Go in Prepared, Leave with a Vehicle You Love
When you’re in the market for a new or used car, truck, or SUV, you’re likely considering local car dealerships to visit to find your next ride.
Before you go, there are a few things you should know so you are prepared for the experience.
Understand Dealer Pricing Structure
At new and used car dealerships, there are multiple prices you may encounter: asking price, dealer retail price, Kelley Blue Book value, and wholesale price.
The asking price is the amount of money the dealer wants to get out of their vehicle. This is the price listed in the ad for the vehicle. You can, of course, make an offer at a price you’re more willing or able to pay. Know that some dealerships, like a prominent Ford dealer in Kansas City, do not haggle with their customers because they already price their vehicles at the lowest possible asking price.
The dealer retail price is the highest price the dealer wants to get from a vehicle. It’s similar to the asking price, but many car salespeople will use this as the starting point for negotiating.
Kelley Blue Book (KBB) price, or “book price,” is the resource many car dealerships use to set their retail prices, among other proprietary resources. KBB provides information on dealer retail, private-party, and trade-in prices. It is publicly available to car buyers as well.
Invoice price is the amount the dealership paid for a new vehicle, fresh from the factory. Similarly, wholesale price is what the car dealership paid for a used vehicle at auction – the rock-bottom amount a dealer can accept in order to break even. It isn’t likely you’ll be able to buy the vehicle for this amount, however.
Narrow Down What You’re Looking For
Do your research ahead of time about the type of vehicle you’re looking to purchase. This will help the salesperson you’re assigned to find the right vehicles for you to test drive.
Part of what you need to know is how much money you’re willing to spend on a new or used vehicle. You can use various car payment calculators online to get a sense of how much you might pay each month, based on your auto loan interest rate, down payment, and loan term.
You’ll also need to know what kind of vehicle you want to drive every day. You can learn more about both new and used vehicles by reading reviews on auto magazine websites or in consumer-rating magazines. Other considerations include fuel economy, number of passengers, cargo room, whether you want four-wheel drive, and body style.
To make it even easier, you can converse with the salesperson you’re working with prior to your appointment. Send them a list of vehicles you’d like to see – or the must-haves you’re looking for – and they can help you choose from their inventory.
If you plan to walk into the dealership without an appointment, bring a list of vehicles you’re interested in seeing. You can find detailed information about each vehicle on the dealership website.
Bring Along Important Documents
At many reputable dealerships, you can apply for financing while you’re there and do not need to come with your own loan from the institution of your choice. However, to apply for a loan while you’re at the dealership, their finance department may ask you for proof of income. They use this information to allow potential lenders determine what they’re willing to loan to you. Your credit score also factors into this decision.
Bring along a month’s worth of pay stubs, a letter from your work confirming your employment and pay rate, or your offer letter that lists your salary or hourly pay and number of hours worked each week.
Be prepared to have a credit check run through one of the major credit reporting bureaus, like Experian or TransUnion. If your credit score could use some improvement, take a few months to work on that before applying for a car loan. You’ll not only increase your odds of getting one, but you may qualify for a better interest rate, which saves you money long-term.
If you’re trading in a vehicle, it’s helpful to bring all your keys to said vehicle as well as your title, registration, and proof of insurance. This will speed up the trade-in process significantly, and you won’t need to pay future visits to the dealership to drop them off.
Plan to Spend Some Time at the Dealership
It’s almost impossible to walk into a dealership, buy a vehicle, and leave without spending at least a few hours at the dealership. Give yourself plenty of time to complete your purchase, and don’t schedule important activities after your appointment at the car dealership.
Some people will even need to return to the dealership a second time to complete their purchase, depending on the time of day their initial appointment was, or if the finance department needs more information before finding a loan with the best terms.
Are You Ready?
Now that you know these important things to be prepared for before visiting a car dealership, we think you’re ready for your appointment and what is hopefully a wonderful experience in car-buying.