Common Sense Approach to New Car Shopping
This booklet outlines a plan for you to:
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Slow Down!
Understand Your Trade Value
Use The Internet To Research Prices and Rebates
Take A Test Drive
Walk Away!
Let Multiple Dealers Compete For Your Business
Negotiate Via Email – NOT At The Dealership
Get The Best Price
Determine The Bottom Line via email BEFORE You Take Delivery And Eliminate Optional
Fees
First things first – slow down and take your time!
One of the costliest things you can do is walk into a dealership at night or on the weekend and
drive away with a new car 3-5 hours later. What if you could have walked away and negotiated
a lower price via e-mail? What if another dealer would have sold you the same car for $1000
less and given you $1000 more for your trade? What if you could accomplish this from the
comfort of your home or office as opposed to sitting across the desk from someone who is a
more skilled negotiator than you…and you end up making an impulse purchase decision?
Patience
+ Knowledge
+ Confidence
+ Taking emotion out of the car buying process
= $$ in your pocket.
Get Pre Approved
The first step is to call People’s Trust and get pre-approved so you will know what you can
spend, including how your trade-in value versus your payoff (if applicable) will affect your final
negotiated price. We will issue our Express Check to you. It looks and acts just like a check and
you will be ready to shop!
Understand Your Trade Value
Having a firm, realistic, and fair value for your trade and possible negative equity situation is a
crucial component to car shopping. If you are legitimately $4000 “upside down” in your trade ,
don’t let the dealer tell you that you are $6000 “upside down” unless you want to pay an
additional $2000 for your new purchase.
By the same token, if you have $4000 equity in your trade then you need to make sure it is
applied as a $4000 cost reduction on your next purchase!
We can help you determine a realistic value for your trade.
Utilize the Internet for Research
Utilize the manufacturer websites to view current rebates as well as build and price the vehicle
you have in mind. Most of the manufacturer websites are very detailed in regards to
equipment packages and pricing, but they will only show you MSRP minus current rebates. To
get a look at the invoice price, build your vehicle on www.edmunds.com and www.kbb.com as
well.
Note: Ignore the “True Market Value” and “Fair Purchase Price” from these websites (Edmunds
and KBB) as these sites are funded by dealers. Further, the Invoice and MSRP prices are not
always exactly the same as the invoice pricing you will receive from the dealer. However, these
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sites are a great research tool to help you execute your game plan as well as a platform to
receive bids from multiple dealers.
Take a Test Drive
Test drive the vehicle(s) you are considering and make note of how the vehicle is equipped.
DO NOT sign a credit application or negotiate at the dealership!
Determine if this is the vehicle you want to own or whether you want more or less equipment
and features. Take detailed notes of the equipment and features. There will be several
thousand dollars difference between a base unit and an upscale unit. Make sure you compare
apples to apples!
Tell the salesperson that you are just shopping and taking notes. Kindly thank them for their
time and no - there is nothing they can do to get you to buy today.
Walk Away
DO NOT LET YOUR EMOTIONS COMPEL YOU TO MAKE AN IMPULSE PURCHASE DECISION AT
THIS STAGE but be sure and include this salesperson in the bidding process outlined below.
Find the Lowest Price for the Car You Want
Pick up the phone and make personal contact with a fleet or sales manager at 3-4 area dealers
close to home and let them know you are a serious buyer, or utilize the internet bid route.
Here’s a sample email or phone conversation:
“I will be buying a (insert vehicle) in the next few days and would like to receive a bid
from your dealership. I will email you the specs as to the vehicle I want to buy. I want to
be up front in that I will be receiving bids from multiple dealers. Whoever has the best
price will get the sale. Please let me know if you are interested in bidding. If so, I will
email the specs to you right now.”
DO NOT GIVE SPECIFICS TO COMPETING DEALERS AS TO WHERE YOU TEST DROVE A VEHICLE.
DO NOT PROVIDE A VIN when you make contact with the other dealers! This will almost
guarantee you being forced to purchase from the original dealer (and pay more) if you decide
on that specific vehicle.
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Some dealers will say “let me know your lowest bid and I will beat it.” Politely inform them
that you will only be dealing with those who send a price.
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Complete and email the equipment template that has been provided to each manager
that is willing to bid for your business. There are literally hundreds of different package
options on the market today so be as specific as possible in regards to the equipment
packages you want!
Keep in touch with these individuals by phone or email to let them know you are serious.
Lean toward the manager that has not only given you a good price (they will all be close on
the price) but has also worked hard to find the vehicle you want as opposed to selling you
something in stock.
The websites referenced above, including the manufacturer websites, provide a link to get
multiple quotes from competing dealers near your home. You can also
utilize www.autotrader.com and www.cars.com to get multiple quotes. You will typically get
a phone call and email from an internet sales representative if you go this route.
Some, but not all, internet sales departments are outsourced and their main function is to
get you in the door as opposed to giving you a price.
They are also known for telling you a particular unit is in stock - when in fact it is not – just
to get you in the door.
If you choose the internet route to get multiple bids, be sure and ask the internet rep if they
office at the dealership with literal access to the inventory.
Regardless of the route you take (phone or internet contact), by all means utilize the Bid
Equipment Template provided to you. It contains specific language designed to let the
dealer know that you are a serious buyer and ensure you get the best price possible.
If the manager (or internet sales rep) follows your request, they will attach and email a
clean copy of the invoice and let you know what price they are willing to give in relation to
invoice as well as any factory rebates, 0%, 1.9% offers, etc., or customer down payment
assistance dollars. If the manager is hesitant to provide the actual invoice, assure them that
you are aware of the holdback dollars and advertising costs that will be reflected on the
invoice. Let them know that you do not expect them to provide a price based on their
wholesale finance credit.
Talk to People’s Trust
Speak with your People’s Trust representative in regards to any 0% APR incentives versus
factory rebates. We can tell you to the penny whether you are better served by 0% or the
rebate. In addition, make note of any additional cash offered by the manufacturer’s captive
lender. Take advantage of this cash, but know that this will alter your game plan when you take
delivery as People’s Trust will not be the initial lender. See section titled “Take Advantage of
Manufacturer Cash or Down Payment Assistance.”
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Appraise your Trade
Once you narrow down the 2 lowest bids, verified with a faxed or emailed invoice, as well as
applicable rebate information, ask the dealer if you can email pictures of your trade for an
appraisal. Most are willing to do this and it will save you a trip. Invest in a good detail job if
you have a trade-in. Clean cars bring more money.
• Take lots of pictures and email them along with a detailed description of the vehicle. If you
accurately describe the condition they will typically stick to their word and honor their
appraised value after they have physically seen the vehicle.
• If they insist on seeing the vehicle before placing a trade value, you may have to physically
visit the dealership to have your trade appraised.
Request the Buyer’s Order
Before you set an appointment to take delivery, have the dealer send you a copy of the buyer’s
order by sending the email below. This is a crucial step – don’t let all your hard work and
patience be wasted by the dealer adding optional items on top of the agreed upon sales price.
Also, it is highly recommended that you communicate via email only at this point so as to take
emotion out of the process that may come into play over the phone or in person. Here is a
sample email:
“Please send a copy of the buyer’s order so I can review before I write the check. So as
to avoid unnecessary and unpleasant back and forth communication, please remove any
optional charges for VIN etching, undercoating, maintenance plans, and dealer service
fees, etc. I understand the VIN etch stencil may already be on the vehicle, but the deal
has not been closed and you have not paid for the benefit registration. Also, please
make sure the doc fee does not exceed $50. The doc fee is not required by law but I am
willing to pay $50. If everything looks good I will set an appointment to bring in my trade
and take delivery of the new vehicle.”
IMPORTANT SECTION – PLEASE READ!
Requesting a copy of the buyer’s order to be emailed to you will set off alarm bells at many
dealerships.
Why? Well…..the dealer does not want to give you an opportunity to carefully observe, identify,
and remove optional fees that can add hundreds if not thousands of dollars to the price of the
vehicle. Further….the dealer will want you to visit with their “business manager” to “verify the
paperwork for titling purposes,” etc.
The F&I (Finance and Insurance) or Business Manager at a typical dealership is highly skilled,
highly trained, and highly compensated. Their job is to generate maximum income for the
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dealer (and themselves) by selling you their financing, Vehicle Service Contract (VSC), GAP, and
other types of protection products. Further, they will give you a variety of skilled responses as
to why they can’t remove optional fees from the buyer’s order (VIN etching, dealer service fee,
etc.)
Many dealerships generate more income per vehicle from the finance department than the
sales department. Who pays for this? You do….IF you walk in unprepared and don’t have your
Express Check already filled out. Therefore, it is in your best financial interest to have a copy of
the buyer’s order emailed or faxed to you prior to taking delivery. However…..what if the
salesman or sales manager refuses to send it to you?
Nobody wants to wrap up a new vehicle purchase with a conflict situation. It should be a time
of happiness as you are just one step away from enjoying your new vehicle. Unfortunately your
happiness (making sure you aren’t hit with optional fees) may not coincide with the dealer’s
happiness (making sure they maximize their profit at your expense).
Our advice is to be firm but polite. Be as nice as possible….but hold your ground….keep your
money in your pocket….and stick to email communication only. Here is a sample email if the
dealership is reluctant to send the buyer’s order.
Dear Jim:
Thanks for your response.
As mentioned, I will be writing a check for this vehicle. If you aren’t able to send me a
copy of the buyer’s order, please have your business manager send me a copy. Please do
not have your business manager call me as there is nothing to discuss until I receive a
copy of the buyer’s order before I make an appointment to take delivery.
I simply want to review the figures and bottom line before I write my check. If
everything looks good, I will have the check in hand when I take delivery and will be
happy to sign the title application, buyer’s order, etc.
You have worked hard to get this sale and I really want to give you guys the best possible
rating on the CSI survey. Let’s not jeopardize this sale by being uncooperative in regards
to sending me a copy of the buyer’s order.
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At this point, the ball is back in the dealer’s court. Many dealers will cooperate. Others will
not. It may boil down to a war of wills. Hopefully not! Only you can determine if you are willing
to show up to the dealership with a blank draft.
If you do show up with a blank draft, you are assured of a friendly visit with the business
manager. As mentioned, this individual is highly skilled. No offense to our members…. but
chances are that he or she is a much better salesperson than you.
After a little small talk, routine paperwork, and making you feel comfortable, the business
manager is going to ask you the following question: “What interest rate are you getting from
your credit union?””
If your rate is 3.5%….they will offer 3.4%. They will do their best to get you to focus strictly on
the rate…..which means you won’t be focusing on the optional fees and charges. They will then
focus on selling you their GAP, Warranty, maintenance plans, etc.
People’s Trust FCU’s GAP and Warranty prices are almost always substantially less than the
dealer’s prices and provide the highest levels of coverage and terms available in today’s
marketplace. Our products are insured and administered by A rated carriers with long term,
proven track records in both credit unions and dealerships nationwide.
So….back to 3.5% vs. 3.4%. The difference in payment is about $1 a month, which can quickly
be eclipsed in this scenario:
Vehicle
Legit TT&L
Vehicle Service Contract
Gap
Dealer Service Fee
VIN Etch
Amount Financed
Terms
Payment
People’s Trust
$30,000
$2113.02
$1295
$450
$0 – not necessary
$0 – not necessary
$33,858.02
3.5% @ 60 Months
$616.00
Dealership
$30,000
$2113.02
$1995
$750
$495
$299
$35,652.02
$3.4% @ 60 Months
$647.05
Is 3.4% at the dealership really better than 3.5% at People’s Trust?
The only way to 100% ensure that you aren’t burned with optional fees and overpriced
protection products is to review the buyer’s order before you take delivery and walk in with
your draft already filled out.
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Review Buyer’s Order with People’s Trust
Once you get a copy of the Buyer’s Order, speak with People’s Trust in regards to what the
exact amount of the buyer’s order should be (i.e. the bottom line) after factoring in the sales
price, trade value, and legit fees and taxes. Use our buyer’s order calculator to help you
crunch the numbers. A thorough review of the buyer’s orders before your write your Express
Check can save you thousands of dollars. Below is a sample buyer’s order:
Between these items and these items, the dealer added over $8,000 to the price of the car.
This could have been avoided!
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Note: Many, if not most, dealers will tell you that “add-on” products such as VIN Etching, Theft
Protection, and Phantom Footprints are “already on the car” and they cannot take them
off….so you have to pay for it which can cost you from $200 - $600. This is simply not true. The
dealer may have utilized the stencil to put the “product” on the car, but the stencil only costs
around $5. The “benefit” is not activated until the deal is closed and the dealer pays his cost
which is typically around $30. If you just have to have this product, buy it for $25
at www.vinetcher.com If the dealer refuses to take it off because it’s “on the car” you can also
say….
”That’s fine…..you can leave it on the car but I just need you to lower the cost of the car
by $549.” (or whatever amount they are trying to charge)…….you can also say “I’ll give
you $5 for the cost of the stencil, but I know you haven’t paid to register the benefit so
please remove it from the buyer’s order.”
Further…many dealers will charge a “prep fee” or “admin fee” or “dealer service fee” ranging
from $195 to $695. This fee is nothing more than added profit for the dealer. Firmly but
politely refuse to pay this fee and ask the dealer remove it from the buyer’s order.
“Dear Jim: I would hate for you guys to lose this sale because you refused to remove this
fee. If you want to keep the fee on the buyer’s order that’s fine…..I just need you to lower
the price of the car by the same amount.”
Take Delivery and Pick Up Your Vehicle
If everything looks good on the Buyer’s Order, fill out your Express Check and go pick up your
new vehicle! We can coach you through the process of filling it out before you go to the
dealership. Consider the Express Check as your “safety net” that ensures all your hard work
(and money) doesn’t go to waste!
Make sure you fill out and sign the Express Check
before you take delivery!
If the transaction has gone smoothly, be sure and give the dealer the highest rating possible on
the follow-up survey from the manufacturer. In addition, please share the manager’s name
with People’s Trust so that we can steer fellow members their way.
Take Advantage of Manufacturer Cash or Down Payment Assistance
If the manufacturer offers additional cash or down payment assistance for utilizing their finance
source, by all means take advantage as it will lower the amount you are paying for the vehicle.
The interest rate, however, will more than likely be much higher than what you can get through
People’s Trust. However, you can refinance the loan through the credit union and get the best
of both! All you have to do is wait a few days – contact the lender – get a payoff – and refinance with the credit union at a lower rate. You do not have to wait 90 days or make 3
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payments before you do this and you will not lose the additional cash assistance if you do this.
Texas is a simple interest state and there is no pre-payment penalty!!! If the business manager
tells you that you have to wait 90 days to refinance, just say “OK”…..sign your paperwork….and
drive away…..because you know the truth.
If you feel the business manager is using scare tactics and not being truthful in regards to
waiting 3 months to re-finance, you can also pull out your cell phone….turn on the video
camera….point it at the business manager…..and say “can you please repeat that on camera?”
You can also point this out to the business manager in regards to Prepayment language on the
finance contract you will sign with the factory lender. “If I pay all that I owe early, I will not have
to pay a penalty.”…in black and white.
Pay Close Attention
In addition….PAY CLOSE ATTENTION to the “Amount Financed” (Line 5) at the bottom before
you sign the finance contract with the other lender. The finance contract is the longer, legal
size document you will have to sign. The top of this document typically says:
Motor Vehicle Retail Installment Sales Contract
Simple Finance Charge
Unless you have opted for additional products or services offered by the business manager,
MAKE SURE this number (Line 5 on the finance contract) matches the bottom line (unpaid
balance or amount due) of the buyer’s order! If it doesn’t match, pay close attention to lines 1
and 4. An example is provided on the next page.
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Phantom Footprints added for $1250 on Line 1. Ouch! If it’s on Line 1 it’s considered “a part of
the car” and is non-refundable!! This member should have demanded that the dealer remove
this charge before signing the finance contract.
GAP and Extended Warranty are refundable and will be disclosed on Line 4 under “Other
Charges”. This member saved almost $1500 by canceling these products and replacing them
with the credit union’s products.
Remember….you will only have to sign another lender’s finance contract if you are taking
advantage of additional cash offered if you utilize the factory lender. Otherwise you will utilize
the People’s Trust Express Check to pay for your new vehicle!
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Final Note
If you opt for accessories to be added later (running boards, bed liner, etc.) make sure you get a
signed copy of the “We Owe” document. This document details the extra equipment or
services that were added to your buyer’s order and you will need it when you bring your vehicle
back to have the equipment installed or services rendered.
People’s Trust understands this process can be more time consuming than just driving to a
dealership, negotiating a deal, and driving off in a new car.
However, let’s say that this process takes up 4 additional hours of your time but you end up
saving $4,000. You just paid yourself $1000 an hour for your efforts and patience.
We think it’s worth it!
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