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Hiring Expert Help to Buy a CarJerry Edgerton
Let's say your old car is piling up costly repair bills and you think you may have to buy a new car soon. But it's not only cost that's worrying you. The thought of visiting car dealers and negotiating a good deal seems daunting and unpleasant. If that sounds like you—or even if you don't mind negotiating, but don't have the time—consider hiring a car buying service to help you find the right car at the best price.
The best of these buying services often can get better deals than even very well-informed individuals. Edmunds.com, an auto research Web site based in Santa Monica, Calif., decided to put this to the test with Authority Car Buying Specialists—based in Sherman Oaks, Calif., but working for clients nationwide.
On a new 2009 Ford Flex, Edmunds staffers had negotiated a deal for $500 more than the invoice price—the price the manufacturer charges the dealer. (The invoice price for the SE model of the Flex, a recently introduced wagon, is $26,842). But the Authority service came back with a price $1,500 below the invoice figure—a $1,305 savings after paying the $695 fee for the service.
How can specialists get a price this low? Oren Weintraub, founder and president of the Authority service, says that as a former sales manager at an auto dealership, he knows how to negotiate to get a break on hidden dealer profit centers. "The consumer may know that there is a customer rebate on a car but not know that the manufacturer also is giving the dealer an incentive payment to sell that car," says Weintraub. "Often we can negotiate to knock most of that incentive off the price."
Authority and other services such as CarQ, based in Terra Linda, Calif., shop prices among several dealers in the client's home area. And not going to the dealership yourself avoids the temptation to agree to costly add-ons you usually don't need, like extended warranties and insurance on everything from tires to your windshield. In difficult times for the auto industry, dealers are selling these products especially hard.
Handling trade-ins also can produce significant savings for clients; often individuals will negotiate a decent price for a new car but accept less than their trade-in is worth. Authority and some other services will handle the trade-in for an extra fee (usually about $200). For that fee, they will offer your old car to several dealers or other possible buyers—not just as a trade-in.
For many busy people, the convenience and savings in time are just as important as the money saved. "People who go shopping on a weekend can wind up spending six hours at a dealership waiting around to close a deal," notes Philip Reed, senior consumer advice editor at Edmunds.com. "With a buying service, it usually involves just an initial phone call and then some follow-up calls or e-mails until you go to the dealer to pick the car up or have it delivered."
Buying service fees start at just below $500 for a full-service car purchase (Authority charges $495 for cars with a list price of less than $23,000 and $695 for those listing for $23,000 to $50,000). CarQ charges $490 regardless of the price of the car and will review a deal you already have struck for $290. Seattle-based AutoAdvisor charges $767 for any model.
But if paying a fee doesn't feel good to you, you might consider the dealer referral service from an organization or business where you already have paid dues. AAA, Sam's Club, and Costco all have dealer referral programs where dealers have agreed to no-haggle prices below the list or manufacturers suggested retail price.
While not entirely uniform, these prices tend to run 1% to 3% more than the dealer's invoice price. Thus you will not be getting the lowest possible price but you do avoid the hassle of haggling. Unlike the independent buying services, these outfits do collect fees from dealers to be included on their referral list.
Another alternative—which, unlike the dealer referral services, will search for the exact car you want at a variety of dealers—is CarsDirect.com. CarsDirect gives you a fixed, stated price for your area by zip code and often includes dealer incentives as well as other special pricing.
Do enough research to assess your alternativesBefore you contact any buying or referral service, know what car, pickup, or SUV you want to buy—or at most get it down to two possible models. Go to Web sites such as Edmunds to see reviews, side-by-side comparisons of competing models, and the average selling price in your area, known as "True Market Value." Similar information is available at the competing Kelley Blue Book site. This will give you a basis to see if the prices you are being quoted add up to good deals.
Determine what level of service you need and will pay forIf you don't mind paying for a good chance at getting the lowest price available and the certainty of saving many hours of shopping time, consider hiring a buying service. If you want to avoid fees and are willing to spend more time talking to a dealer about a no-haggle price, consider the referral services of AAA, Sam's Club, or Costco. Or consider shopping for the fixed-price deal through carsdirect.com.
Get financing approved before shoppingIf you have a pre-approved loan from your credit union, you or someone you hire can focus solely on the car's price—improving the probability of a good deal.
If you hire a buying service, make sure it is working only for you
Often companies advertising themselves as consumer auto buying services may be taking money from dealers to refer business as well as from consumers. This conflict of interest makes it unlikely that they will push hard for the lowest possible price. Services such as Authority Car Buying Specialists, CarQ, and AutoAdvisor—which are paid only by the buyer—are likely to display this fact prominently on their Web site or other material.
In a time when economic anxiety has added to the general stress level, saving both time and money seems like a winning proposition. Using a dealer referral service is a good step in that direction. But hiring help from a buying service lets you have it both ways: You avoid the haggling hassle but still take advantage of the reality that hard negotiators get the best prices.
Jerry Edgerton is an automotive writer whose work has appeared in Money and other national magazines. He also is the author of "Car Shopping Made Easy."