I thought this would be a good post to follow the one this morning on why I buy new cars.
Last month (at the end of October), I finally bought a new vehicle: a 2011 Toyota Highlander.
I detailed the cars I had been looking at and why on my post titled What to Do When Your Car Reaches 100,000 Miles (see that post if you want/need specifics.) In the end, the Highlander was the best option for me from an overall standpoint, so I pulled the trigger and got one. Here are the bullet point highlights of my purchase as well as a few interesting tidbits I discovered along the way:
- I used the same basic method I laid out in Buying a Car Using the Web (research, test drive, develop bids by email, drive the price down, buy.) Doing this I ended up $470 below invoice and $347 better than the second-best price option (and several hundred below Edmunds' True Market Value -- the price everyone else is paying -- though it was such a new vehicle it's hard to tell if they had an accurate number).
- For those of you who like the specifics, I got the base Highlander model (no moon roof -- I needed the height) with the tech package, cold weather package, and mud flaps. I also got roof rails thrown in for free at the end of the deal. I had negotiated the price without the roof rails, but the salesman found out later that they were very difficult to remove. So he let me keep then without charging me any extra.
- Before it was all over, I test drove several cars (including some FMF readers had suggested but that I didn't originally include in my list of potential purchases.) Ultimately, most of them didn't fit me (I'm tall) and the Highlander did. So I went that route.
- Ultimately I ended up getting quotes from ten different dealerships. I got three dealers from using Consumer Reports' "Build a Car" option (which didn't really help me get any better of a price) and two from Edmunds (one of which was my #4 bidder). I also dealt with a local dealer (where I took a test drive). The others were mostly nearby dealerships.
- Here's a tip for you if you want to get bids from many dealers but don't want to search the web for all the dealers in your area: go to the manufacturer's website. Toyota.com gave me a list of the top 50 (I could have had more) dealers closest to my house. They helped me a lot in locating dealers to ask for bids.
- I ultimately bought from a dealership about 45 minutes from my house -- the third-closest to me physically. It won't be the place I go for service, but since most of my service is non-dealer anyway, that didn't matter much to me. BTW, this was the one dealership that actually had the car I wanted. All the rest would have had to secure it for me from somewhere else.
- The dealers started high on pricing (not too far off from sticker price) and then got lower as I told them they weren't doing as well as their competitors (I did not share specific numbers from one dealer with another). One by one they eventually dropped by the wayside until there were only two left. I asked them for their "best offers" one last time. One came down a good bit, the other didn't, and my decision was made.
- My local dealer was second-best in pricing and I probably would have gone with them if the sales person had been less snooty. But she was a bit put off by the whole pricing competition, let me know it, and was rather rude on a couple of occasions. So I felt like giving her any business wasn't worth it (by the way, I was always polite when asking for a "better price".)
- During one test drive, a car salesperson told me she needed to sell 12 cars a month to keep her job -- 20 a month (one per day) to do "ok" financially. On a later visit, she told me she saw, on average, one customer per day (because they had so many sales people.) So she had to convert approximately 100% of her leads. That's a brutal business!!!
- Another dealer told me that the automobile business model is built on the service department covering all overhead for the entire dealership. Then the dealer's profits are obtained by new car sales. Interesting!
- I went to the Honda dealer one night wearing gym shorts and a t-shirt (yes, I can be a slob sometimes, but I don't care that much.) I was looking over one vehicle when a sales person said, "That's $37,000." The way he said it, he meant, "You can't afford that." I smiled since I could have easily afforded that car (though I ended up spending considerably less than $37k.)
- The dealer I bought from said that I had gotten a "rock bottom price" and that I was "the most organized buyer he'd ever dealt with." Don't know if either of these were true, but they are likely closer to reality than not. ;-)
- At the final purchase, I asked if I could pay for the car with a credit card (we debated this issue here a few years ago, remember?) They said they had a policy on credit cards and I could only charge $2,000 of the car on it. So I did, netting an extra $40 in cash back rewards.
- My car insurance turned out to be about $150 per year more expensive than what I was paying on the old car. Not a bad deal IMO -- I thought it would have been higher.
That's it for the new car buying process. Here's what happened as I tried to sell my used car:
- I had asked two dealers to submit offers for my car as a trade in, which they both did (I took the car to them and had them inspect it). They both also later increased their offers as part of the bidding process. My wife cleaned out the car before I had it appraised and one dealer commented that it looked like I had already had the car detailed. ;-)
- I had a friend interested in the car and we negotiated a price that saved him some money versus private-sale prices (based on Edmunds' estimates) and earned me more than what the dealer was going to give me for a trade in (by several hundred dollars). It was a win-win for both of us.
- As you can imagine, he wanted the car inspected (I would too if I was buying used) and he selected a dealership to do the work. The mechanic found $3,000 worth of repairs that "needed" to be made. (If you ever have your car serviced, you know how they always suggest things that "need" to be done to your car -- imagine that on steroids.) A few days later, I gave the list to a friend of mine that's pretty good with cars (he wasn't available during the selling process) and he said that these repairs were probably not needed (except for the timing belt which was part of the regular car maintenance cycle), otherwise I would have seen signs of the problems they mentioned in my garage and/or the place where I park at work -- and I had no signs of any issues.
- That said, the buyer wasn't interested in the car any longer and I couldn't blame him -- I probably wouldn't have been interested either after that report.
- I could have tried to sell the car myself. I had already purchased my new car, but the dealer gave me 10 days to sell the car on my own or I could sell it back to him at the price he offered. But there were several reasons this wasn't going to work for me:
- We were leaving for vacation in a few days.
- I didn't really know whether or not the car had problems and I didn't want to sell it to a person if it did. Dealers can fix those sorts of things well below "retail" cost, so I didn't have a problem selling to them. Besides, they had looked it over and said it was ok -- and they should know since they also sold Subarus, the model I traded in.
- It would have required time, effort, and expense to sell the car, and I didn't think it was worth it (see point #5).
- The car was not legally drivable since it had no plate on it (the plate was transferred to my new car).
- I had an offer from the dealer that wasn't too far below what I could hope to get for the car in a "good" scenario.
Given all these, I decided to sell it to the dealer.
So that's it. I have a new Toyota Highlander and am rid of my Subaru Forester (which I loved, BTW.) Now my kids fit better into the car (as does their stuff) and I should (hopefully) be looking forward to several years of mostly repair-free driving.