Buying a car in the current recession: need advice

November 22, 2008 12:54 AM

Hi All, We are in need of a car. New or used, does not matter. Our current car is near death and we cannot postpone. Friends have told me that with the current economic recession, this is a great time to buy a new or used car. If this is indeed the case and it is a good time to take advantage of the poor economy, then in what ways do I maximize my savings?

Obviously I can't walk into the dealer and tell them how they are not selling cars so they should give me a deal. Are any class of cars being discounted more than others? Any ways to find out which companies are deeply discounting their cars? How about the used car market, what can I do there? Financially, I am doing well. I don't have to finance, I have cash on hand. We are looking at sedans and sports cars under $50K new or used. Thanks!

posted by Ligament to work & money (15 comments total)

Obviously I can't walk into the dealer and tell them how they are not selling cars so they should give me a deal.

That's not obvious at all. I'm in the UK and don't know much about buying cars in the US but after talking to friends who've bought cars recently, I'm quite sure that aggressive demands for discounts will be taken fairly seriously no matter how distasteful that behaviour is to you.
posted by Dan Brilliant at 12:58 AM on November 22, 2008

I'd suggest doing the normal smart things. Do some research (Internet, Consumer Reports, lots of places to look), and decide on the make model and year you want ahead of time. Call four or five different places asking for quotes. Tell them what you are doing (specifically that you are not going to make a commitment now and you are going to ask others the same thing) and ask for a bottom line price that includes any dealer fees or whatever other crap they are going to choose to add on. Go with the lowest price, following a routine inspection / test drive which will probably be uneventful with a new car.

The impact of the current market should be you will get better offers, without any particular effort on your part.

Have fun!
posted by Bokononist at 1:54 AM on November 22, 2008

My parents just bought a new Lexus for well below 50K. My dad said he just walked on the lot and negotiated as usual. He did mention he was also looking at Acuras (or Mercedes, some competing brand) at X dealership as well. Anyway, he got the car for pretty cheap in comparison to what those cars cost at the beginning of the year. He did the usual internet research to first try and find the dealers with the lowest prices. Unlike you, m y dad got financing from a bank (as he says, why turn down free money? there was some more complicated reasoning in there having to do with good interest rates).

He said when he went no one else was on the car lot. The salespeople were all so eager to help him, and they didn't seem to BS him as much as usual. It was the best experience he has ever had in buying a car. So, yeah, I think you shouldn't have to do anything more than usual, it's just that your standard negotiating and your money will go a little farther.
posted by bluefly at 3:46 AM on November 22, 2008

Well American dealerships in particular should be pretty eager to make sales about now, given that their suppliers are about to go belly up.

But if you're willing to deal with slightly higher risk, you should look for cars for sale by owner. The economic depression affects individuals just as much as dealers, so you're likely to find good value there as well. Even under normal conditions, these are almost always significantly cheaper than buying them at a dealership, even if you have to drop a few hundred bucks on them for minor repair issues. Insist that the seller show you a recent Carfax report, and arrange to have your mechanic take a look at it on your test drive, and you should be fine.

Check Kelley Blue Book for canonical price information. For example, a 2005 BMW 3 series sedan with 50k miles on it should go for about $21k on the lot but $18k from a private party. Even if you have to spend $1k on repairs, you're still coming out way ahead. The cheaper price means you'll save a bundle on sales taxes too (6% is a $200 difference, 10% is $300, etc.).

The only real drawback is that you probably can't afford to be quite as picky about make and model, as the dealers in your area will have far more cars for sale than private parties will. But if you're willing to take a week or two and see what's available, you can probably save some money. Check your local newspaper(s) for ads.
posted by valkyryn at 4:43 AM on November 22, 2008

I just bought a 2005 Mazda 626 Sport Wagon with 50K miles on it for $3K below the KBB price. The car had been on the dealer's lot for a few months and had been in their inventory since April. A clean Carfax report told me the car had been in no accidents and was a trade-in from a single owner who bought it new.

I made sure to buy the car in the last week of the month, when the sales guys are under pressure to meet their quotas. I was able to name my price and stuck to it. I had to walk out a few times when they wouldn't meet my price but negotiated a final price on the phone with the sales guy the next day.

I was able to get them to also pay for the registration fees, the title transfer and do all the work needed at the DMV.

I was able to basically name my own price just slightly above the KBB trade-in value because I was willing to pay cash.

Most importantly, do your research. Don't let the sales people sweet-talk you. Go in informed and don't be afraid to walk out if they won't bend.
posted by camworld at 6:03 AM on November 22, 2008 [1 favorite]

When I was used-car shopping I often saw some AMAZING deals on eBay Motors, specifically from larger dealers in Florida, Texas and Arizona. If you're willing to travel to get a fantastic deal you can often find a great price on a car only a few years old with low miles.

If you want a truly AMAZING deal, then you should put the time and effort into attending some of the auto auctions the government has every month. It's a real mixed bag as far as quality of the car, but the prices are unbeatable.

Lastly, because Ford and GM offer employee pricing for new cars to their workers, there are often a glut of cars in the Detroit area that have low miles and are only a few years old. This is because a lot of the auto company workers buy a brand new car every couple of years because they get such good deals. Again, if you are looking for a deal and are willing to ravel and don't mind a Ford or GM car, check out some of the used-car dealers in southern Michigan.
posted by camworld at 7:47 AM on November 22, 2008

I have seen a few spots recently on a dealer in Chicago who is offering a buy one, get one free deal on new cars. You could buy one and unload the second to help recoup the cost of the first. Not sure how good of a deal it is after all is said and done, but might be worth looking into.
Here
posted by pazoozoo at 8:48 AM on November 22, 2008

"Are any class of cars being discounted more than others?" Yes: SUVs, trucks, anything with a V8 engine, anything that is a gas guzzler.
posted by profwhat at 1:20 PM on November 22, 2008

Watch how to buy a car. Follow these steps. There is almost no reason other than vanity to ever get a new car, so apply the same steps to buying your gently-used car.
posted by anildash at 9:52 PM on November 22, 2008

Oh, and with cash on hand, finance your car and then pay it off as quickly as you feel like. You'll feel great, and so will your credit.
posted by anildash at 9:53 PM on November 22, 2008

I took a wonderful lecture, sponsored by my credit union, and taught by a former auto scammer. As a condition of his parole, he could not work in car sales, nor own more than 2 cars, for X years.

Lotsa good information there, but here's some highlights:

NEVER buy that day. The salesman will do a LOT to keep you on the property. Even if you find the dream car, someone else is coming to see it, at this price it won't stay long, I can't promise you that it will still... walk away. Leave your phone number, and tell them you are shopping around. Do not let the salesman believe that you are sold on this car, this color, this set of extras. Within 24 hours the salesman will call you with an improved offer.

Shop around. With the internet, that's pretty easy. Know what the car is selling for, once you pick one out. Be prepared to come back and say, "OK, X thousand dollars for this model is a decent price, but I've found another in a neighboring town for X-1 thousand dollars." Or X-2.

Whatever you counter with as an offer is guaranteed to be lower than what you will eventually pay. It can only go up from there.

The car will have added goodies you didn't even know you wanted. Example: undercar anti-rust spray (their cost: $10; your cost: $100). Tell them you don't want it, and if they can't remove it, you'll buy the other car from the other dealer. Of course they can't remove it. But they can remove the bogus markup for it.

When you go to sign the contracts, they will attempt to add a few hundred here, $50 there, and - whoops! - they forgot the legally-required tire inflation tax, but that's just $19.26. When I bought a van in 1999, I told them my ceiling was $7,000, I was buying cash, and they jiggled the numbers until it was only $7,036.00. I wrote my check for $7,000; told them it would bounce for $7,001, and - surprise! I got it for $7k even.

It's emotionally difficult to negotiate, especially as Americans, since we don't tend to do that in our culture. If it helps, you aren't negotiating with people, or even with a slimy saleperson. You are negotiating with a finely-tuned selling industry, skilled & trained to squeeze every last dollar out of the deal. Show no mercy. Smile, play coy, be nice - but show no mercy. They won't show you any.
posted by IAmBroom at 10:14 PM on November 22, 2008

Watch how to buy a car. Follow these steps. There is almost no reason other than vanity to ever get a new car, so apply the same steps to buying your gently-used car.

anildash, I used to agree with you, but discovered an exception: I bought a 1998 brand-new Saturn for less than 1997 used Saturns were going for, when they were trying to clear the lot for the next year's models.

That's the only instance I know of, however; otherwise, you're spot-on.
posted by IAmBroom at 10:19 PM on November 22, 2008

Research it online and make a short list of a few cars that you would like.

Stop by the dealers and test drive them to narrow it down to one or two.

Go to the manufacturer's web site and use the "request a quote" feature to request a quote from 5-10 dealers closest to you.

Research the dealer with the lowest price online -- look for horror stories of terrible service.

Call the dealer to confirm the price.

Once you're there, you can try negotiating a little more, based on the fact that you're paying cash.
posted by qvtqht at 10:27 PM on November 22, 2008

I spent at 3 solid months looking at Craigslist postings in New Yor and New Jersey, became intimately familiar with the asking price for the types of cars I was looking at:

- 2003-2005 VW Passat Wagon
- 2002-2005 Subaru Outback Wagon
- 2003-2005 Mazda6 Sport Wagon

I spent many hours reading consumer reports about these cars, reading the automotive forums full of people who owned these cars and either loved them or hated them. I used numerous web sites to search for these cars nationwide, and then spent a lot of tie sorting the listings by year, by price, by mileage and by location -- learning exactly what was available, for how much and where it was located. I spent the $20 or so to get a 30-day unlimited Carfax account and looked up hundreds upon hundreds of VINs. Almost every time I found a car that seemed like a god deal, a Carfax report would confirm that it'd been in an accident and repaired.

I eventually learned that finding a used Passat Wagon or Subaru OUtback that was less than 4 years old with low-to-medium miles was next to impossible. People simply do not part with these cars until they're older, have higher miles, have been in an accident or want far too much for them. THey really hold their re-sale value compared to other cars.

After a long period of looking I settled on the Mazda6 Wagon because it got decent reports, was affordable, was usually available for a fair price and had a V6 engine. I came close to buying one in Texas but realized there was no easy way for me to get time off work to fly to Houston and drive it back. I stumbled upon a nationwide car search site (cars.com, I think -- there are several good ones) and found a dealer only 15 miles away in NJ that had one. My wife and I test-drove it. Done.

The only downside now is that Mazda no longer makes the Mazda6 Sport Wagon. They discontinued it because of too much internal competition, with their CX7 and CX9 SUV crossovers being too similar a vehicle to the wagon version of their popular Mazda6 sedan.

And the marketing is true: Zoom Zoom! indeed. For a family car it really has some get up and go.
posted by camworld at 3:32 PM on November 23, 2008

People need cars, tight times or not. What people don't need are impractical cars that are desired mainly as status symbols, and which they'd only buy as a second or third car. When buckling down for tough times, those are the cars that people won't splash out on, or will try to get rid of.
Sedans are quite practical and get decent gas mileage. You'll probably find better discounts among the sports cars.
posted by -harlequin- at 3:18 PM on November 24, 2008