Next to a house, buying a new car is the biggest purchase decision most people will ever make. Facing-off with a new car salesperson can be intimidating, but if you know which questions to ask, and what kind of answers you’re looking for, you’ll feel a little better about plunking down your hard-earned cash. Here are seven “must ask” questions.
“Can I take it for a test drive?”
It may sound obvious, but unless you’ve had first-hand experience with the car you’re considering, always take a test drive. First, get inside. See how well it “fits” your needs. Have the salesperson walk you through the features and controls. Then, take it out on the road. To the extent you can, see how the car performs in various environments. Is it maneuverable in the city? How does it handle on a winding road? How well does it accelerate when merging onto the Interstate? How stable is it at highway speeds? All told, the process can take up to an hour or so, but it will be time well spent.
“What fees will be added to the cost of the vehicle?”
When buyers arrive to sign the purchase contract and take delivery of their new vehicle, they often find the price is higher than what they’d negotiated. There’s a difference between negotiated price and out-the-door price. There are always fees baked-in to the out-the-door price. Some, like tax, registration and documentation [more on this in a moment] are legitimate. Some dealers, however, tack on associated fees and give them official-sounding name, like “S&H” or “dealer prep” or even “shipping” which can be reduced or eliminated entirely. When you see unexpected fees that increase the out-the-door price of the vehicle, you’ll want to know exactly what they’re for.
“How much is your documentation fee?”
All car dealers charge a documentation (“doc”) fee when you buy a car to cover the cost of filling out all the paperwork. As noted above, it’s legitimate. But the amount can vary widely. Some states have laws that cap doc fees, but other states don’t and they can add as much as $1,000 to your out-the-door cost. If you’re doing business in a state that doesn’t cap doc fees, and the fee can’t be reduced, tell the dealer you’ll need to negotiate a better price on the car itself.
“What options are included in the sticker price?”
Options that weren’t installed by the manufacturer at the factory are called dealer “add-ons,” and the markup can be quite steep. Popular add-ons include rustproofing, fabric protection, window tinting, all-weather floor mats, and more. Dealers include them to boost their profit margin. Don’t automatically accept add-ons. There’s nothing wrong with paying for one if it’s something you want, but the dealer’s mark-up is negotiable.
“Where has the vehicle been since it left the factory?”
Check the odometer. You’ll want to know how many miles are on the car. It’s possible your dealer got it in a trade with a dealer that is dozens or even hundreds of miles away. Or it may have been used as a dealer demo and taken on test drives. If there are more than about 200 miles on the car, you should consider negotiating a price reduction. You may also want to ask for its “in-service date.” It’s usually the date you take possession of the vehicle, but not always. It’s important information to have since that’s the date warranty coverage went into effect, and ultimately, the date it expires.
“What kind of deal can you give me on financing?”
It doesn’t do much good to negotiate a great deal on the price of a car only to throw it away by not paying careful attention to the terms of your financing agreement. If you think it’s easier to just finance your purchase through the dealer, you’re right. But what you gain in convenience can cost you mightily in the long term. Most times, the dealer will quickly sell that contract to a third party, such as a bank or finance company. Often, the real lender will have approved you for a loan with a 4.5 percent APR based on your very good credit score. But it will allow the dealer to charge you as much as 6.5 percent. The difference is the “markup,” and the markup goes directly into the dealer’s pocket — a tactic called “interest-rate bumping.” It’s critically important to comparison shop and to be pre-qualified before you go to a dealer. If the dealer quotes you a higher APR, it could mean you’re being bumped.
“How much will you give me for the car I no longer need?”
This is an important question to ask your dealer, but like arranging for financing it’s important to do your homework first. In most cases, you’ll get more for your no-longer-needed car if you sell it yourself. If you need a new car now but need to apply the cash from the sale of your old car to get it, you may have little choice but to trade it in. If, on the other hand, you can complete the new vehicle transaction before selling your old car, you’ll be better off financially to do so. Whether you trade it in or sell it yourself, you’ll want know the value of your current car before buying your new one.