Strategies for Smart Car Buyers^SM

There's a story about a New York City counterfeiter who tried to forge $20 bills but got it wrong — they came out as $18 bills. He drove way up into New England, thinking he could pass them off to the rubes living there. He walked into a Vermont country store and asked for change for the $18 bill. The clerk said, "Sure. Do you want two nines, or three sixes?"

I was reminded of this joke recently when I went to Vermont and my friend asked me to help him buy a van to replace his Plymouth Voyager. I was out of my element among all those cows and maple trees. Would I really be able to help my friend? Or would these local dealers seize the opportunity to fleece a city slicker?

Much of car buyers' uneasiness comes from the nagging fear they've been had. Car salesmen try to offset this fear by assuring prospective buyers they're getting a rock-bottom deal. Once, as I was signing a contract on a car I'd just bought, the general manager of a dealership said, "I just wanted to thank you for helping me lose money." I often repeated this line to my friends as proof that I got a screamin' deal.

With these thoughts in mind I asked my friend Neal, an antique dealer, what kind of a deal he wanted. A good deal, he said, but he didn't want to be a jerk about it. "I hate it when people pick up something in my store with a $200 price tag on it and say, 'I'll give you 10 bucks for this thing.'"

"So you don't mind if the salesman makes a commission?" I asked.

"No," Neal said. "But I don't want to get ripped off. The last van I bought, the salesman was this Irish guy with a great accent. I think I paid too much."

Seven years ago and he was still chafed by it.

We got onto Edmunds.com using Neal's computer and I showed him how to use the "Compare Similar Vehicles" feature where he could look at competing vans from other manufacturers. He was tempted by some of them but kept saying, "I've had good luck with Chryslers. I feel comfortable with them."

We returned to the Voyager detail page and considered the options he wanted. Basically, he was after a "stripper." The only must-have features were the V6 engine and rear defroster (those Vermont winters are tough). I glanced at the invoice, MSRP and the True Market Value (TMV®) prices. I explained to Neal that TMV is an average of what other buyers have paid for this vehicle in his region. At a glance, it appeared that TMV was several hundred dollars over invoice.

We clicked on the incentives link and found Chrysler was offering $3,000 cash rebate or zero-percent financing. If Neal took the $3,000 rebate off the negotiated price of the car, he could still get a five-percent interest rate. We computed his payments on the Edmunds calculator and, with no money down, got a monthly payment of $383 for 60 months.

Finally, we clicked on the "Find Local Dealers" button on the vehicle detail page and saw that Foster Motors was in Middlebury, 23 miles away, while Freedom Chrysler was in Burlington, 31 miles away.

"OK, let's go," Neal said.

"Hold on," I said. "Let's give them a call and get the pricing part of it out of the way first. Then, all you have to do is find the right van."

I called Foster Motors and asked for the Internet manager. They said he was out for the day so I asked to speak with the sales manager. A friendly voice came on the line and, after some chitchat, he said he would sell the Chrysler Voyager to us for $400 over invoice.

When we got to Foster, I found it was a medium-size Chrysler and Dodge dealership spread out along a country road among — what else? — dairy farms. We zipped over in a golf cart to see the vans. Neal instantly rejected the idea of considering a Dodge Caravan because he liked the Chrysler badge and the Voyager's grille reminded him of a PT Cruiser, which he secretly admired. Our salesman, a pleasant, low-key guy named Bernie, was very helpful and knew the vans inside and out.

Neal couldn't find the right color and configuration at Foster's, so we drove back to his house. "Maybe I'll wait a few weeks and think it over," he said. But the next morning he said, "I really want to get this over with. Let's go to the dealership in Burlington and see what they've got."

Again, I stalled Neal and placed a phone call to the sales manager at Freedom Chrysler. "We've shopped around a little," I told him, "And we've gotten a quote of $400 over invoice. Can you do any better?" He said he could probably do $300 over invoice.

We headed to Burlington, population 38,800. There, Neal found a Patriot Blue Chrysler Voyager with a V6 engine, a convenience package (which includes a tilt steering wheel and cruise control) and a rear defroster. He drove it. He liked it. It was time to make a deal.

I took Neal aside and said, "You're getting the van for $300 over invoice, which is fair. Then the dealer will deduct the $3,000 rebate from Chrysler. And then it will finance the loan at 5.49 percent. That's a good deal." He agreed, but added, "I want free floor mats and I don't want to pay extra for an ashtray. It's just a stupid little piece of plastic but they charge you like a hundred bucks for it."

We sat down across from the salesman, Craig, and said, "We've already got a price from your sales manager. And I'm sure we could beat that price if we shopped around. So all we want is $300 over invoice with free floor mats and the smoker's package."

Craig went away, came back and said it was a done deal. The papers were drawn up and Neal's monthly payment was $374 — $9 less than we had calculated. Neal signed on the dotted line without getting the usual high-pressure pitch from the finance manager to buy extra items or an extended warranty.

Outside, the gleaming van was gassed, washed and detailed. We all shook hands and Neal climbed aboard. Craig bid us farewell, then went back into the dealership.

And then it happened.

As Craig turned away and walked back into the dealership, he clapped his hands together as if to say, "I did it!" It was a gesture that struck fear into my heart.

My reservations deepened when, later, Neal said, "I really wanted to see them wince." He was right, the salesman never winced. During the night I woke, wondering if we'd been taken.

It was then that I invoked my "deal appraiser" — a list of questions to test what kind of a deal it is:

Did you follow TMV? This is the typical selling price of the car in your region and is a good price for you and a fair deal for the dealership. Yes, we got TMV.

Did you take advantage of all incentives? The $3,000 rebate put us so far ahead it was hardly worth grinding for a lower price. Furthermore, we only paid sales tax on the after-rebate amount, further reducing our costs.

Did you get nailed by inflated fees or added extras? We paid the locally standard price of $90 for the doc fee. But there were no other fees and no dealer installed extras such as an alarm system.

Did you push for extras? The floor mats and smoker's package we got for free would have cost $200 if bought separately.

No, I thought, mentally reviewing the list, this was a clean deal. My fears abated when I found Neal out in his driveway early the next morning, admiring his purchase. "I can't believe I have a new van," Neal said. "It's great."

Throughout the day Neal kept thanking me for my help. After all, I was an expert. And I told him it was a good deal. And it was a good deal. But I had forgotten only one car-buying rule. Next time around, I'd like to see the car salesman wince. Just once.

For this, and other buying and leasing strategies, pick up a copy of STRATEGIES FOR SMART CAR BUYERS, by the editors at Edmunds.com.