New-car buying process (and selling old car)

We bought a Nissan Rogue on the last day of last month.

Or let me put it this way.

We bought a new 2012 Nissan Rogue SV AWD, with premium package (with added splash guards and rear bumper protector), on 31st August.

Details matter. So does research.

Since we knew that Brinda was on her way into the world, we made the decision to sell off one of our sedans and get a compact SUV, for the most obvious reason: space. And also for the less-obvious reason of switching to an AWD vehicle (both our cars were FWD). Living in Minnesota, having AWD on all vehicles should be the law!

We decided to part ways with my Mazda6, as –   a) Vivian’s Accord is a Honda and Honda’s are …well, just plain Honda. Reliable.   b) The Accord gives better miles per gallon   c) Vivian is more comfortable with the Accord

Since neither of us had owned a SUV before this, or had a particular preference, I looked to the internet to get all the information I could. I have a spreadsheet in which all compact SUVs, across brands, are compared for:  * Comparably equipped price  * mpg  * power/torque  * Any promotional APRs (the closer to zero, the better it is)

Honda CR-V, Hyundai Tuscon, Kia Sportage, Nissan Rogue, Toyota RAV4, Mitsubishi Outander,  Ford Escape and Subaru Forrester made it to my spreadsheet. The VW Tiguan did not, as it does not come in an AWD option. I have stopped considering GM as a viable option after they took government bailout, and declared bankruptcy, only to emerge from all this unscathed. Just the stockholders were left with their pants in their hands. I’m not going to distinguish Chrysler – even with Fiat taking over – with a comment.

In terms of the features, price, mpg, reviews – the CR-V was the clear winner and I was almost certain we’d end up with that. But we wanted to give all the vehicles a fair chance and armed with all these information, we started test driving these vehicles the last weekend in August. By the time Vivian finished her test drive of the Outlander (we went in order they were mentioned above), she knew the one she liked the best. The Rogue. Since this was going to be her ‘primary’ car, the Rogue is what we finalized on.

Now comes the part I enjoy. The actual pricing out of the car and the buying process!

The first step of the pricing-out process is already baked into the test drive stage.

1. For the test drive, go to the dealership from which there is a very little chance of your buying the car. You can know this by researching in your area, which dealerships offer ‘no worry buying experience’ or ‘one price dealership’ or such gimmicky catch-phrases. These places are the least likely to budge on the price. Go to one such rigid, high-faluting dealership and milk them.

2. After the test drives, once we finalized on the make/model/trim/package of the vehicle we wanted, I went and searched the inventories of all the other (except for the one I’d already been for the test drive) dealerships in my area. There are 5 more Nissan dealerships in a 30 mile radius. All of them had at least one vehicle which matched our specifications.

3. Then I sent out the following missive (or a slight variation) to each dealership, through their website.

Hi,

I am looking for a new 2012 Nissan Rogue AWD SV, with Premium Package.

I see you have 8 vehicles which match my criteria.

Edmunds says the Invoice price for this configuration is $25,144. I am also aware of the $500 Bonus Cash, the $500 NMAC Cash available from Nissan. I am also looking at the 0.9% 60 month financing from Nissan. I know I will qualify for this APR.

I will put down at least $10,000 as down payment. I’m looking to take possession by this weekend.

With all the above information taken into consideration, please give me your BEST price. Period. I will not negotiate with you on the price nor come back with another number. The price that you quote is the price that I will expect to pay you (plus TTL, which approximately comes to around $2000) if I buy from you.

So, to break it down:
I would expect the base price (A) and the TTL fee (B), with a total drive-off-the-lot price of (C = A+B).
I will put down $10,000. I will finance the rest (D=C-10,000) at 0.9% for 60 months, with monthly payments of E.

Please provide the numbers for A, B, C, D and E.

Just to clarify, I’m not looking at this exact vehicle that I requested the quote for, rather among all the vehicles that are in your current inventory or anticipated in near-future inventory.

Looking forward to your email response.

Carefully notice the following:

a. I did not provide my phone number. I only want e-mail communication. With e-mail communication, the facts and numbers are there in black and white in front of you. Also, the sales person has less opportunity to work his/her ‘charm’ on you, as with a telephonic conversation.

b. All rebate information and special financing offered by Nissan is documented in my mail. These information are readily available in the Nissan site (nissanusa.com) and the first dealership that I test drove the car, confirmed them as well.

c. Explicitly mentioned out is the fact that I was not going to play games with them, nor going to pit dealer against dealer. Neither was I willing to haggle with them over the price.

d. I just wanted 5 numbers.

e. My starting price point was the invoice price. Not the MSRP.

f. With all the above points, I wanted to convey that I was a serious buyer, looking to complete the transaction quickly.

3. Within 2 hours of my sending out these 5 mails, I had  responses, with all the 5 numbers I wanted, from 4 dealerships. The fifth one came in next day morning. With 6 quotes (5 through e-mail and the one from the test drive dealership), I was ready to hit the road. Literally.

4. As it would happen, the lowest quote (which was $200 less than the next best one; a whopping $2,500 less than the worst one!) was from a place just 5 mins drive from my work. The next day, I drove to this dealership closest to my work the first thing in the morning. The sales guy who had responded to my e-mail was not yet in, and I got hooked up with another guy. I had a printout of our electronic correspondence, and showed him. He skimmed over it, nodded and asked enthusiastically if I was ready to go out for a test drive. Now I was getting into my game.

5. When I contacted the dealerships through their website, I had to select a vehicle on which I was requesting a quote or wanted more information. On each site, I just selected a 2012 Nissan Rogue SV, with premium package, WITHOUT any other extra options or accessories. For this particular dealership I was actually eyeing another vehicle in their inventory, same 2012 Nissan Rogue SV, with premium package, but with couple of more options – rear bumper protector and splash guards – a $150 value. I suggested to this sales guy if we could take that other vehicle out for a drive instead of the one that I got the quote on. Of course, he said and out we went on a joy ride.

6. After coming back to his desk, I played my trump card. Calmly, looking directly into his yes, with a steady tone, my exact words were, “If you can give me the vehicle that we just test drove, at the price that was quoted in the e-mail, I will buy this car right now.” This guy looked at me, and quietly said, “Let me talk to my manager. I’ll be right back.” Five minutes later he comes back and says, “Yes, we can make that happen.” My car buying is done.

Take-aways from the experience.

1. Timing – time of the day, day of the month, month of the year – plays a crucial role in getting the best deal. Yes, dealerships have incentives on the total number of units sold in a month and will go (a little) out of their way to meet their numbers at the end of the month. Car makers usually have “holiday deals” around most major holidays. Labor Day, typically has more significance since the next year’s models are either on the lot or coming soon. Incentives abound to get the current year’s models out of the lot fast. Also, when I walked into the showroom early morning, I was the only customer in that dealership. The sales staff were focused and they had two very clear choices: start off their day on a real positive note, with an early sale; or not. I’m pretty sure if I had gone there an hour later, they would not have agreed to basically give me the added options for free.

2. Be firm in your tone – written, vocal and physical attitude, but mix that with courteousness. Develop your script before-hand and stick to it.

3. Research and get the facts! Truecar, Edmunds and KBB are all good places to know the MSRP, Invoice and actual selling price of the vehicle in your area. You’ll get to know how much rebates and incentives the car maker is offering (to all dealerships/customers) and you’ll get know if there something more the dealership is offering. Zero percent APRs ARE offered by car makers, or stay as close to zero as possible (0.9 is pretty close!). Compared to the lowest invoice prices that I could find on the internet, my base price (without TTL – taxes, title and licence – fees) was less than I could find anywhere, for the exact same model and options! 

4. Know exactly how much you are going to put as down payment. Know how much of the financed portion is going to cost you every month, for 60 months (or 36 or 48 or 72, or none at all if you pay cash!). Be aware of your credit score. You need not know the exact number, but you should know the range you fall in. [Check out your credit report, for absolutely free, once a year, from each of the 3 reporting agencies – TransUnion, Experian and Equifax – from AnnualCreditReport.com – this is the ONLY legitimate site that offers the free option]

5. Don’t get stuck up either emotionally, on a particular vehicle/dealership/sales-person, or the non-essentials, like the colour of the car. Be prepared to walk away.

Whew.

That was half the fun. Now to sell my Mazda6.

I had taken it to a Mazda dealership and got the 50,000 miles (though it was technically a few hundred miles less than 50K) check-up done on the car – a $185 value. With this piece of printed paper, detailing what all is right (everything) with the car and what needs repair (nothing), I went to the sales floor of the same dealership and asked for a quote if I sold them my car today. No trading in or anything. Outright selling to the dealership. They gave me one.

Going back home, I pulled up the KBB value of the car. Now KBB values of used cars comes in 2 broad different categories: What my current car is worth, and, What should I pay for a used car.

“What I should pay for a used car” basically is what a dealership will sell you my car for, after I’ve sold it to them. With a jack-up of a few thousand dollars. If they can make it a Certified Pre-Owned (Certified Pre-Owned, another scam, which is like a divorced person saying, “I was already married, you know I’m certified pre-banged”!), then raise a couple of thousands more.

Trade-in value and Private party seller are the 2 values you’ll get under “what my current car is worth”. Dealers will pay you the trade-in value, no matter if you’re trading in or not. Why I did not trade in my car for the new vehicle is this: then they have 2 numbers to play around with – the price of the new car and the worth of the old car. Private party sellers are the general population to whom you can directly sell the car.

The quote my Mazda dealership had given was a pretty good one. It was just a little below the “excellent” (out of excellent, very good, good and fair) trade-in value of the car suggested by KBB. But, I was looking for more. Close to the private party excellent value.

With this thought, I put out ads in Carsoup, Craigslist and Local files. In the ensuing days, I got calls from prospective buyers. In the meantime, I also took the car to a couple of other dealerships, just to get few more quotes. Those quotes were far below the initial quote from my local Mazda jig.  After a couple of showings to regular people (“private party”), I finalized on a deal which was $1,600 more than the best dealership offer.

There, this ends my longest blog post till date.

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Categories: Demystify, Economics, Life | 2 Comments

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2 thoughts on “New-car buying process (and selling old car)

  1. LOVE this post.

    Before we bought our newest car (a 2006 model, we drive our cars forever!) we researched cars for about 2 months. We also test drove from another dealer – I test drove without intent to buy that day (i.e. I even test drove without my husband) However, we moved dealers because the 1st dealer acted like the sale was in the bag and was indifferent toward me. Um, I was buying an Acura TL, I did expect some customer service out of the experience. So, we switched dealers. We also did not do a trade-in because you are correct — it just gives the dealer yet another price to confuse you with!

  2. Steve Barrera

    I definitely feel you over-analyze things. One doesn’t need to go through all the trouble you did just to secure a price you feel satisfied with. You could have gotten a better price using another type of approach. Usually I walk out with cars paying only $50 over what the dealer paid. The key is also know how to master the financing department. Lots to learn still, but the key is simplicity, not over-complexity just because you’re an engineer. Enjoy and remember to drive safely too.

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