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Grand Prairie Credit Union

Common Sense Approach to Used Car Shopping

This booklet outlines a plan for you to:

Slow Down! Understand Your Trade Value

Use The Internet To Research Prices Take A Test Drive

Walk Away! Negotiate Via Email – NOT At The Dealership

Get The Best Price Determine The Bottom Line via email BEFORE You Take

Delivery And Eliminate Optional Fees

(Turn the page if you want to get the best deal possible on your next used vehicle)

Common Sense Approach to Used Car Shopping

 

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First Things First –slow down and take your time!

One of the costliest things you can do is walk into a dealership at night or on the weekend and drive away with a used vehicle 3-5 hours later. What if you could have negotiated a lower price by walking away? What if another dealer across town would have sold you a virtually identical vehicle for $1000 less and given you $1000 more for your trade?

Patience

+ Knowledge

+ Confidence

+ Taking emotion out of the car buying process

= $$ in your pocket.

1. Call the credit union and get pre-approved so you will know what you can spend, including how your trade-in value versus your payoff (if applicable) will affect your final negotiated price. We will issue a sight draft to you that looks and acts just like a check and you will be ready to shop!

2. Having a firm, realistic, and fair value for your trade and possible negative equity situation is a crucial component to car shopping. If you are legitimately $4000 “upside down” in your trade then don’t let the dealer tell you that you are $6000 “upside down” unless you want to pay an additional $2000 for your new purchase.

By the same token, if you have $4000 equity in your trade then you need to make sure it is applied as a $4000 cost reduction and tax savings on your next purchase!

We can help you determine a realistic value for your trade.

3. Research the vehicles you are considering online at sites such as:

www.edmunds.com www.kbb.com www.nada.com www.autotrader.com     www.cars.com     www.autos.yahoo.com www.carsdirect.com 

 

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These sites offer a multitude of consumer reviews in regards to reliability and owner satisfaction (via owner forums) as well as the ability to search for a specific vehicle. You can also type “used car buying tips” and “used car checklist” into a search engine to help you in your research. You will find multiple links with an abundance of valuable information, but be aware that many of these sites are trying to sell you something.

What does this mean?

Certified Pre-Owned (CPO) vehicles typically go through a multi-point inspection and are backed by the manufacturer or the dealer’s extended warranty company for a certain amount of time / mileage in regards to the new owner not having to pay for certain mechanical failures. If you are considering a CPO vehicle, ask the dealer for documentation that details the specific coverage and terms that apply to the vehicle you are considering. You can request a “non-certified” price and compare the difference in pricing if you add our Platinum (exclusions only) Mechanical Breakdown Protection plan.

 

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The thing about used car prices is that they fluctuate from day to day and month to month. They are affected by a variety of factors including but not limited to fuel prices, economic conditions, and new car supply and demand. Further, you just never know what a dealer paid for a used car.

He could have underbid when the previous owner traded it in and now owns it way below book value

He could have overbid when the previous owner traded it in (just to put the deal together) His used car buyer could have bought it cheap at the auction His used car buyer could have paid too much at the auction You just don’t know and it’s highly unlikely they are going to tell you!

So – now what??????????

Conduct LOTS of research from the comfort of your home utilizing the sites referenced above.

You can conduct a detailed equipment search using these sites to find the exact vehicle you have in mind – or close to it.

When you conduct your search, you may notice price discrepancies from dealer to dealer for vehicles that appear to be very similar. Keep scrolling down and notice the lower prices from dealers who are more realistic in their asking price. Write down the VIN if a specific vehicle is of interest to you – even if it has a higher asking price. Share the VIN with your Cy-Fair FCU rep and let us do some homework for you. Remember…..prices are negotiable! Look at the Carfax or AutoCheck report. Most dealers provide this report for free when they list a unit on their website. If you are buying from an individual, purchase the CarFax or AutoCheck report yourself. It can save you a lot of headache down the road.

4. Call the dealership to make sure the vehicle is still available and set an appointment to test drive the vehicle(s) you are considering.

 

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IMPORTANT!! Go ahead and have the used car manager provide a written bid for your trade while you take your test drive (if you have a trade) and make sure to give your trade a really good detail job!!

On your test drive and inspection:

Do not show any emotion. Even if you are in love with the car you need to act like it’s not very

appealing to you.

Take detailed notes of the model, trim level, equipment and features. There can be several thousand dollars difference between a base model compared to an upscale model. Compare apples to apples.

Determine if this is the vehicle you want to own or whether you want more or less equipment and features.

Tell the salesperson that you are just shopping. Kindly thank them for their time and no - there is nothing they can do to get you to buy today.

DO NOT sign a credit application! Repeat – DO NOT sign a credit application.

Do not negotiate at the dealership.

WALK AWAY. DON’T DO THIS

DO NOT LET YOUR EMOTIONS CAUSE YOU TO MAKE AN “ON THE SPOT” PURCHASE DECISION AT THIS STAGE THAT CAN COST YOU THOUSANDS OF DOLLARS. BE POLITE……BUT WALK AWAY.

5. Call us and provide the VIN as well as the specific model you are considering. We can help you determine a fair and realistic sales price for the vehicle.

6. Send the salesman or sales manager an email. Email communication is crucial at this point

as it removes personal contact emotion (that can cost you money) and allows the exchange to focus strictly on getting the best price. Further, your email communicates 3 things to the salesman or manager:

You are not in love with that vehicle alone. They have competition.

 

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They need to drop the price to get the sale.

Sample email:

“Dear Jim: thanks for taking the time to show me the 2011 Explorer. I have test driven a few other vehicles that fit my needs and will buy one of these vehicles in the next day or two depending on who gives me the best price.

Please reply with the lowest price your dealership is willing to accept for the Explorer as well as whether you are willing to pay more for my trade-in. I am going to buy a pre-owned vehicle in the next day or two and your response will determine if it’s the Explorer or another vehicle.”

7. Wait for the response. If you feel the price is too high you can always counter offer. Remember that this is a negotiation. If it’s a “hard to find” unit you may have to live with their price if you really want the vehicle. Every situation will be different due to the nature of used car prices, supply, demand, and whether you just HAVE to have it.

Note: if they ask you what other vehicles you have test driven, simply reply “similar vehicles that fit my needs”.

If you feel the price is fair, the next step is to determine if they are being fair and realistic in

regards to the value of your trade. If they are in the ballpark and you are willing to accept their offer for your trade, go to Step 9.

8. If they aren’t allowing enough for your trade, it’s time to send another email.

“Jim: I am willing to accept the selling price on the Explorer but I need more for my trade. If you can raise your bid from $7000 to $8500* I will be there tomorrow with my trade and a check and you will have a new customer.”

Note: $8000* is a fair price for the trade. Aim a little higher in your email. A variety of replies could happen at this point.

They could accept your offer. They could split the difference. They could stand firm. Only you can decide whether you are willing to live with their counter-offer, but never lose sight

of the fact that they want to sell the car.

9. If you reach an agreement on the sales price and trade value, have the dealer send you a copy

of the buyer’s order. Send the salesman an email along the lines of the following:

 

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“Please send a copy of the buyer’s order – exactly as it will read when I sign it - so I can review before I write the check and take delivery. Please remove any additional charges for VIN etching, undercoating, maintenance plans, dealer admin fees, etc. If everything looks good I will set an appointment to bring in my trade and take delivery of the vehicle.”

It is vitally important that you send this email and get a copy of the buyer’s order before you take delivery of your vehicle!

IMPORTANT SECTION – PLEASE READ! Requesting a copy of the buyer’s order to be emailed to you will set off alarm bells at many dealerships.

Why? Well…..the dealer does not want to give you an opportunity to carefully observe, identify, and remove optional fees that can add hundreds if not thousands of dollars to the price of the vehicle. Further….the dealer will want you to visit with their “business manager” to “verify the paperwork for titling purposes”, etc.

 

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The F&I (Finance and Insurance) or Business Manager at a typical dealership is highly skilled, highly trained, and highly compensated. Their job is to generate maximum income for the dealer (and themselves) by selling you their financing, Vehicle Service Contract (VSC), GAP, and other types of protection products. Further, they will give you a variety of skilled responses as to why they can’t remove optional fees from the buyer’s order (VIN etching, dealer service fee, etc.) Many dealerships generate more income per vehicle from the finance department than the sales department. Who pays for this? You do….IF you walk in unprepared and don’t have your Smart Check already filled out. Therefore, it is in your best financial interest to have a copy of the buyer’s order emailed or faxed to you prior to taking delivery. However…..what if the salesman or sales manager refuses to send it to you? Nobody wants to wrap up a vehicle purchase with a conflict situation. It should be a time of happiness as you are just one step away from enjoying your new (to you) vehicle. Unfortunately your happiness (making sure you aren’t hit with optional fees) may not coincide with the dealer’s happiness (making sure they maximize their profit at your expense). Our advice is to be firm but polite. Be as nice as possible….but hold your ground….keep your money in your pocket….and stick to email communication only. Dear Jim:

Thanks for your response. As mentioned, I will be writing a check for this vehicle. If you aren’t able to send me a copy of the buyer’s order, please have your business manager send me a copy. Please do not have your business manager call me as there is nothing to discuss until I receive a copy of the buyer’s order before I make an appointment to take delivery. I simply want to review the figures and bottom line before I write my check. If everything looks good, I will have the check in hand when I take delivery and will be happy to sign the title application, buyer’s order, etc. You have worked hard to get this sale. Let’s not jeopardize all your hard work by being uncooperative in regards to sending me a copy of the buyer’s order.

 

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At this point, the ball is back in the dealer’s court. Many dealers will cooperate. Others will not. It may boil down to a war of wills. Hopefully not! Only you can determine if you are willing to show up to the dealership with a blank check. If you do show up with a blank check, you are assured of a friendly visit with the business manager. As mentioned, this individual is highly skilled. No offense to our members….but chances are that he or she is a much better salesman than you. After a little small talk, routine paperwork, and making you feel comfortable, the business manager is going to ask you the following question: ”what interest rate are you getting from your credit union?” If your rate is 3.5%….they will offer 3.4%. They will do their best to get you to focus strictly on the rate…..which means you won’t be focusing on the optional fees and charges. They will then focus on selling you their GAP, Warranty, maintenance plans, etc. Grand Prairie Credit Union’s GAP and Warranty prices are almost always substantially less than the dealer’s prices and provide the highest levels of coverage and terms available in today’s marketplace. Our products are insured and administered by A rated carriers with long term, proven track records in both credit unions and dealerships nationwide. So….back to 3.5% vs. 3.4%. The difference in payment is about $1 a month, which can quickly be eclipsed in the following scenario:

Credit Union:

Credit Union Loan Dealership Loan $30,000 Vehicle $30,000 Vehicle $2113.02 legit TT&L $2113.02 legit TT&L $1295 Vehicle Service Contract $1995 Vehicle Service Contract $350 GAP $750 GAP $495 Dealer Service Fee $299 VIN Etch $33,758.02 Total $35,652.02 Total 3.5% @ 60 Months $3.4% @ 60 Months $612.30 Payment $646.98 Payment

Is 3.4% at the dealership really better than 3.5% at the Credit Union? The only way to 100% ensure that you aren’t burned with optional fees and overpriced protection products is to review the buyer’s order before you take delivery and walk in with your Smart Check already filled out.

 

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10. Speak with your credit union in regards to what the exact amount of the buyer’s order should

read (i.e. the bottom line) after factoring in the sales price, trade value, and legitimate fees and taxes. This step can save you hundreds if not thousands of dollars in “optional” product fees and hidden add-ons. . Use our buyer’s order calculator to help you crunch the numbers.

A thorough review of the buyer’s order can save you thousands of dollars.

See the example on the next page.

 

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Between these items and these items, the dealer added over $8,000 to the price of the car. This could have been avoided!!!

Note: Many if not most dealers will tell you that “add-on” products such as VIN Etching, Theft Protection, and Phantom Footprints are “already on the car” and they cannot take them off….so you have to pay for it which can cost you from $200 - $600. This is simply not true. The dealer may have utilized the stencil to put the “product” on the car, but the stencil only costs around $5. The “benefit” is not activated until the deal is closed and funded. If you just have to have this product, buy it for $25 at www.vinetcher.com If the dealer refuses to take it off because it’s “on the car” you can also say….”That’s fine…..you can leave it on the car but I just need you to lower the cost of the car by $549.” (or whatever amount they are trying to charge)…….you can also say “I’ll give you $5 for the cost of the stencil, but I know you haven’t paid to register the benefit so please remove it from the buyer’s order.”

 

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Further…many dealers will charge a “prep fee” or “admin fee” or “dealer service fee” ranging from $195 to $695. This fee is nothing more than added profit for the dealer. Firmly but politely refuse to pay this fee and ask the dealer remove it from the buyer’s order. “Dear Jim: I would hate for you guys to lose this sale because you refused to remove this fee. If you want to keep the fee on the buyer’s order that’s fine…..I just need you to lower the price of the car by the same amount.” ALWAYS review the Buyer’s Order and have your loan officers direct phone number

Review the Buyer’s Order from home or work

Use our Buyer’s Order Calculator

Direct phone number to your Credit Union loan officer

 

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11. If everything looks good, call your Credit Union loan officer for drafting instructions

Does the dealer need my Social Security Number?

If you are going to take advantage of additional consumer cash by utilizing the factory lender, then yes you will have to complete a credit application and provide your SS# to the dealer. If you are going to utilize our Smart Check, some dealers may require you to provide your SS# for identity verification purposes….and their internal policy may forbid them from selling you the vehicle if you do not provide it. Here’s how you handle it. We will provide a form to you that allows the dealer to utilize your SS# for identification purposes only……but not to pull your credit. Print your name…..sign the form….and have the dealer rep do the same. Tell him or her that they may write your SS# on a piece of paper and utilize the number for identification purposes. Once they write it down, ask them to give the form back to you so that you have documentation that you provided your SS# for identification only.

 

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12. Final Note: If you opt for accessories to be added later (window tint, running boards, etc..) make sure you get a signed copy of the “We Owe” document in addition to these items being listed on the Buyer’s Order.

DO NOT rely on a handshake. This document details the extra equipment or services that were added to your buyer’s order and you will need it when you bring your vehicle back to have the equipment installed or services rendered.

If the transaction has gone smoothly and the dealer provided a good buying experience, be sure and pass on the salesman’s information to friends as well as the credit union so that we can refer other members.

We at Grand Prairie Credit Union understand that this process is more time consuming than just driving to a dealership, negotiating a deal, and driving off in a vehicle.

However, let’s say that this process takes up 4 additional hours of your time but you end up saving $4,000.

You just paid yourself $1000 an hour for your efforts and patience.

We think it’s worth it!