This document provides tips and strategies for smart car buying. It emphasizes the importance of preparation, such as determining needs and budget, researching vehicle types and costs, and getting pre-approved financing. When negotiating, the document advises negotiating the selling price, not monthly payments, and making incremental offers. Salespeople will try different tactics, so it is important to remain in control of the negotiations and get the best deal. The entire car buying process is described as not just an event, but something that requires planning and strategy.

1. Secrets of Smart Car BuyingPresentation Transcript
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4. https://learn.extension.org/events/1327
5. CAR PURCHASING STRATEGIES Elaine A. Courtney University of Florida/IFAS
Extension Okaloosa County ecourtne@ufl.edu
6. WHAT ARE THE SECRETS TO WISE CAR BUYING? Preparation Shopping
Negotiating
7. Has this ever happened to you? • SKIT
8. Preparing to Purchase • Needs, wants? • How much can I afford? • Financing
9. The Dream…
10. Research • Auto Types • Reliability • Safety www.hwysafety.com • Gas mileage •
http://www.fueleconomy.gov • Insurance for type of auto
11. Chat Question • Have you ever looked up the maintenance cost prior to purchasing?
12. The car should fit your budget Do the math!
13. Transportation as part of the budget On average, Americans spend the following
percentages of their income in each category: Food 13-15% Housing 32-42% Education/
Recreation 0-10% Gifts/ Contributions 0-10% 2-10% Child Care 15-25% Clothing 3.84.2% Personal 2-5% Misc./ Emergency Transportation 17-18% Savings 0-10% Medical
6-7% Insurance 0-11% Source: Florida Master Money Mentor, Budgeting PowerPoint,
2010.
14. Get ahead before it is time to buy Make a car payment to yourself Monthly Amount
$200 $200 Number of Annual Months Percentage Yield 24 1% 48 1% Total $4,846
$9,790 Save $50/week or about $6.67/day
15. Check your credit report • www.annualcreditreport.com • Check for errors • Prequalify with bank, credit union or other lender • If not offered comparable interest rates,
ask why • New federal laws
16. Auto Loan, Average Rate Example Type Loan Term Rate New 48 months 2.6% Used
36 months 48 months 2.0% 2.7% Used 36 months 2.6% Source: Bankrate.com, Jan. 6,
2014

2. 17. Get a PAL! • Preapproval • Credit Union • Bank • Need not reveal details to
salesperson
18. How will you pay •Cash •Determine the amount to be borrowed •Research financing
options •Bank •Credit Union •Dealership
19. Impact of Interest Rates Purchase Price $10,000 $10,000 $10,000 $10,000 $10,000
Down Payment $2,000 $2,000 $2,000 $2,000 $2,000 Amount Financed $8,000 $8,000
$8,000 $8,000 $8,000 Interest Rate 6.0% 10% 14% 18% 22% Loan Term (months) 36 36
36 36 36 Monthly Payment $243 258.14 273.42 289.22 305.52 Total Finance Charges
761.68 1293.04 1843.12 2411.92 2998.72
20. Impact of Shortening the Loan Term 3 Years (36 Months) 5 Years (60 Months) 7
Years (84 Months) Amount Financed $20,000 $20,000 $20,000 Contract Rate (APR) 6.5
6.5 6.5 Monthly Payment $612 $391 $297 Total Payments $22,032 $23,460 $24,948
Finance Charges $2,032 $3,460 $4,948 The person taking 84 months pays $2,916 more
interest than the person paying the car off in 36 months.
21. New car depreciation • Depreciation – decrease in value • Drive new car off lot •
Used car • Average depreciation 20%
22. Upside down on a car loan • Owe more on the car than it is worth
23. Avoid being upside down • Down payment of 20% or more • Especially if it is a new
car • Pay off car as soon as possible • Try to avoid loans that are more than 48 months •
Avoid expensive interest rates
24. Impact of down payment 48 month loan term for all Down Payment $0 $5,000
Amount Financed 20,000.00 15,000.00 Interest Rate (APR) 5.00% 5.00% Monthly
Payment 460.59 345.44 Total Payments 22,108.32 16,581.12 Finance Charges 2,108.32
1,581.12 $10,000 10,000.00 5.00% 230.29 11,053.92 1,053.92 Source: FINRA Loan
Calculator, http://apps.finra.org/Calcs/1/Loan
25. Consider the whole picture • Auto loan • Consider the total cost • Avoid short term
thinking such as only considering monthly cost • Maintenance • Gasoline • Insurance
26. Get the best deal • Don’t combine transactions: • Trade-in • New Car • Financing •
You will get a better deal if you negotiate each one individually • Or if you sell to a
private party • Be cautious when dealing with strangers
27. Poll Question • Are you planning to purchase a new or used automobile?
28. Buying Like an Expert
29. Getting Ready to Go • What to bring • The invoice price for the car you are interested
in • Checkbook and/or cash for downpayment • Loan pre-approval forms • Auto
insurance information, including proof of • Driver’s license • Social security card • Title
and registration, if you are trading in a car • Who to Bring • If vehicle will be jointlyowned, bring spouse • Friend who is not emotionally involved in the situation
30. The Goal of the Game • Most car salesmen are playing the same game with the same
basic game plan • Goal: • • • Sell you a car At a high price, so they make maximum
commission Once you understand the game, you: • • Deal effectively with the car
salesman Get what YOU want
31. The “Greeting” and Test Drive AKA: Salesman’s attempt to lead you through
specific steps that will lead him to his goal • • • • • • • • Greets you warmly Asks you
some “innocent” questions Shows you a car HE suggests is right for you Does the “walkaround” Invites you to sit in the car “How about a test drive?” Back at the dealership, door-die moment Customer’s curiosity is peaked

3. 32. Negotiating the Selling Price 1. Salesman will ask basic questions -- Tries to make
the negotiating start out friendly 2. He will want to discuss monthly payments - Never
negotiate based on monthly payments -- “I’m not interested in discussing monthly
payments. I only want to talk about the selling price of the vehicle.” --- Negotiate up from
dealer’s cost 3. How will you be paying for the vehicle? - “I only want to talk about the
selling price right now. We can discuss finances later.”
33. Negotiating the Selling Price 4. YOU are the one who will determine the way the
negotiations go! - He will continue to try to back into his game - It’s up to you to keep
things on track -- Stay strong and focused on your buying goals FIRST Rule of
Negotiating Never appear anxious, worried, or desperate. Remain calm, casual, and
willing to walk away at any time.
34. Negotiating the Selling Price 5. Tell him you are ready to make an offer - Let him
know that “you are in no hurry to buy a car; however, if my offer is accepted, I am
prepared and willing to sign the papers and drive the car home today.” SECOND Rule of
Negotiating Never negotiate down from the sticker price. Always negotiate UP from the
invoice price (new cars) or wholesale price (used cars).
35. Negotiating the Selling Price 6. Once you’ve made an offer, be quiet - Sit and wait for
a response - The salesman will probably insist your offer is too low Negotiating Tip
Whoever speaks first after an offer is made is in the weaker negotiating position 7. The
salesman will try to get you to raise your bid Negotiating Tip Never negotiate against
yourself Never raise your own bid until they make a counteroffer
36. Negotiating the Selling Price 8. Let the games begin - The salesman will walk over to
the Sales Manager’s office -- Sit back and relax --- Sooner or later, the salesman will
return ---- He and/or his Sales Manager will present their counteroffer ---- Sit and think --- They will probably speak first to break the tension ---- At the appropriate moment,
show your flexibility by raising your bid Negotiating Tip Always raise your offer in small
increments $50 - $100 at a time
37. Negotiating the Selling Price 9. The game will go on - Back and forth --- Shake their
heads --- Try to get you to spend more than you have planned 10. Eventually, your offer
will rise to your pre-set limit - When it does, FREEZE! -- Don’t budge 11. If they won’t
sell at YOUR price - Thank them and leave -- If they WILL sell at YOUR price…
38. Closing the Deal • Negotiations finally end when • They are convinced you absolutely
cannot or will not go any higher in your price • They know they are making a profit…
even a minimal one
39. Gap Insurance • Upside down on car loan • Auto insurance pays off market value •
Gap pays off any difference • Need if likely to be upside down • Extra long loan term •
No money down • Do not purchase unless necessary • Compare prices • Dealer • Lender
40. Surviving the Business Office • Selling price agreed to..sent to Business Office •
Discuss financing • Pre-approved financing • Dealership financing • Cash • Read ALL
fine print • Think twice about all those “extras” • Extended warranty • Paint protection /
fabric protection • Rustproofing /Undercoating • Alarm systems • Window Etching •
Window tinting • Insurance: disability, life • Etc. • Remember… The Business Manager
is another salesperson working on commission
41. Negotiating Negotiate the price of the car, not the payments.
42. SKIT
43. THOUGHT TO REMEMBER… Car buying is a process… not an event!!!

4. 44. Congratulations! YOU are now in control of the “Car Buying Game!”
45. Summary • Consider all costs • Save for a down payment • Get a PAL • Do your
research • Negotiate
46. Sources • Consumer Federation of America, • • • • Car Buying Power Points and
Brochures. Consumer Reports Edmunds.com US Air Force FTAC Curriculum Florida
Master Money Mentor Curriculum