The best way to avoid automobile headaches is to buy a new vehicle; one which has an excellent track record for reliability. New vehicles have few problems (if any) and, in the event something does go wrong, you're covered by the vehicle's warranty. However, new vehicles are expensive - on average $26,000.00 and, if you're like most people, you'll finance it which then requires full, complete insurance coverage.General guidelines
You should ask yourself the following questions when thinking about buying a new vehicle...
1. What are my transportation needs?
2. What is my price range?
3. How important is resale value?
4. What about reliability (see ratings tables)?
5. What about safety?
6. What kind of warranty comes with the vehicle?
7. Which local dealers do good warranty work?
Buy or lease?
This is the age old question - should I buy or lease? Before we can answer this question, let's understand the differences between the two. Buying a vehicle is simple - you make a down payment, you make monthly payments, and, after you've made your last payment, you own the vehicle. Leasing, however, works differently - you may or may not make some sort of down payment, you make monthly lease payments, and after your last payment, you return the vehicle to the dealership or leasing company. In a sense, leasing is like renting a vehicle for a long time.
If you are the type that likes to drive the same vehicle for 100,000 miles or more, then leasing is definitely not for you. On the other hand, if you're the type that likes to get a new vehicle every few years, then leasing could possibly work for you.
As a general rule of thumb, leasing is more expensive than buying but, it is also a little more hassle free. The only real way to know if buying or leasing is going to be cheaper for a particular vehicle is to do a side-by-side comparison using purchase and lease calculators. When using these, pay close attention to the "Total of Payments" figure. You have to remember that this figure represents how much you will have spent in payments. In the case of buying, you'll own the vehicle after you've spent this amount. In the case of leasing, you won't own the vehicle... even after making all of those payments!
Negotiating for the best price
When buying a new vehicle the game is called "you -vs- the salesman". The salesman is trying to make as much money as possible and you're trying to save as much as possible. As you probably know, new car salesmen are very astute. They know every tactic to get you to pay as much as possible for a vehicle.
Unlike most consumer products, the sticker price on a vehicle is negotiable (with the exception of most Saturn models). In theory, there is the absolute minimum a dealer will accept for a new vehicle. This amount is the factory invoice (what the dealer paid for the vehicle) + cooperative advertising costs (the contributing cost to run all those TV commercials, magazine ads, etc.). If the dealer sold a new vehicle for this amount he would make no profit on the car. Obviously, no dealer will accept an "at cost" or absolute minimum offer unless he is desperate to get rid of a particular vehicle because it is taking up valuable lot space (i.e. it is last years model that still has not been sold).
Your objective in buying a new vehicle is to negotiate a price which is as close to this absolute minimum as possible.
Here's what you do...
1) No matter how much you're "in love" with the vehicle you're interested in, never ever let the salesman know this. You must maintain a sort of lukewarm attitude about the vehicle... sort of like "yeah... the car's pretty nice but I've seen better. But then again, if I can get a great price, I might be interested". If the salesman clues into the fact that possibly this vehicle is your "goal in life", he'll have the upper hand in negotiating.
2) If you are planning on trading in your old vehicle, make sure you find out how much it is worth. Consult either the NADA Official Used Car Guide or Edmund's Used Car Prices.
3) Find out what the dealer paid for the vehicle you're interested in. However, don't walk up to the salesman and say "show me the factory invoice for this particular vehicle". This is crass and will immediately create friction between you and the salesman (plus, you can't be sure he is really showing you the actual factory invoice). Alternatively, find out on your own (before you go to the dealership) by visiting your local bookstore. Consumer Reports, Edmunds, and Pace all publish a new car buyer's guide which will tell you what the dealer paid for a particular vehicle.
4) Add $300.00 for the cooperative advertising costs. You can't get out of this.
5) You now have the absolute minimum for that vehicle. In all fairness, the dealership is a business and therefore must make a profit to stay in business. Therefore, don't be ridiculous and offer the salesman the absolute minimum. Start by firmly offering the salesman $800.00 more than the absolute minimum (this is generally considered fair and, by the way, don't let any applicable rebates influence your offer; rebates come from the manufacturer, not the dealer). If the salesman refuses your offer, simply write your name, phone number, and offer on a piece of paper and ask him to call you if he reconsiders.
6) More than likely the salesman will call. He will also more than likely make you a counteroffer which will be slightly higher than your offer (i.e. he'll try to get a few more bucks out of you).
7) At this point you have to make a decision if the continued haggling is worth saving a couple hundred bucks. If his counteroffer is still way below the sticker price, you may opt to accept it. If continued haggling does not bother you, refuse his counteroffer. The salesman may then tell you he can't go below this price and say goodbye (and he may be right if the vehicle is in healthy demand). In this case, hold your own and wait a few days to see if he calls back to accept your original offer (i.e. he may get somewhat desperate). If he does, then great - you win. If he doesn't, you'll have to either call him back and accept his counteroffer or start the whole routine over at another dealership.
Options
In order to keep the cost of a new vehicle down, you must use restraint when it comes to options. Much of the equipment offered to you when shopping is just that... optional. However, when it comes to safety, two options that you should definitely consider are anti-lock brakes and air bags. These two have been proven time and time again to save lives.
Some options are part of packages and cannot be requested separately. In this case, you must weigh the cost of the package to the total advantage of all of the package's options.
The following should give you some insight into the various options you may come across while shopping for a new vehicle.
| OPTION | ADVANTAGES | DISADVANTAGES | COMMENTS |
| Intermittent Wipers | Will clear windshield in a light drizzle without driver interaction. | None. | Highly recommended. |
| Tilt Steering | Lets you position steering wheel comfortably. Easy access to drivers seat. | Expensive to fix. | Could be an advantage if many different people will be driving the vehicle. |
| Air-conditioning | Improves comfort. Reduces driver fatigue. | Reduces MPG. Expensive to fix and repair. | Desirable if hot climate area. |
| Stereo System | Entertainment while driving. | Distraction while driving. Lures thieves. | Buying and installing car stereo after purchase may be cheaper. |
| Cruise Control | Reduces driver fatigue. | Dangerous on slippery roads. May cause driver to not pay attention to road. | Useful/safe only on wide open roads. |
| Theft Deterrent System | Helps keep your vehicle from being stolen. Reduces insurance premiums. | None. | A must for expensive vehicles. |
| Electronic Instrument Panel Display | Digital readouts are more accurate than analog. | Very expensive to fix. | Choose only if standard displays are hard for you to read. |
| Trip Computer | Computer tells average speed, how many miles until empty, average MPG. | Expensive to fix. | Can come in handy at times. |
| Power Windows | Simple to operate. | Expensive to fix. | Yet another expensive thing to fix when it does breakdown. |
| Central Locking | Able to lock all doors with the push of a single button. | Expensive to fix. | Very handy; a timesaver. |
| Courtesy Lights | None. | A waste of money. | No need for this gimmick. |
| Sun Roof | Better ventilation. | Provides another way for a thief to get into your vehicle. | Seems to help resale value a bit. |
| Body Trim | Prevents parking lot dings. | None. | Worth the cost. |
| Rustproofing | None. | Some manufacturers will void their rust warranty if rustproofing is incorrectly applied. | A total waste of money. Modern vehicles do not need extra rustproofing. |
| Paint Sealant | None. | None. | Laugh when the salesman offers you this one. A can of wax is all you need. |
| Undercoating | None. | None. | Another laugher. Modern cars do not need undercoating. |
| Anti-lock Brakes | Allows steering during braking. Keeps vehicle from spinning out. | Expensive to fix. | Highly recommended. |
| Air Bags | Protects upper body and face in frontal crash. | None. | Highly recommended. |
| GPS Navigation | Allows you to find your destination quickly and accurately (usually). | Expensive to fix. Directions can at times be wrong. | Comes in handy, especially for people who can't read a map. Great feature, especially for women. |
| Turbocharger | Adds pep to an engine. | Expensive to fix. | Cheaper than getting a larger engine if more power is what you want. |
| Automatic Transmission | Simplifies driving. | Reduces MPG. | Just a matter of preference (i.e. stick -vs- automatic). |
| Power Steering | Makes steering require less effort. | Can reduce road feel. | Great feature, especially for women. |
| Power Mirrors | Makes adjusting mirrors a little easier. | Expensive to fix. | Yet another expensive thing to fix when it does breakdown. |
| Rearwindow Defrost | Allows driver to see through rear window on cold mornings. | None. | Necessary if you live in a cold region. |
| Rearwindow Wiper | Clears rear window. | None. | Highly recommended. |
| Power Seats | Allows driver to customize the height & position of the seat. | Expensive to fix. | Because of the height adjustment capability, recommended for shorter drivers. |
Essentially, an extended warranty (also called a "Service Contract") does just what it says, it extends a warranty on a new vehicle. As a general rule, extended warranties are a great deal for car dealers and a lousy deal for buyers. Why? Because dealers know that an extended warranty will almost never pay off for the buyer. When the salesman offers you an extended warranty, refuse it no matter how hard the sell.
Getting the most out of your warranty
The first thing you should know about a new vehicle warranty is that it is something you pay for - it is not some sort of bonus offered to you as an incentive to get you to buy the vehicle. Auto manufacturers know that some things may go wrong with a particular make/model in the first few years. Therefore, they factor that cost into the price of the vehicle.
Another thing you need to know about warranties is that they are another "you -vs- them" situation. When a dealer does warranty work, he is paid for that work by the manufacturer. However, manufacturers pay dealers a lot less than what a dealer would normally charge a customer. This kills much of the incentive for a dealer to do warranty work and is why many people get the "run around" when they need warranty work.
Also, get your warranty work done at the dealership which sold you the vehicle. Technically, you are entitled to have warranty work done at any dealership (which sell vehicles of the same make as yours). However, if you bought your Ford Escort at "Joe's Ford" and you take it to "Jim's Ford" for warranty work, you can be sure Jim's Ford is not going to be too happy to do the work since you bought from his competitor.
Finally, don't ever be afraid to get what is coming to you in terms of warranty work. For every 10 people that allow themselves to be manipulated, one will stand firm ground and hold out until he gets what he is entitled to... be one of those people!!
Here are some tips related to warranties...
Buy from a dealer that has a reputation for doing good warranty work. Ask friends who have purchased from a dealer you are considering or better, check the dealer's CSI (Customer Satisfaction Index) rating by calling the manufacturer (check the web for the number of the local manufacturer's office).
Always demand a copy of the warranty repair order. Even though you will not pay for repairs under warranty, you are still entitled to the repair order showing the work was done. This is an important document to have in case you have the same problem in the future (i.e. you'll be able to show the dealer he did not correct the problem the first time).
If the dealer gives you the "run around", contact the manufacturer's customer service department and complain. The harder you complain, the better the results. Tell them you'll never buy one of their vehicles again if they don't resolve your complaint. These key words carry weight in the fiercely competitive automotive market.
About two years into the warranty, have an independent garage thoroughly inspect your vehicle. Have the mechanic document any problems he came across (including small problems that may turn into big problems if not fixed soon) and then take this information to the dealer for the repairs. This service may cost $150.00 but it is well worth the money. Note: It is important to have an independent garage do the inspection. Why? Because if you have the dealer do the inspection, there is a chance he may not be truthful with you in this situation (because he may be resistant to doing warranty work). A few months before the warranty expires, repeat the above.
By Carl O'Reilly