Categories
learning

How to buy a used car for way below Kelly Blue Book, Part 1

After a couple months of research we were finally able to purchase a great used minivan while getting a good deal from a reputable dealer.

General used car buying advice

Preface — Download the free Kelly Blue Book app for your phone. In order to beat the dealer in real time, you’ll want to have access to the data when you are shopping.

Goal— This plan is loading you up on leverage so that you can be in the offensive position when it comes down to negotiating price.

  1. Start with a class, not a specific make/model/year. In our case, we were looking for something that seated 7 people that was 3-7 years old. As you get deeper in the process it’ll help to know the basics about your class. Which car is most desirable in that class? Which is least desirable? What are the best features in that class for those years? On and on.
  2. Use AutoTrader.com and Yelp. Once you have #1 figured out, create two searches on AutoTrader and set them up to send you a daily email. Do one search for the cars you are most interested in within 25 miles. Do another search for the entire class within 75-100 miles. This will notify you when something you really like is close, so you can go over and take a look. But it’ll also give you an idea of what cars are going for in your class within your area. (Lots of dealers have several locations and move cars around so their lots look fresh.) Save the ones you like the most. This will make it simple to go back and compare, plus if you use it long enough you’ll see which cars in your class move the fastest and at what price. For Yelp, get to know the dealers reputation in your community before you see their striped tie on the lot… just type in the name of your city and “used car” and you’ll learn all sorts of things about the dealers who look awesome on AutoTrader.
  3. Avoid tent sales, sales events, and anything attached to the name “Giant” or “Super.” If you don’t believe me, leave your checkbook at home and go visit one. It’s every slimy sales guy/tactic at one place trying to out-sell the other slimy guys. From a strategy perspective this is how dealers move inventory quickly at higher-than-normal prices OR ridiculous financing. These events put the seller in the power position and you, the buyer, in the weaker position. Have you ever gotten a good deal at a carnival? I didn’t think so. 
  4. Sunday and after hours are your friend. In our area (San Diego, CA) most of the lots are closed on Sunday. And most lots are closed by 6 PM during the week. If you want to get a closer look at a car you might be interested and want to avoid the people in ties this is the best time to do it. Everything looks nice on AutoTrader. Just do a few recon missions to see who carries what and at what quality. Most smaller lots and a lot of big name dealers buys their cars at auction. Then they spend $1000 on them to spiffy them up at a nice profit. But a few of the name brand dealers keep the best trade-ins and then fill their lots with some auction stuff. Get a close-up look and you’ll spot the winners from losers right away.
  5. Keep the deal simple. You won’t be able to do the math in your head if you start talking about financing, trade-in value, etc. You only want to talk about “out the door” price. (Including all their fees, sales tax, etc.) So take care of your financing ahead of time, sell your car on Craigslist– just do whatever you need to do in order to simplify the deal to an “out the door” price.
  6. Buy at the end of the month. Salesperson paychecks and quotas are measured on the last day of the month. If you are walking onto a car lot knowing you can buy when you find the right car, knowing what you can spend, and are willing to negotiate, and willing to wait another few weeks if you need to– you have about as much leverage as you’re going to get in the last few days of the month.
  7. Don’t go alone. Typically, dealerships assign one salesperson to each buyer on the lot. So having two of you and one of them is a big, tactical advantage. When the salesperson starts showing you cars the second person can open up different doors and see the price or give you a quick opinion. I took my 8 year old son and he was perfect for this job. He and I worked out little looks and gestures for when it was time to move.
  8. Test drives are free. You ultimately won’t know what you like until you get behind the wheel. If a salesperson is douchie about it just walk off the lot. (Most require your drivers license. If they ask to run a credit check in order to test drive, it’s time to bounce.) It’s not like they really think you are going to buy a car without driving it. Test out if you like where the controls are, if things move like they are supposed to, if everything works, etc. Any reputable dealer is also fine with you taking the car to a mechanic to get it looked at. (Usually this is under $50)
  9. Don’t fall in love. If you’ve done your research you’ll know that your #1 – #5 choices are likely available at various lots. Until you sign on the dotted line you need to be prepared to walk away. In fact, walking away is your best leverage point. You have everything the salesperson wants, your money. And only you can decide when the sale makes sense.
  10. Character matters. Be willing to walk off a lot and miss out on your #1 choice if the dealership is shady. Even at the best dealerships, service is going to go down drastically from the moment you buy the car. So if you feel weird about the guy in the tie talking to you– know that he’s the nicest guy at the shop. If you don’t like him you’re really not going to like the service department or anyone else. There are thousands of dealers and millions of used cars available. Just trust me, if you feel weird… walk away.

In Part 2 of this series I’ll share our actual experience with getting a deal 22% below Kelly Blue Book price and nearly 50% cheaper than similar dealer list price for the exact same used minivan. 

By Adam McLane

Kristen and Adam live in the San Diego neighborhood of Rolando with their three children.

6 replies on “How to buy a used car for way below Kelly Blue Book, Part 1”

While laying the groundwork for the church we planted, I spent about 18 months selling cars (if you do it right, there are a great deal of similarities between car sales and ministry, but that is another conversation for another time).  

Buying a new car is easy, when it comes to prices… the invoices and all the pricing information are available online.  Used cars are a whole different ball game because the buyer does not have the same access to information that they have on new ones.  Pricing on used cars varies greatly based on how much a dealership has in a car.  The Blue Book, Black Book, and all the other resources out there are guides, since there are no set prices on used cars.

I would agree with you on #1,3,5, 9, and 10.  The end of the month thing is a myth… You can have far better luck an hour before the dealership closes the first day of the month if they haven’t put a car out than you can on the last day of the month when they have 5 out for the day. 

Here are the four things I tell people who want to buy a car: 1. NEVER buy for monthly payment (that includes a lease), 2. NEVER buy from someone who makes you want to shower after talking to them, 3. Have a general idea of what you want (mileage, options, type, etc) and know about what you want to pay for it, 4. After you buy it, stop looking (there will always be a better advertised deal).

If for no other reason, the dealership wants to move a car off of their books by the end of the month for accounting purposes. Sometimes its more than making money, sometimes you just need the cash. Even a big dealership with deep pockets has to worry about how much cash they have locked up in inventory. (Says the guy with a lot of cash locked in inventory!) 

Building incentives for the sales staff to do that is just logical. 

That is actually more for new cars than for used.  New cars get a sixty day (if I am remembering correctly) grace period before dealerships start paying floor plan costs.  

All I am saying is that at the end of every month I would have people sit across from me at my desk demanding a ridiculous deal because it was the end of the month.  If the dealership had put out one or two cars that day… they had a slim chance of that happening.  If the dealership had put out ten or fifteen cars, they were going to pay more.  

As awful as it sounds, it can be helpful to string out a salesman for a little while until their sales manager is in full fledged panic about calling their GM that night and reporting no sales had been made: THAT is when the true deals come out.

One more thing, this one is for free:  PLEASE, don’t be a jerk to your salesman.  If he is a sleaze, leave, but if you are working with one of the good guys it is in your best interest to make him your advocate.  Build a rapport with him, be honest with him, and get him to like you… it will help you in the long run.

When we bought our van 5 years ago, I insisted on negotiating three separate prices: cost of van, trade in price, and interest rate. When all three are combined, it gets very distorted. Two things I did to ensure this was I 1) didn’t bring my trade-in on the same day as buying, and 2) brought a preapproved car loan guarantee with listed interest rate. They tried to stick it to me on the interest rate after we haggled over other two prices, but when I pulled out the loan, they gave me the rate I wanted.

Leave a Reply