My wife and I recently decided that it's time to get serious about replacing my 1991 Honda Accord. After looking around, we've settled on a Honda CR-V LX (with two wheel drive) -- a bit more practical than my current car size-wise, yet it still gets pretty good mileage (29 highway/24 city). While I'm well aware of the advantages of buying a late-model used car, I have to admit that I'm one of 'those people' that prefers to buy new. One of the big reasons for this is that we're a Honda family, and the price difference between new and late-model used Hondas isn't that great. On top of that, I tend to drive cars for a long time -- in fact, if I keep my next car as long as I've had this one, I won't be in the market for a replacement until 2020 (unless the world runs out of gas before then). Thus, the difference in price, when amortized over the life of the car, isn't that much (yeah, yeah, I know... I'm rationalizing). Anyway, I've spent a bit of time in the past week trying to find a good deal, and I thought I'd chronicle the process here.

My modus operandi when it comes to car shopping is to keep the dealers at arm's length until we find the deal that we want. To this end, I tend to rely on faxes and, more recently, e-mail. In short, I start by soliciting bids from all dealerships within about two hours of here. What follows is an example of the sort of message that I send. You should either direct it to the sales manager, or send it via e-mail to their internet sales person.

Dear *SALES CONTACT*,

We are planning on buying a new car within one to two weeks. We are specifically interested in purchasing the following vehicle:

*INSERT DETAILED DESCRIPTION OF CAR HERE*
*INCLUDE TRIM LEVEL, OPTIONS, COLOR, ETC.*

Over the next three days, we will be taking bids from dealers interested in our business.

Please note that we are not willing to purchase a demo. Rather, we expect to purchase an extremely low mileage vehicle that has experienced nothing more than the occasional test drive. Moreover, we intend to make our purchase within a week after selecting the most attractive bid. Thus, we expect the vehicle to be in stock and available within that timeframe.

If you choose to bid, please provide us with an itemized list of all costs associated with the vehicle detailed above. We will not consider incomplete bids, nor will we consider bids for a vehicle other than the vehicle described above.

Please also note that we will accept no bids after 5:00 PM on *DAY*, *DATE*. The sooner we receive your bid, the better.

If you are interested in our business, please either e-mail (preferred) or fax your bid to us at:

E-mail: *INSERT YOUR E-MAIL*

or

Fax: *INSERT YOUR FAX #* (Attn: *YOUR NAME*)

Thank you for your time. We look forward to the possibility of doing business with you.

Sincerely,

*YOUR NAME*

The key here is to be as specific as possible about the vehicle in which you're interested. This works especially well with Hondas, as they typically come in just three (sometimes four) trim levels with no other manufacturer options. This makes it especially easy to compare amongst quotes without having to figure out how to compare prices/features between "Luxury Option Package #5" and "Super Duper Trim Package #7."

As soon as a reasonable number of bids have come in, compare them to each other and then shop the best bid around to the other respondents. Don't worry about getting a response from everyone -- some dealers probably don't have the car that you want in stock, and others are intent on drawing you into negotiations by responding with a "make your own deal" offer. I've had the best luck shopping the best bid to the other dealers one at a time. If anyone beats it, you have a new low bid to take to the remaining dealers. If you have a preferred dealer from which you'd like to purchase, I'd recommend leaving them until last. That way you can go to them with the best price in the market and ask them to match/beat it.

Once you've made your best deal, give the dealer a call and iron out the details for completing the transaction. I'd recommend getting the out-the-door price (including tax, title and license) at this point and then informing them that you'll be writing the check for that amount before you leave home. That way they'll know that they can't (or at least shouldn't try to) play any last minute games with you.

We went through this process about a year and a half ago when we bought our mini-van, and we were able to quickly find the bottom of the market. Indeed, after working our way through the second-chance bidding, we quickly got the price down to a point at which a number of dealers said that they wouldn't/couldn't match it even though they had the vehicle in stock. When we finally called up our dealer of choice, we told him that we'd be there in two hours with a check in hand if he could have beat the current low price and have the car ready for us. He agreed and shortly thereafter we were taking a last-minute test drive and inspecting the car before closing out the transaction. All in all, it was incredibly painless (and maybe even a little bit fun).

This time around, we started by contacting the dealership/salesman that we bought from last time and gave him a chance to make the initial bid. We then cast a much broader net by contacting all of the other dealers in and around our area. We were hoping that, by buying late in the model year, we might get an especially good price on a 2005 closeout. After all, if you're going to drive your car as long as I intend to drive mine, rather than flipping it for a newer model in three years, there's no real need to get the newest model year. On top of that, the 2006 model is identical to the 2005 model.

The problem that we're running into right now is that we may have waited too long -- a lot of the dealers that we've contacted have told us that they're out-of-stock and don't have any more in the pipeline. But we have received some pretty good bids. In fact, I thought that we had struck a deal this afternoon when we took the best available price back to the guy that we bought from last time. Unfortunately, it soon became clear that his best price comes complete with a $299 processing fee that wasn't included in the quote. What?!? I know that this sort of thing is standard practice for car dealers, but... I asked for an itemized quote including EVERYTHING. Besides, this sort of processing fee is akin to a grocery store tacking on an extra fee for the privilege of having them ring up the gallon of milk that you're about to purchase.

Anyway, only time will tell if this'll work out. Unfortunately, it hasn't been quite as painless this time around. Oh well, if things fall apart we'll just wait until their lots are full of 2006 models and we'll try again.

Note: Since pricing is often closely tied to financing, this process is far easier if you're going to either pay cash or line up your own financing.

You're reading Part I of "Buying a New Car"
Read Part II of "Buying a New Car"
Read Part III of "Buying a New Car"
Read Part IV of "Buying a New Car"

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"Buying a New Car" was first published at fivecentnickel.commortgage calculator