This document provides guidance on buying a car, including determining your budget, deciding between new and used, leasing versus buying, creating a shortlist of options to research, test driving, and negotiating the best deal. The key steps are to determine your budget and financing terms upfront, do thorough research on safety ratings and pricing, and get the best price by negotiating with the dealership or working directly with the fleet manager.

1. BUYING A CAR
Tricks of the trade

2. Overview
• Determine your budget
• Lease or buy? New or used?
• Create a short list
• Research
• Test drive, make a final decision
• Negotiate (if necessary)
• Fleet managers

3. Determine your budget
• How much cash do you have for a down payment?
• How much can you afford in monthly payment including
insurance?
• It’s difficult to change terms later without paying off the loan; if monthly
payments are a concern, now is the time to consider that.

4. New or used?
New Used
• No worry about vehicle history
• Modern safety features
• New car smell (actually toxic)
• Save money
• More seller options
(private, dealership, auction, etc)
• Unknown history, short or no
warranty
New cars depreciate as soon as they’re purchased. Example…

5. Nissan 370z:
$29,837
Drive off the lot:
$27,314 (-$2,500)
The following year:
$24,186 (-$5,600)
On average, a new car loses 11% of its value when you drive off
the lot and 15-25% every year thereafter.
Source: http://www.edmunds.com/car-buying/how-fast-does-my-new-car-lose-value-infographic.html

6. Buy or Lease?
There are pros and cons to both:
When you buy a car, you benefit financially once the car is paid off.
You also have the freedom to use the car however you want.
When you lease a car, you are essentially borrowing it and paying for the
depreciation. Since you are only paying for the difference, it makes expensive
cars more affordable, but leaves you with no residual value.
Leases also come with restrictions on miles, usually about 12,000. My daily
commute: 60 miles/day or 14,000 miles a year, not counting weekends and
road trips.

7. You will pay less for a brand or car that retains its value:
Example:
2013 Prius Two Base: $25,220
Lease: $279/mth, $1000 down, 36 mths
2013 Scion FR-S: $25,255
Lease: $293/mth, $2000 down, 36 mths

8. Create a short list
Good resources:
• Edmunds.com
• Autos.jdpower.com/ratings/
• Caranddriver.com
• Many more…

9. Research
• Safety ratings
• Reviews
• Price
• MSRP or sticker price
• Actual amount being paid - “True Market Value”
• Invoice price
• Incentives and rebates
• Usually involve low APR or cash back
• Discounts are generally offered for makes or models that need to
boost sales; e.g. 2010 was an excellent year to purchase Toyota
because of recall scares.

10. Negotiate
• Always negotiate on price, not monthly payment. Get to minimum price then work out
payment terms.
• Salesman do need to talk to their manager for every offer (“desking it”). This is by design; the
salesperson doesn’t know the barebones price or which cars need to move on the lot. Speed
up the process by timeboxing negotiations and asking the manager to join you.
• Salesmen know that very few customers come back after leaving the dealership. Timebox all
negotiations and be willing to walk if necessary.
• Make sure you know about dealer incentives.
• Be ready to pounce on a good offer.
There are several ways to buy without negotiating:
• Buy online from sites like carsdirect.com, truecar.com, carmax.com
• Buy from a fleet manager…

11. Fleet managers
In the world of sales, volume talks. Fleet managers have
enormous leverage because of how many cars they move.
• Fleet managers are a well kept secret. Most dealership
employees and their families buy from fleet.
• Usually work with businesses but are allowed to sell to the
public.
• They have the ability to sell cars at or below invoice price.
• They are trained to handle transactions start to finish, including
financing, which can make for a better experience.
• They are looking for a quick and easy sale from a well-informed
buyer who is ready to pull the trigger.
Here’s how to do it…

12. Decide on a model, trim, color and options ahead of time. Make sure
you’ve done your homework and know the range you’re happy with.
1. Call the dealership and ask for the fleet manager’s name. If they ask
why, tell them you're doing research for your company.
2. Make an appointment, ask for fleet manager by name and let him
know that you’re looking to buy a car in the next __ days and want to
work with him.
3. Be friendly. The fleet manager can sell to you but doesn't have to. The
attitude will be different than a typical salesman. Much less pressure.
4. Take the car for a test drive. If all looks good, talk numbers.
5. Prices will be quoted as ”four over" or "two under” meaning the amount
over or below invoice price. In this case, $400 over invoice.
If you aren't satisfied with the price, leave on good terms and try several
other dealerships. If the deal sounds good, go for it. There isn’t much room
for negotiation here but you can try several dealerships and will almost
always get the best deal this way.

13. Summary
• There are many resources online for every aspect of car
buying.
• Make sure you’re comfortable with the terms of the loan.
Putting some money down can make a big difference.
• Find out what most people are paying for the car you’re
buying and try to hit the low end. At that point, close the
deal and enjoy your car!