Wednesday, October 7th, 2015

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Car Buyer’s Guide to Online Shopping

Many Internet services will help you buy a vehicle at, below or just above the invoice cost. Note: If you’re looking at cars in the top of the market, don’t be surprised to find that there is very little play in their MSRP (manufacturer’s suggested retail price). With limited inventories, these cars tend to be in high demand, thus the less incentive to offer rebates or to negotiate lower prices.

Online buying sites have agreements with dealers across the nation to deliver a car at a pre-established price. In most cases they work though the dealer’s fleet sales manager. Fleet sales were originally set up to provide buyers of "fleets," e.g. corporations, taxi companies, etc., with the option of buying multiple cars for company use at prices near or even below the invoice. These sales are important to the dealer because they count against the sales targets set by their manufacturers.

Generally, these sites will ask you to begin by "building your car" – i.e. specifying the model, color and options. They will then ask for you to provide contact information – phone, address, email – and then pass your name on to one of their dealer associates in your local area.

These dealers generally have a person or persons in the dealership dedicated to responding to Internet leads. Depending on the Internet site, you may be given a price quote by the service or by the dealer.

As you explore these sites, we recommend that you take the time to look for their explanation – usually in small print at the bottom of various Web pages — of how their service works, what guarantees they offer and their answers to Frequently Asked Questions (FAQ).

How to Use Online Shopping Services

The key to getting the lowest price for a new car via the Internet is to obtain as many quotes from competing online services as possible. Because dealers have no opportunity to use pressure sales tactics, they are obliged to compete for your business on price alone. All you have to do is fill out the on-line forms provided by the service and wait for prices that would take you many hours to negotiate in person.

You will receive the MSRP and Dealer Invoice prices for the car with the options you’ve selected. You’ll also be given rebate and related incentive information. Keep in mind, this service should be free. No, they are not doing social work. They receive a commission for every lead that turns into a sale from their dealers.

Be aware, however, that there are a few online services that will permit the contact person from the dealership to try and entice you to come into the dealership without first giving you a firm price. Our advice is to hang up and try another service. While there are a number of excellent online services, you might begin your exploration by looking at carsdirect.com, autobytel.com, invoicedealers.com and discountnewcars.com.

Once you have quotes from three or more online services, you need only compare to find the lowest bid. One of the advantages of buying your car through a reputable online service is that the dealers on these networks know that they are competing against one another based on price. Further, they know that you are armed with facts and numbers, thus they are going to price their vehicles with this in mind.

Here are some general tips to keep in mind:

1. Get your facts first

  • the MSRP
  • the Invoice
  • Rebates
  • Incentives

2. Have a target price in mind

3. To assure a fast response, indicate on the information request form that you’re ready to buy within the next 48 hours.

4. Make sure you have a specific quote from the dealer. You don’t want to go into a dealership and find yourself having to deal with sales pressure or the need to haggle on price. Of course, if you like negotiating, have at it.

5. Call near the end of the month when the dealer may need units to qualify for his bonus.

6. Be ready to make your deal. Have your financing pre-arranged with your bank. Or if you elect to take advantage of a manufacturers’ reduced financing package, know the rates, the length of the loan – 36 months is the maximum length we recommend – and the monthly payments you’re prepared to make. Many of the Internet sites noted above will help you determine your monthly payments.

Used Vehicle Listings

Hundreds of thousands of used car listing sites can be found on the Internet. You can go to a site like cars.com and search for a make and model in your local area. Many of these ads are from car dealers who use the Internet much as they use classified newspaper ads.

Our recommendation is that you treat used car listings the same way you would were you to search the used car ads in your local paper. Use the Internet to search for cars and to get an idea of the range of prices that a used model is bringing. Ultimately, however, you’ll need to go inspect the car or have a qualified mechanic do it for you.

Online Auctions

Arguably the most popular site for buying cars via an on-line auction is eBay. Their eBay Motors pages are dedicated to providing access to used cars. Car dealers and wholesalers offer most of these cars. We’ve talked to a number of users who feel that they were able to get a good buy and felt secure in using this method of purchase.

If this option appeals to you, then it’s our strong recommendation is that you visit the eBay site, read how it works and why they can claim that eBay has built-in safe-guards for both the buyer and seller. In short, do some research. Read everything. Look at the list of FAQs and take their "guided tour," which explains how to stay safe at eBay. Then make your decision.

From our perspective, one of the drawbacks to eBay is that you’re dealing in a national market. You might find a car that you like, but discover that while you live in San Francisco, the car is sitting on a lot in Miami. You’ll note that in virtually every case, it’s up to you to get the car home. If you elect to have the seller ship it to you, expect to pay the freight.

Protecting Yourself from Scams

Here is some advice that you might want to consider when using the Internet to shop for a car.

  • Don’t buy from spam emails or pop-up ads unless you’ve checked them out.
  • Pay upon delivery of the vehicle – and after you’ve thoroughly checked it out. The one exception is eBay and we refer you to their site to understand the protections they provide.
  • Keep the basic rule of buying in mind: If the deal seems too good to be true, it probably is.

© 2008, Young Money Media, LLC. All rights reserved.

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