5 Questions To Ask Before You Say Yes to a New Car Deal
How To Spot Deal-Killing "Land Mines"
"So, do we have a deal?" the salesman says, extending his hand.
Wait! Before you agree to buy that new car, take a few minutes to ensure there are no land mines that will blow up the deal when you're in the middle of signing the contract. This also is your last chance to use your leverage to sweeten the deal a little more.
These questions are "deal testers," a way for you to verify the terms and unearth any problems. The list includes two questions specifically for people who did most of their shopping via the Internet and are making a deal over the phone without having seen the car. (We highly recommend the Internet car shopping route since it is faster, less stressful and will generally get you a better price.)
So instead of saying, "Deal," ask these questions and you won't fall victim to salesmen who try to boost profit from the unsuspecting buyer.
1. What other fees will I be charged? Another way to ask this question is, "What's my out-the-door price?" Up to now, you have probably been negotiating the price of the car only. You will, of course, be required to pay additional fees, some of which are legitimate and some which might be questionable. Legit costs include sales tax, registry costs and a documentation fee. Some dealerships, however, tack on additional fees that they invent as a way to build profit back into the deal. The sooner you find out about these fees, the better you can avoid them. Read more in "What Fees Should You Pay?"
2. How much is your documentation fee? All car dealers charge a documentation — or "doc" — fee when you buy a car. This means they actually charge you for filling out the contract. It seems strange, but it's universal. What isn't universal is the amount dealers charge for the doc fee. Some states cap the doc fee, usually below $100. Other states don't regulate the doc fee, so it can be as much as $600. If you think you're getting a good deal, it could be because the dealer intends to slap on an extra-large doc fee later on. Find out the amount early and negotiate the fee down to a reasonable level. If the salesman won't budge, say that you'll take your business elsewhere.
3. Are there any aftermarket parts or alarms on the car? Most cars come with options installed at the factory as the car is being built. But sometimes the dealer adds items as a way to boost profit. Popular ones include mud flaps, aftermarket alarms, running boards, tinted windows or the ever-popular "paint protection package." These are called dealer "add-ons" and the mark-up can be quite steep. An increasingly common add-on is LoJack, a vehicle recovery system. Dealers often add the system's cost to new cars without telling the buyer, who discovers it when he reviews the contract. We're not saying you should never buy a car with dealer add-ons. But you want to know about any add-ons well in advance. Know that these are profit centers and negotiate accordingly.
4. How many miles are on the car? This is particularly important for Internet shoppers who might not have seen the car yet. You would think that every new car has less than 10 miles on the odometer. But in some cases, the car might have gone on a lot of test-drives or is a "dealer trade," meaning that the dealer traded another car for it and it's been driven in from another dealership. If there are more than about 300 miles on the car, you need to negotiate a lower price.
5. Can you deliver the car? This is another great question for Internet shoppers. If everything else in the deal looks good, and you haven't yet said yes, you could ask for this one last little perk. Say something like, "Well, if you are willing to deliver the car, then we have a deal." Instead of going to the dealership and waiting while the car is washed, gassed and prepared for delivery, why not stay at your home or office and let the dealer bring the car to you? A dealer representative will arrive with printed contracts and you won't have to go through the gauntlet of sales pitches from the finance and insurance manager.
Bonus question: Is the car on your lot? If you tell the salesman that you don't want a car because of its color or options, he'll quickly answer, "We can get you the car you want, no problem." It sounds like he might have the right one out back, or in another lot. In fact, he is planning to do a dealer trade for the car. This isn't necessarily a bad thing, but it means the car isn't immediately available and the terms of the deal could change. It's quicker and cleaner to deal with the cars that the dealership has on its lot.