Buying Our First "New" Car

[jkelley9]

My wife and I are planning on buying our first "new" car (small SUV, actually) and I'm wondering what is realistically a "great deal" nowadays. We're highly value conscious, and practical people. The only reason we're buying a new car is because her's is 14 years old, she's 5 months pregnant, and I want her to be in something that is very safe and up to the latest safety standards. 

With the evolution of "Truecar.com" are they honestly showing you what a "good deal" is? 

I've heard of two instances recently where people apparently got fantastic deals. The one I can remember the details was someone bought a $33k sticker price toyota camry, 2017 model, fully loaded, brand new for $22k. That's like... 30% off! Truecar says his exact car is basically $25k... so he got it for much less than that.

When my wife and I are looking at Truecar, the prices are basically matching the sticker prices we're seeing on the lot minus maybe 5%.

What's the situation nowadays? We're not even picky. My wife wants a couple of options, most are take-em-or-leave-em, color isn't super important, we just want a decent car for a good value. So I feel like we have room to negotiate.

2018 models are coming soon, and dealers are telling us this is a slow time of year. So what can we reasonably expect to get off sticker, for a car they they may be trying to unload to make room for new inventory? Just a ballpark range? Is this even the right time of year to be buying? Should we wait?

Are we suckers if we pay anything in dealer fees?

I've already brought up to a couple dealers (we've gone to kia and hyundai so far) that we can either finance low (preferable) or buy the car outright in cash. So we can't be squeezed there. 

We're going to a few more dealers this week, we're looking at anything from a hyundai tuscon, mazda cx-3, honda cr-v, ford escape, kia sorento, those kinds of vehicles. sub $30k.

Any insight/advice y'all have would be fantastic!

[David in FL]

My last new car purchase was about 4 years ago now, but I've never paid more than about $500 over actual, verified dealer invoice.  Dealer fee or no dealer fee, it's all the same pile of money.  If they want to give it to me at invoice and then add a $500 dealer fee because that somehow helps their accounting, I don't care.  Either way, I'm not paying more than that.  And that does NOT include any additional manufacturer's incentives.  Those are out of the manufacturer's pocket, not the dealer.

My last 2 purchases I did 100% online.  Once I'd determined the make/model I wanted, I found the specific car I wanted via their inventory, researched the pricing, and then corresponded directly with the online sales manager/dude.  I never stepped foot in the dealership except to give them a check and pick up the car.  That's the only way to go...

[klineka]

One thing to keep in mind, there is always room for negotiation on price. It sounds like you are still in the exploratory phase of the new car search. Once you have it narrowed down to one or two models that you really like, then it is time to shop around and see what kind of deals you can get. The shopping around portion is even easier if you narrow it to one model. 

Then you can get the truecar value for it, as well as looking online at other dealerships around your area that have the same car and see what they priced it at. 

I love browsing for vehicles on cargurus.com you can search for new cars in your area and there are so many different filters you can apply to narrow it down. 

If you arent attached to a specific dealership, then once you have the specific model identified, find which dealer has the lowest starting price and visit them when you are ready to make the purchase. If the car is $25k for example, go in there, test drive it, and tell them you will buy the car today if they can meet XXX price (varies based on the car, maybe like $22k. What will most likely happen is they will say they cant do that, and either go back and "talk" to their manager or just offer something higher than what you just offered. Go back and forth a little bit until you are satisfied with the deal. They will still make money on it even if they come down a few thousand. 

I also recommend declining any dealer extras like a detailing package, extended warranty, "new car protectant" etc etc. and with you being in a strong financial position, assuming you are going to either pay cash or put a large down payment down, I would turn down the gap insurance as well.

One thing I have learned is that at the end of the day, the dealership will always make money, regardless of how good of a deal they give you. What matters is that you find something in your price range and that you feel that you got a good deal on. If you dont think the dealership is giving you a good enough deal, then walk away. Often they will call you a day or two later and might be more willing to negotiate.

Also, if you choose the route of financing, be sure to stay focused on the total amount financed, not the monthly payments. Dealerships love to just get people that focus on the monthly payments because then they can extend the length of the loan, making more in interest, etc. Run some calculations ahead of time and know where your monthly payment range would be based on different loan terms and interest rates. 

I bought my car used, and before I went to the dealership I got preapproved online for a used car loan at a low interest rate. When the dealership offered their financing, I said I am going with my loan I was preapproved for unless the dealership could beat the interest rate. The dealership beat the interest rate I had from online, so I went with the dealerships bank. 

Good luck and if you have any other questions let me know.

[Kalnoky]

I bought a car two years ago and I beat the Truecar.com price by a couple hundred, i.e., not much. It was more important to me that I got the features and color that I wanted. As my dad wisely said, "you'll still be paying it off in a few years, so make sure and get what you like".

The money is made at the F&I stage of the purchase. If you can get factory financing and incentives DO IT - the dealership has no way to juice the interest rate on those deals. Also, DO NOT buy the extended warranty... EVER.

Source: wife is former F&I manager for Ford. Many friends in the car business, current and former. 

[saevel25]

18 hours ago, Kalnoky said:

I bought a car two years ago and I beat the Truecar.com price by a couple hundred,

I can't remember how Truecar calculates their values. If it is based off the cost to the dealership provided by the dealerships, then it wouldn't be accurate with out some major reductions.

This is the real eye opener. http://clark.com/cars/eye-opening-truth-about-dealer-invoice-price/

I used this website before to get a rough estimate of what the true cost to the dealership is.
http://www.realcartips.com/newcars/029-car-dealers-true-cost.shtml

18 hours ago, Kalnoky said:

It was more important to me that I got the features and color that I wanted. As my dad wisely said, "you'll still be paying it off in a few years, so make sure and get what you like".

Most people do not want the lowest price on a vehicle. They want a price they think means they got the quality of vehicle they wanted. They equate dollar value = quality of vehicle.

[mattm16]

Question.  Have you considered an Equinox?  Very good vehicle, I know 3 other people besides me that has one.  Everybody loves it.

[dennyjones]

How exciting for you and your family.   Congrats.  

as @mattm16 suggested, I have a newer, 2015, Equinox and love it.   It's would be great for a small family and although it won't carry four guys and their clubs, it will work with three.   

[Wally Fairway]

I haven't bought a "new" car in almost 30 years. I think if you are looking at the best value then look for a 2015-2017 used car, typically coming off lease or a dealer car (I try to avoid rental fleet vehicles) they don't have more than 20,000-25,000 miles and it should save you >$10,000.
Unless there is a feature that has come out on the vehicle that you like I don't think a new car is ever the best value; and that is from someone who worked as a supplier to the Detroit 3 mfg for about 15 years.

[jamo]

I bought a VW Golf a few years ago. My previous two cars were sedans but I wanted something a little different. The Golf is a nice mix of sedan size and SUV versatility without the gas mileage and size of an SUV. (The runner up I was looking at, the Subaru Impreza hatchback, was a similarly nice size.)

Looking back, I definitely could have and should have driven a tougher bargain. I got pre-approved for a loan from my bank. I probably could have negotiated and cross-shopped my way down an extra $1000-$2000, but honestly I got a good about of features (sunroof, heated seats, upgraded speakers) for what I paid, so I'm not that disappointed. (The only disappointment I have now is that I bought mine a few months before the next model year came out, and I really would have loved Apple Car Play over the mediocre VW infotainment system software. But I didn't know that at the time, and my previous car was dead so I couldn't hold out for it.) Aside from a snafu with the cooling system that was covered by the warranty, I haven't had any issues with it. I'm nearing 50,000 miles.

One thing I noticed when I bought mine is that the used car price gap seems to have closed quite a lot. Used Golfs a few years old either had a significant amount of miles or just weren't very discounted, so I went with a new model. I don't regret that move in the slightest, as I intend to drive this car for a good long while.

[Gator Hazard]

28 minutes ago, jamo said:

One thing I noticed when I bought mine is that the used car price gap seems to have closed quite a lot. Used Golfs a few years old either had a significant amount of miles or just weren't very discounted, so I went with a new model. I don't regret that move in the slightest, as I intend to drive this car for a good long while.

We noticed this as well while shopping for a car for my wife. I remember reading something along the lines that there is just not as much used car inventory as in past years. People are keeping their cars longer. 

 Took us a while but we finally found the right car at the right price online. Secured it and drove up to Atlanta to buy it. Three years old and 31k miles in great condition. Wife is happy. 

[jkelley9]

Thanks everyone for your help. I've read some interesting articles around both consumer reports and sites like Truecar. Most interesting is the Clark Howard article around buying a new car.

[jkelley9]

We ended up going with the Mazda CX-5. Got it for about $2k less than the "fair purchase price," out the door including tax, title, and all fees.

I don't feel like we got a stellar deal (I was exhausted from the whole process and ready to get the rest of my Saturday back)  but I don't feel like we got a bad deal either.

The Equinox was a close second, as was the Rogue. 

We're really happy with the car though, I just hate being on the car payments again! But it's for my wife and our first child so... gotta do what you gotta do. Safety first!

I'll still get the satisfaction of driving my $3,700 truck around, lol. 

[iacas]

4 minutes ago, jkelley9 said:

We're really happy with the car though, I just hate being on the car payments again! But it's for my wife and our first child so... gotta do what you gotta do. Safety first!

Car payments aren't the devil. I'm paying off my Sorento… at 0.0% interest. It makes a HELL of a lot more sense to do that than to pay for it all up front (even though we could have).

[jkelley9]

1 minute ago, iacas said:

Car payments aren't the devil. I'm paying off my Sorento… at 0.0% interest. It makes a HELL of a lot more sense to do that than to pay for it all up front (even though we could have).

Yea the standard interest rate was 3.7% or something for most places. I made it clear that whatever deal we go with we're wanting financing at LEAST under 1%. 

One thing I was shocked about was we were looking at the Honda CR-V and they offered 0% financing on all of their models EXCEPT the CR-V and one other model. That makes ZERO sense to me. The lowest they would go, with excellent credit, was 3.4%. I said thank you for your time, but I'm not going to buy a car from someone exploiting the need of a family vehicle and charging interest of $30-40 every month when MONEY IS MONEY. I feel like it's borderline discrimination - although I know it isn't. Just felt like it at the time.

Mazda gave us 0% for 36 months and 0.9% for 60 so we chose the latter considering we're having a child soon anyways. That way I don't have to change any recurring deposits into our investment accounts and make more money off them than the 0.9% from the payment. 

Glad to be done with the new car buying process. I'll take the used car market buying process (private party) any day even though it has it's frustrations too.

[DeadMan]

4 minutes ago, iacas said:

Car payments aren't the devil. I'm paying off my Sorento… at 0.0% interest. It makes a HELL of a lot more sense to do that than to pay for it all up front (even though we could have).

Yeah, interest rates are so low right now that it makes more sense to get a loan than paying for it all up front. Last car I bought was used, and we got a 2.5% interest rate. The amount of interest we're paying over the term of the loan is miniscule. I don't have the disclosure handy, but I remember being shocked at how little money it actually is.

[saevel25]

4 minutes ago, jkelley9 said:

Yea the standard interest rate was 3.7% or something for most places. I made it clear that whatever deal we go with we're wanting financing at LEAST under 1%. 

You must have good a good credit rating for that.

I'll probably refinance my car here soon. Some places will either give you a deal cash off incentives or interest rates only.  If the incentives lowers your principle then you might pay less in interest than taking a lower interest rate. The option to refinance makes that a much better deal as well.

7 minutes ago, jkelley9 said:

One thing I was shocked about was we were looking at the Honda CR-V and they offered 0% financing on all of their models EXCEPT the CR-V and one other model. That makes ZERO sense to me. The lowest they would go, with excellent credit, was 3.4%. I said thank you for your time, but I'm not going to buy a car from someone exploiting the need of a family vehicle and charging interest of $30-40 every month when MONEY IS MONEY. I feel like it's borderline discrimination - although I know it isn't. Just felt like it at the time.

Honda is always stingy with their incentive programs. They hardly ever do cash incentives.

 

[iacas]

37 minutes ago, jkelley9 said:

One thing I was shocked about was we were looking at the Honda CR-V and they offered 0% financing on all of their models EXCEPT the CR-V and one other model. That makes ZERO sense to me.

The CR-V is popular. They don't need to incentivize people to buy it.

Pretty simple, no?