One of the most important things you can do when building wealth is to be smart about making large purchases. A lot of people tend to think about their daily Starbucks coffees and other small, frequent purchases when it comes to money management, but big purchases like cars and homes play a much more important role in the overall picture of a person’s wealth.
When it comes to buying a car, the unfortunate reality is that the auto market almost never works in the favor of the consumer. State laws often protect dealers from competition, making it impossible for the average consumer to buy a car directly from the manufacturer.
Because of that, consumers often pay more for their cars than they would in an open market filled with businesses competing for their dollar. The Federal Trade Commission has called for states to allow consumers to choose how they buy their vehicles, giving some life to the hope that that will one day be a reality, but that doesn’t help you today, does it?
Fortunately, there are some things you can do to make sure you get the best value when you shop for a car. You want to think about the process as though you were coming up with a reverse auction.
That means making car dealers compete against each other for your business from the comfort of your home.
You should start by knowing just what kinds of incentives salespeople and dealerships have. In many cases, these incentives are given by the manufacturers and are connected to either the end of the month, quarter, or year. It isn’t uncommon for salespeople to have their own incentives as well.
Consider shopping for your car on a weekday, when dealers aren’t as busy, and toward the end of the month, when the deadline for sales targets is getting close.
By doing this, you can get dealerships to bid against each other and try to undercut the competition in order to close the deal and get you as a customer. Stay in contact with each prospective dealer and let them know what the other guys are offering. This will give them a chance to give you a better price, which can come under the invoice by thousands of dollars in some instances. By using a method like this, many car buyers have been able to buy a new car below invoice.
When using this method, there are some things to keep in mind. First and foremost, you want to make sure that the make and model you are interested in is available at multiple dealers. You also want to be somewhat flexible when it comes to features like colors, because it will be harder to get a good deal otherwise.
Furthermore, this strategy might work better on certified pre-owned vehicles over traditional used cars, because the conditions of cars in the latter category can vary.
Until lawmakers are willing to get rid of the laws that prevent competition among auto dealers, it is up to consumers to do what they can to encourage competition and get the best deal. It’s unfortunate that it has to be this way, but when you are armed with the strategies mentioned above, you will be able to increase your chances of making a smart purchase and getting exactly what you want.
If I can be of any help with your car purchase just let me know.