Chat Transcript

<Edmunds_Moderator> Welcome to our Special Chat Event with Guest Expert Philip Reed, Editor and Car Buying Expert at Edmunds.com. He's here to share his extensive knowledge on "Car Buying Tips & Secrets". He will answer as many submitted questions as he can, so ask away! We're happy you joined us!

<Philip_Reed> Hi there, great to be here

<Edmunds_Moderator> Lou: How can I find out what customer rebates or dealer incentives are currently available?

<Philip_Reed> We post that information on www.edmunds.com

<Philip_Reed> It's under Car Buying Advice, under Rebates. Generally, you should ask the dealer.

<Philip_Reed> They're willing to share that info with you in most cases, esp. if you can use it as a down payment- that means that they can get you into a new car.

<Philip_Reed> Some of these rebates can be very powerful to you.

<Edmunds_Moderator> gmman1: Phil- Why would a dealer sell a car into holdback?

<Philip_Reed> gmman, could you clarify your question a bit? It is an important topic.

<Edmunds_Moderator> gmman1: dealers have a cost call "dealer holdback", what is this? Will they give that to a consumer?

<Philip_Reed> gmman, they won't give it to the consumer, but knowing about it can get you a better deal.

<Philip_Reed> In two ways: if the car has not been sitting on their lot very long, they can sell it at invoice and make a profit on the holdback.

<Philip_Reed> also: knowing that there's a holdback can make you bargain more aggressively.

<Philip_Reed> Dealers don' t really want to discuss holdback, so you won't make much headway by bringing it up.

<Philip_Reed> But knowing about it helps you to drive a hard bargain

<Edmunds_Moderator> richard: When dealers (Honda) service my car, should I question every little charge or are they The Professionals?

<Philip_Reed> Richard, this may be a question for our service advisor, who will be chatting soon, but...

<Philip_Reed> yes, you should always inspect your service bill and keep in mind that some service advisors get a commission on the parts and labor that they sell to you.

<Philip_Reed> Need I say more?

.<Edmunds_Moderator> TX_TBIRD: Phil when I go to trade in my car, should I expect to get the Blue Book price for it or something approximate to that?

<Philip_Reed> You almost never get even trade-in bluebook value without a major struggle.

<Philip_Reed> You're almost always better off selling to a private party. Bear in mind there is the consumer's Blue Book and there is the Dealers version, so you shouldn't expect those numbers to match.

<Philip_Reed> If you're determined to trade in, shop your trade in first (go to 3 dealers and get figures) and then work your new car deal from there.

<Edmunds_Moderator> donny: Have you ever had any backlash from car salesman calling you a traitor?

<Philip_Reed> Not yet, I'm fairly new to the job, just about 5 months.

<Philip_Reed> But, it may be coming!

<Edmunds_Moderator> dylan: Hello--Do you have an opinion on buying Honda Odysseys used--will they continue to be near the new car price?

<Philip_Reed> I just had an editor at Edmunds.com who just paid about $500 over sticker for a new Odyssey.

<Philip_Reed> He told me there were many waiting lists for new Odysseys. It's a highly desirable car, and very few of them are showing up on used car lots.

<Philip_Reed> So yes, the used car prices will close to the new car Odyssey prices.

<Philip_Reed> Edmunds.com has really good classified ads for used cars. You can type in your zip code and then expand your search range until you find the used car that you want.

<Edmunds_Moderator> TX_TBIRD: Can you tell us more about what "holdback" means?

<Philip_Reed> Holdback is money that is paid to the dealer by the manufacturer once the car is sold. It's a formula based on how long the car is on the lot.

<Philip_Reed> So basically, the faster they sell the car, the more of the holdback money the dealer gets to keep.

<Philip_Reed> But not all cars have holdbacks. Again, you can check www.edmunds.com. Cars with holdbacks are listed.

<Edmunds_Moderator> sekeew: Hi Phil: I'm considering purchasing either a VW Jetta or Golf in the near future. I'm undecided as to whether to buy a 2000 or wait for the 2001's. What sort of percentage off of MSRP should I expect to get on a 2000 VS a 2001.

<Philip_Reed> sekeew, I know that the Passat is selling about $500 below sticker price. And I believe that the Jetta is equally popular.

<Philip_Reed> But I was told just last week that with the 2001 models showing up on VW lots, the 2000 models are going at "bargain" prices.

<Philip_Reed> To find out what you should pay for a 2000 model; always check Edmunds' True Market Value prices.

<Philip_Reed> Those prices are an accurate indication of what new cars are actually selling for.

<Edmunds_Moderator> jeffrey: This may sound like a silly question, but I'd be interested to know the secret of the New Car Smell. Is it true that dealers can buy it by the bottle?

<Philip_Reed> If you know where to get it, send me the address. By the way, a recent t Simpson's' episode had a user getting ready for surgery receiving New Car Smell instead of anesthetic.

<Philip_Reed> One more thing: people joke about New Car Smell, but it's very real!

<Philip_Reed> As a car buyer, hold your breath on the test drive. It's intoxicating!

<Edmunds_Moderator> ld jones: Ordered a F-350, cannot get a schedule date to build from factory. Any suggestions!

<Philip_Reed> I know that with the PT Cruiser, there's actually a website where you can type in your order number and find out exactly where your car is in the manufacturing/shipping process.

<Philip_Reed> If you surf the web, you might be able to find a similar site for the F-350.

<Philip_Reed> Or try the manufacturer's customer service 800 number. They're pretty good about researching questions like this.

<Edmunds_Moderator> TX_TBIRD: Phil, what about the PT Cruisers...are they completely sold out for 2000? I heard I could order one but it would take 6 mos! Is that for the 2001s?

<Philip_Reed> The PT Cruiser is ONLY a 2001. I just bought a PT Cruiser for Edmunds, and we had to go to Massachusetts to get it (we're in California)

<Philip_Reed> But we got it within 3 weeks.

<Philip_Reed> Call all of the Chrysler dealers in your area and get your name on their dropout list.

<Philip_Reed> Sometimes a Cruiser is delivered and the person decides they don't want it. The dealer will cal l you if you're on the dropout list.

<Philip_Reed> Don't give up; they're out there!

<Edmunds_Moderator> gmman1: Edmunds has something new called TMV. What is this? Will every dealer honor this price? Why is Edmunds pricing vehicles now?

<Philip_Reed> Traditionally, there was sticker price and invoice price and most new cars sold somewhere between these two figures.

<Philip_Reed> TMV (True Market Value) is based on real research conducted by Edmunds to find out at what price cars are actually being sold for.

<Philip_Reed> This means you don't have to guess or haggle for a long time.

<Philip_Reed> Theoretically, if you offer TMV price to a new car dealer, they will accept it.

<Philip_Reed> It also gives you some ammunition in your arguments when you negotiate, if you show them a printout of Edmunds' TMV.

<Edmunds_Moderator> Carleton: What is the normal difference between the price a dealership pays for a trade-in and the price they sell it for?

<Philip_Reed> Huge!!!

<Philip_Reed> For example, I helped my dad buy a car that was advertised by the dealer for $17, 995. We bought it for $10,995.

<Philip_Reed> And we may have paid too much.

<Philip_Reed> Most people don't realize that Used Cars constitute a huge profit for a new car dealership.

<Philip_Reed> I've heard the profit is much greater than New Cars.

<Philip_Reed> This is the opposite of what most people assume.

<Edmunds_Moderator> dylan: In general--how long should I keep a car before selling it and buying a new one. I've heard many opinions i.e.: 100,000 miles... Thank you.

<Philip_Reed> Cars lose a lot of value in their first 2 years of life, and then the depreciation curve flattens out for 3 years.

<Philip_Reed> At 5 years, the depreciation drops off steeply again.

<Philip_Reed> So ideally, you want to buy a used car that's 2 years old and sell it when it's 5 years old.

<Philip_Reed> Of course, all cars depreciate at a different rate.

<Philip_Reed> You can find out the depreciation rate by asking for the residual value.

<Philip_Reed> At many leasing websites, for example.

<Edmunds_Moderator> Gabe: What's the difference between a demo car and a program car?

<Philip_Reed> I'm not absolutely sure, but a demo car is one that's been used extensively by a dealership for test drives.

<Philip_Reed> A program car is a car which has been used by an auto executive for typically one year or less, and then sold as a new car.

<Philip_Reed> (I'm not absolutely sure about that)

<Edmunds_Moderator> Davis: Why is the car I'm looking at on the West Coast or in the Southern tier of states priced differently than what's listed on this Web site?

<Philip_Reed> Car pricing is a regional practice.

<Philip_Reed> Kelly Blue Book adjusts it by region/season and it changes frequently.

<Philip_Reed> It's similar with Edmunds. It's all based on the anticipated desirability of certain models.

<Philip_Reed> One of the difficulties for shoppers is to get exact pricing on cars they're considering. If you can get within several hundred dollars, you can usually get a good deal, but don't try to price a car to the penny.

<Philip_Reed> If you look at Edmunds, Kelly, and NADA, the prices will all vary.

<Philip_Reed> For a number of reasons-- I can go into more detail if anyone is interested.

<Edmunds_Moderator> TX_TBIRD: I am wanting to move.... can I purchase the car in this state and pick it up at a dealership in the one I am moving to?

<Philip_Reed> You're going to have to ask the dealer about that. There?s a very good chance of that.

<Philip_Reed> One owner will own a string of dealerships and can easily arrange it for you.

<Edmunds_Moderator> gmman1: Phil. It says that you are an expert at car buying. Do you shop via the Internet or do you go into a dealership and deal with a salesman?

<Philip_Reed> Great question!

<Philip_Reed> I always start on the Internet. To speed up the process, I then go to a dealership to close the deal.

<Philip_Reed> Usually the negotiation is done over the telephone or by fax and email.

<Philip_Reed> I generally urge shoppers to do as much as they can over the telephone.

<Philip_Reed> It's much easier than negotiating face-to-face

<Edmunds_Moderator> Jason: I want to pay cash for my new car. Do I have an advantage?

<Philip_Reed> Yes, a fairly big advantage. Like most people, car dealers respond to cash.

<Philip_Reed> This is considered "up front' money and it is desirable.

<Philip_Reed> Not only that, but it makes the deal much cleaner for you.

<Philip_Reed> You can focus on one thing: the purchase price.

<Philip_Reed> But be prepared. In the finance and insurance room, they will probably try to sell you their financing. If their interest rates are super-low, you might consider it.

<Edmunds_Moderator> TX_TBIRD: So is there a time/season that is BEST to make your purchase?

<Philip_Reed> Yes. Although there are many theories on this.

<Philip_Reed> The end of the month really is a good time to buy a new car.

<Philip_Reed> As you move toward the end of the year (typically mid-October) the new models are appearing and dealers want to clear out last year's cars.

<Philip_Reed> If you want to get more involved, you can find out the end of the financial quarter for each manufacturer and shop accordingly.

<Philip_Reed> But don't tie yourself in knots guessing. Buy a car when you're prepared.

<Edmunds_Moderator> Robert: Do you advise buying the extended warranty when I make my purchase?

<Philip_Reed> I know people that swear by extended warranties, and our service expert at Edmunds.com also encourages people to get them.

<Philip_Reed> But my personal opinion is that most new cars come with excellent factory warranties.

<Philip_Reed> Typically cars are covered for at least 3 years.

<Philip_Reed> If you're planning to keep the car forever, that's when you should consider the extended warranty. Keep in mind that a factory warranty may be easier to use than independent warranties.

<Edmunds_Moderator> Paul: Do factory orders cost more than buying from dealer stock?

<Philip_Reed> Typically, it will cost a bit more.

<Philip_Reed> Dealer stock is what they are most interested in selling "today".

<Philip_Reed> As a result you can bargain more aggressively. Often, the reason you're ordering a car is because it's in high demand or you need a difficult configuration.

<Philip_Reed> In general you'll wind up paying extra for these services.

<Edmunds_Moderator> dylan: Do luxury or base models have different depreciation rates in general? Thank you.

<Philip_Reed> Depreciation is really an abstract concept.

<Philip_Reed> When you go to sell your car, it's worth whatever somebody's willing to pay for it.

<Philip_Reed> If you trade your car into a dealer, all of the options on your luxury car will contribute to a higher trade in price.

<Philip_Reed> Whereas if you're selling to a private party, you'll only get money if the person is particularly interested in those options.

<Philip_Reed> So my answer is, that the luxury cars may depreciate a little faster than the base models.

<Edmunds_Moderator> Reggie: Should I buy rust proofing, fabric protection packages, paint sealant, and other dealer-installed items? Or are these just ways for the dealerships to nickel and dime you for as much as they can?

<Philip_Reed> I hope you're not a dealer, Reggie!

<Philip_Reed> We generally tell people that these items are nearly useless. In some cases, they may actually void your warranties.

<Philip_Reed> Avoid all the extras being pushed at you except warranties and possibly an alarm system.

<Edmunds_Moderator> TX_TBIRD: With depreciation being such a factor, do you think it is a good bet to purchase a program car instead of a brand new one?

<Philip_Reed> Yes. I think you can get a screaming deal on a program car.

<Philip_Reed> Depending on the make of the car, it will hold its value just as well.

<Philip_Reed> If you're interested in saving money and you're not real fussy about color options and a little extra mileage, keep your ears open for a program car.

<Philip_Reed> I have time for one more question...

<Edmunds_Moderator> TX_TBIRD: Phil, if you were going to buy a new car, what would be the top 3 tips you could suggest to us to get the best deal?

<Philip_Reed> 1: do research and price at least 3 different cars that you're interested in

<Philip_Reed> 2: shop using the Internet and by calling local dealerships

<Philip_Reed> 3: set aside an afternoon to go to 3 different dealerships and let them compete for your business.

<Philip_Reed> You don't really need to negotiate.

<Philip_Reed> Just tell them to beat the other guy's price and you'll buy from them.

<Philip_Reed> The car buying experience doesn't have to be painful.

<Philip_Reed> If you've contacted a salesman by phone that you think you can work with, set an appointment with (him or her)

<Philip_Reed> Just be honest and upfront.

<Philip_Reed> You may actually enjoy it!

<Philip_Reed> We hope to be chatting every month or so, hope everyone comes back

<Philip_Reed> Save up those good questions!

<Edmunds_Moderator> Thank you for joining our Special Event Chat with Philip Reed!

<Philip_Reed> I enjoyed these tough questions and I hope you all come back with more next time!