8 steps to buying a new car without getting ripped off
Meet Joe Schreiber. He’s just like you, an automotive enthusiast who wants the most bang for his buck. He’s been everything from a jail guard to an amateur boxer to a teacher of high-school special education: all character-building endeavors that led to him becoming a gifted lawyer and writer. But our modern times make it difficult for him to find a good deal on a new vehicle.
That’s where our story starts.
Actually, it doesn’t, because there’s an elephant in the room: Car dealerships suck. The decades-long ghosts of scammy retailing shenanigans cast a long shadow over the industry. After spending almost 10 years in automotive retail, I know things have been changing behind the scenes. However, progress has been slow, and therefore has never received the oxygen of publicity. That’s changing thanks in part to the pandemic, since we are discovering the fruits of auto retail’s labor. To wit:
‘If you build it, they will buy it’ is business as usual, and that’s wrong. Our product plans for too long have been defined by our capacity. We developed vehicles to fill plants, sometimes at the expense of creativity. From now on, our products will be designed and built to satisfy the customer—not just to fill a factory.
Believe it or not, that quote is from Bill Ford back in 2006. The esteemed Mr. Ford wanted to change the industry, at a time when his company was unloading Jaguar X/S/XJ inventory with sweetheart lease deals and dumping the Taurus into fleets with reckless abandon. These days, his dream has become a reality.
That’s where Joe’s story comes into focus.
Joe knew there are more than the two commonly held options for buying a new car: Walk into a dealership and letting the salesperson put you over a barrel, or buy directly from an automaker like Tesla. This either/or fallacy is an operating principle for most, but as a trial lawyer, Joe understood that deals are always possible.
And he was ready to make it happen, as a painful spinal infection (followed by even more painful surgery) meant his low-slung Kia K900 was a poor choice for his daily-driving needs. He eventually picked the Dodge Durango GT, an SUV with better availability than his other choice (the Kia Telluride), an ideal hip point for ingress/egress, available cloth seats, and a minimal amount of techy bits. Joe walked into the local CJDR (Chrysler-Jeep-Dodge-RAM) dealership and immediately learned the old way of business wasn’t working: All the Durangos in a 500-mile range were poorly optioned, and most dealers were demanding more than sticker price.
So he reached out to his old friend Sajeev for some advice.
With roughly 12 seconds of effort on my smartphone, Joe was on a path to buy the perfect Durango at dealer invoice, receive a fair value for his trade-in (somewhere between Carmax- and Carvana-appraised values), avoid dealer financing (pay cash), and wait only six weeks to get a build-to-order unit delivered to his door. He didn’t have all his eggs in a Sajeev-shaped basket, but other routes weren’t nearly as fruitful.
Believe it or not, my act was likely pioneered by Autobytel back in 1995 as a for-profit business.
Autobytel ensured that a customer spoke to the right person at the dealership (oftentimes a fleet manager) to get the best deal up-front. No dealing with a salesperson, and nary a haggle in sight. While Autobytel is essentially gone from the automotive retail sector, consider modern referral sources like Cars.com and TrueCar as a variation on its theme. Or not, since each takes a commission for its effort. (To be clear, I am not getting paid to refer business to my friends in automotive retail.)
Referrals of the Sajeev or the TrueCar variety are both fine, but neither is necessary. Now every dealership has a website, with contact information to the same employee(s) leveraged in the old Autobytel model. Yet the aforementioned either/or fallacy remains stuck in our collective consciousness, but now we can put Joe’s experience as a third option. Perhaps we can make it easier by laying out the transaction in eight steps. If Joe can do it, so can you.
- Decide what (non-Tesla) vehicle you want. Build-to-order the vehicle on the manufacturer’s website and save its specifications.
- Decide whether you are trading in your current ride. If applicable, get appraisals from places like Carmax, Carvana, etc. and be honest about its condition. This ensures a fair price for you and a respectable profit for the dealership, which must factor in the cost of reconditioning. There’s no need to be coy about trade-ins anymore; money talks and nonsense walks when you work a deal online.
- If you don’t like the dealership’s offer (keep in mind the potential tax savings, depending on your state) then just sell it directly to Carmax, Carvana, etc.
- If you aren’t paying cash, get pre-financed from a third-party institution. You can let the dealer shop its banks and try to beat the rate later, but this is your baseline.
- Do a Google “near me” search for the brand in which you are interested. Open browser tabs for as many dealerships you are comfortable interacting with. The number will vary depending on your place of residence, search radius, and desired brand.
- When looking at a dealership’s inventory page, find vehicles that suit your needs/wants, and submit a purchase request. If the site lacks this functionality (not a good sign), or if none of the vehicles in stock appeal to you, go to the “Contact Us” page and write a friendly note including the information you gathered in steps 1 through 3. Ask which specific discounts are available on a build-to-order vehicle; either a sales manager or someone from the Internet sales department should follow up with you in a matter of hours.
- Make it clear if you want extended warranties, pre-paid service contracts, etc. and ask how much the dealer will discount them.
- Pick a winner in the dealership battle; use a spreadsheet if needed. You want the retailer that provides the quickest, clearest communication and the fairest new/trade-in pricing and cheapest financing.
- Submit your build-to-order request to the winning dealership. Joe recommends you “leave an email trail,” because the build order is a contract. He had zero issues fulfilling his request; both sides had agreed to the trade-in and financing (or lack thereof) stipulations, and he could prove it.
- You will hear horror stories to the contrary, but barring any other tangential issue, getting the vehicle price, trade-in, and financing sorted generally makes this part of the process painless.
- If the deal is a win-win for both parties, delivery will be simple and stress-free. But if you’re crossing state lines, please ensure you know exactly what your home state needs from you to tax and title your vehicle, especially if you pay in cash.
Aside from a possible visit to the local Carmax or local bank/credit union, you needn’t leave the comfort of your home to make this happen. If you live in a sparsely populated area and must have something rare like a Mini, you may be setting yourself up for a lot of traveling and/or high shipping costs, but this advice can otherwise set you up for a major success.
Since I was privy to both sides of Joe’s transaction, I gave Buck Barton (General Manager of the dealership) a call to get his thoughts after the fact. Both Buck and Joe confirmed the deal was done entirely via email and phone calls: Joe lives in Houston, and Buck works at Bob Howard CJDR in Oklahoma City. Buck sold Joe’s Durango at invoice because it’s a non-specialty unit (as I see it, that denotes any vehicle that isn’t super rare, such as a Jailbreak Challenger), and he encouraged me to check out the published discounts for all his inventory posted on to his website. Buck says his customers are often surprised that he’s actually discounting his inventory compared to his regional competition.
Taking the sticker price out of the equation ensured the deal was frictionless for both dealer and customer, and getting a trade-in (with modest reconditioning needs) likely ensured the deal was profitable enough for the dealership to justify the extra effort. Buck insists he operates this way to ensure loyalty to his dealership, and sees it as part of a growing trend in the industry. He believes automotive retailing is moving closer to the Amazon value proposition model of low prices and fast delivery. Perhaps it comes as no surprise, but combined with the pandemic, Buck says that 25 percent of his deals are now happening online.
Though more and more sales are occurring online, Buck is confident that the “brick and motor” business will remain. He envisions a future in which new car sales are more like transactions at an Apple Store: New cars can still be an impulse buy, but some simply think it’s more fun to buy in person.
Perhaps we should end with some salient points I discussed with Joe, as he learned how to avoid paying sticker price (much less paying over sticker) in such a difficult time in automotive retail. Always remember to do your due diligence, and consider a “good deal” a relative term: Dialogue is required to ensure the deal actually advantageous for both parties. He also recommends renting a car if you lost yours—but not from the airport that once fleeced you. (Then find someone like Buck and/or order what you want.)
Perhaps we should conclude with this statement from Joe: “If you aren’t interested in doing all of this work, good luck! You wouldn’t buy a house without researching first, would you?”