Chapter 2: How to Buy a Car Online

• You can typically save more money than you would by haggling with slick commissioned salespeople
• Competing quotes. Enter a new car dealer with half a dozen decent quotes and they can't argue with your data
• Free services, you don't pay money except to the dealer when you buy your car
• You bypass commissioned salespeople, deal directly with an honest non commissioned fleet manager
• Without these quotes as a reference, I guarantee you'll pay too much at the dealer and lose thousands
• If you decide not to accept their price, their quotes are still useful to get you a better deal by using them in your "The Folder"
• If you are a weak negotiator, these services are the only method I would recommend for you to buy your car
• These sites list dealer invoice cost, MSRP, option pricing, rebates, incentives, reviews and photos

Don't worry about your private information and security
Don't worry about leaving your email and phone number, it's safe, they don't sell it to advertisers. They don't hound you about buying a car, they may email you or call once to give you a price, but that's it. These aren't greedy lot rats who hound you all week for a sale. If you don't like the price, they won't waste time on you. They need to get the deal done quickly with little effort.

Advantages of Online Auto Buying Services:

• Painless way to shop that can save you thousands, you're in and out, most deals are done in a half hour, they'll usually show you factory to dealer invoice
• You still get any rebates that are available, take your car to any dealer for manufacturer's warranty service
• These quoting services are free to you, and there is no obligation for you to buy at all
• The dealer can handle your trade in, or you can sell it yourself for more money
• The paperwork is ready when you get there, just sign and drive. Some dealers will even bring the car to your house
• Quotes on new cars usually range from $250 below invoice to $500 over invoice, right in your target zone
• You deal with no-commission fleet managers not sales people, so there's no tricks, no wasted extras

These services will cut your time spent on car shopping in half, because the deals are usually done in under an hour.

Warning about 0% APR loans from GM, Ford, Chrysler.
The 0% APR loans are available only to very few people with perfect credit, on car loans usually 12 to 36 months. Most of you planning 48 or 60 month loans cannot get 0%. Remember, the ads say "with approved credit". Also, you either get the 0% APR or the rebate, not both. Calculate which works out cheaper. Read Tips for getting good car loans for your backup plan.

All About Edmunds New Car Pricing

Edmunds is a useful car information site with car prices, reviews, holdback listed by manufacturer, and photos for most new and used cars. Many people erroneously spell it Edmonds car info, but it's really Edmunds Auto, with a "u". What makes Edmunds more useful than Kelley Blue Book is that just like Fighting Chance, it lists current factory to consumer rebates, as well as secret factory to dealer incentives (Edmunds calls it "marketing support" that car buyers don't know about. Even your salesman most likely does not know about it, but the sales manager does. If you are aware of a secret factory to dealer incentive on your car, you can negotiate a lower price on the car, and often times the dealers accept. This is why invoice price is NOT dealer cost. Edmunds also has a useful Town Hall feature, where you can post a car related question and it will be answered by either a moderator or other car buyers in the Town Hall. Keep in mind Edmunds is a free site, so often you have outdated information, or if your car is too new, it won't be listed yet. That's why we like Fighting Chance the best of all the car pricing sites. So we recommend you get the car pricing and rebates from these sites and come back here to CarBuyingTips.Com, and load those values into our Buyer's Offer Spreadsheet, found in our Free Download Section. Please don't email me asking why Edmunds has the wrong data or your car is not listed there, I don't know why. You get what you pay for. Go ask Edmunds why it's wrong.

Extended Warranties
Dealers will try to sell you an extended warranty, they make good profit on them. As with financing, you must shop for extended warranties before you buy a car to compare with the dealer's warranty pricing. I'll bet you every single time the online sites with better policies and longer coverage terms will have cheaper prices. For an extended warranty, try CARCHEX and Warranty Direct. Click on the following link to read my complete article on buying an Extended Warranty where I review both of them. You want to get an online warranty quote before you go to the dealer, so you'll have something to compare the dealer's extended warranty price with. Never show up at a dealer to buy a car without a free quote from an online warranty site.

Other Car Buying Methods

Auto Brokers:
Some brokers don't require a deposit, but pay your deposit by credit card so you can cancel if it's a scam. Deal only with a broker who accepts credit cards. I still think you can get a good deal on your own, if you're a shark. Brokers can get some cars for cost, then charge you $800 on top, usually a decent price. Their fee is built into the price, so you pay a check to the dealer, and the dealer pays the broker. If you are trading in, the broker is at the mercy of what wholesale auctions people will pay. Fleet managers sell to brokers at invoice because there's no hassle, it increases sales volume and bonus incentives, etc. The best way to find a broker is word of mouth from trusted friends.

ADVANTAGES: Usually a good price, sometimes you don't pay dealer prep & ad fees, car is delivered to your home.

DISADVANTAGES: Some are paid by dealers, some critics doubt you are getting a good deal. But often you ARE getting a good deal.

I recommend that every single car buyer try sites like Cars.com, Edmunds.com, CarWoo, MyRide.com and CarsDirect services first, you don't know who has the lowest price. If the car price is not within the 5% over dealer cost guidelines that you'll see in this article, then it's time to haggle. On cars with no backlog you should be able to get a price of slightly less than invoice price, to no more than $500 over invoice. I've advised many users to negotiate with the dealer to give up the holdback as well, and surprisingly, many of the dealers do.

GM Employees plan, Ford A-Plan, or any other car manufacturer plans.
The key to getting a good deal with these employee plans is to still do your homework and not to assume you'll be treated any different than a regular car dealer customer. Check the employee price on-line through your office, and compare it to the invoice price and MSRP before going to the dealership to make sure it is a good deal. The dealer will of course try to get you to take a high APR loan and lots of unnecessary extras. To the dealer, you're just another bum off the street who wants a discount.

How To Get Your Credit Report
If you are going car shopping, get your credit report instantly online right now so you'll have it, and apply for car loans online now so you'll know now whether you are qualified. DO NOT apply for a car loan unless you have your credit score in hand. You can get your credit report instantly online from Experian, TrueCredit or Equifax. Be sure to get your credit score with the credit report. If your credit score is below 550, don't bother applying for a car loan until you repair your credit first. Learn how to repair credit at our other site DebtWizards.com.

Your credit score will not drop if you run your own credit report
Many people mistakenly think their credit score will drop if they run their own credit report. Salespeople keep you in the dark about you own credit report so they can use your ignorance to charge you higher interest rates. You can verify this urban legend about your credit score at Experian, TrueCredit or Equifax.

Tips To Save You Money On Car Loans: You'll pay less interest financing through Up2Drive, with lower APR than banks & approval online in minutes. You can get new car loans, used car loans, they Fed Ex your check. You can apply today, and pay for your car tomorrow, it's that quick. Finance your car in advance and avoid dealer warranty and window etch loan scams.

Loan/Lease Calculators:
Read all about ALG Residual Values. You'll need this vital data to calculate your lease payments, and look up dealer cost for cars and trucks. Every person who leases use the same type of leasing software that the dealers use. Without it you're sailing the ocean of confusion, and they'll swallow you whole. I would not in a million years lease a car without using software first.

How To Price A Dealer's Demo Model with 6,000 Miles - Is it New or Used?
Nobody gets a good deal on a demo car. That's why I do not recommend buying dealer demo cars, and because no pricing data is available and you can't easily valuate it. There's a loaner car on the lot with 6000 miles which the sales manager drove for a few months and they are pushing you to buy it, spouting off about what a great deal it is. Why do they push it so hard? Due to the mileage, they can give you a slight discount to pacify you. One former salesman told me some demos are referred to as "roll-backs" that car buyers purchased but had to bring back when car financing fell through. They are regularly sold again near full price. The dealer makes extra profit on it twice. In most states there are no laws about labeling a car as new or used, except that once it has been titled, it's used. So dealers can legally claim their demo with 5000 to 10,000 miles is "New".

My formula is to assume the car is a year old, which it probably is close to that if it has 5000 miles. The problem is, there is a reason why it was a manager's special with 5000 miles. Was it wrecked? Used by employees? When you are about to buy a "manager's special" car with mileage, you should run an AutoCheck Vehicle History Report to see if there are any records of it being in a wreck, repossessed, sold at auction, odometer rolled back, etc. I just don't trust high mileage "new cars". You might find nothing, but spending a few dollars for the report is a lot cheaper than $6000 later on unseen damage. Car buyers have emailed me who found "new cars" they were about to buy with 5000 miles had been in a wreck and the dealer did not tell them. Also, the AutoCheck report tells you when the dealer received the car, a very important negotiating factor.

How do you determine what the selling price should be? That's the problem, no one knows. Here's my logical valuation method. A car drops $3k in value the first minute that it's used, ask any insurance agent. Then take off $0.15 per mile just like they would do to you on a lease. So here's 2 methods I came up with to price a demo car:

Demo Model Pricing Method #1:

Your Price = MSRP - $3000 - (number of miles x $0.15 per mile) if the car is less than 6 months old.

For a loaner with 5000 miles, the car should be no more than:

Your Price = MSRP - $3000 - (5000 miles x $0.15 per mile) = MSRP - $3750.

Not a penny more. Most people get $2000 -$3000 off MSRP negotiating the selling price of a new car anyway.

Demo Model Pricing Method #2 For Year Old Car:

Your Price = MSRP - 20% - ( # of miles x $0.15 per mile) if the car is over 6 months old.

I based this on car residual depreciation, which drops 20% in value the first year. Ask for maintenance records too, and make sure the car had 2 oil changes. Most cars require an oil change at 1k and 5k miles. They should do an oil change BEFORE you sign, no verbal promises of a free oil change later. ANY excuse for not having maintenance records, the deal's off.