your check from the outside lender (credit union or your bank), if you don’t have it already.

If you don’t leave a deposit, the dealership may think that you won’t come back and sell the car to someone else while you are away picking up your check.

Sometimes the dealership itself will refuse to take a deposit, thinking that you may not be serious about buying the car. In such case, esp. if you got a desired out the door price for your desired car, call your contact at the credit union or your bank from the dealership, show them or have the credit union or your bank send the dealership all relevant documents – signed contract between you and the bank, and sort the payment out, so that the dealership sees that you are ready to buy and are indeed just going to pick up the check. They bluff all the time so they expect you to do the same.

Now you know everything you should know about buying a car without being taken advantage of. No need to perform the Haka or let them walk all over you. All it takes is to know your enemy and play their game until you win.

Read this article again, make notes, get your approval, and arm yourself with arguments that will make you a winner in every negotiation process.

Never be afraid to bring your notes with you and use them while discussing your payments. Also, there is no shame in using or making notes while negotiating, esp. with the finance manager. Just don’t show them directly to anyone. They are your notes, ergo your advantage because you did your homework and came prepared.

I would love to hear from you. Let me know if the article helped, which part the most and how much you saved.