“How to buy a car 101” should be a mandatory course taught in high schools throughout the United States. It’s incredible that modern day car buying is as aggravating, infuriating, and convoluted as it is, but that doesn’t mean every car shopper shouldn’t know the basics of how to buy a car.
Everyday we receive hundreds of emails from CarEdge members. Many of the emails are success stories about how we’ve helped with our Market Price Report, Deal School e-course, and guides. It puts a huge smile on our face to know that we are helping thousands of people navigate the car buying process more effectively and efficiently.
Just the other day we received an email from a gentleman named Clark. Clark bought a used 2017 Jeep Wrangler with 17,635 miles, and he shared his entire purchase process with us (step-by-step) from start to finish. Clark knows how to buy a car, and we thought we’d take his experience, which he documented and shared with us, as a case study that you can follow when you go to buy your next car.
To protect Clark’s privacy we’ve removed his personally identifiable information from any screenshots. Keep in mind that every resource or tool we recommend in this case study is 100% free.
Without further ado, let’s dive in.
Understand market trends
One of the things Clark did that we highly recommend all car buyers do, is he researched trends in the automotive industry before contacting any dealers. Of course you want to get a great deal when you buy your next car, but what if the supply of vehicles is incredibly short right now, and no matter how impressive your negotiating skills are, car dealers simply won’t budge? What if the inverse is true, what if you know that the industry currently has a surplus of inventory, and that dealers are desperate for you to come in and buy a car.
In which scenario do you think you’ll get a better car deal?
Don’t be intimidated by the idea that you’ll need to scour the web looking for industry insights into inventory levels … We have you covered.
Many research organizations exist that provide weekly and monthly updates on auto industry trends. Unfortunately these resources are only marketed towards industry professionals (which makes sense). That doesn’t mean you can’t access the same information.
Each week we publish a “Market Update” on the CarEdge YouTube channel. These 10-15 minute videos walk you through the high-level trends occurring in the auto industry this week. We pull our data from a few sources:
Our recommendation would be you either watch our weekly Market Update, or you refer to the three resources linked above. Either way, you’ll have a great sense for where the retail automotive market stands week in and week out.
Clark did this, and it was the perfect first step in his car buying process.
Run a Market Price Report
Once you have an understanding of the current market conditions, we recommend you zero in on market conditions for the specific vehicle (year, make, model, and trim) that you’re considering buying in your geographic area.
Our free Market Price Report is a great resource to do this, and that’s what Clark used.
You will use the Market Price Report in a two-pronged approach. First, to help you understand market conditions for the specific vehicle you’re interested in, and second to help you negotiate the best out-the-door price possible.
When we analyzed the overall market conditions (in the step above), we learned about inventory levels for the automotive industry as a whole. Now, with the Market Price Report, we’ll look at inventory levels for the specific vehicle we’re interested in for our geographic region.
Let’s break down this screenshot. And again, for clarity’s sake, you can generate up to 100 of these reports for FREE here.
You can see there are 6 similar Jeep Wranglers in my area. The average amount of time they have been on dealer’s lots is 44 days. Either using the map, or the table, I can see there is another Wrangler within 100 miles of my location that has a higher Negotiability Score. The Negotiability Score is a calculation that takes into account days on lot and market conditions.
As a car buyer, I can now see that there aren’t that many Jeep Wranglers in my area, so negotiating a once in a lifetime car deal may not be realistic. That’s okay, this is why we analyze the Market Price Report, to set realistic expectations.
This is exactly what Clark did. From his email to me, Clark said, “I ran 24 different Jeeps through your tool. I narrowed it down to 7 that I liked. I chose to start with the one I bought because I felt like I had the most negotiating power.”
And that is exactly what the Market Price Report is intended for; to help you focus your attention on the best option in your area!
I told you, “How to buy a car 101” really should be a course they teach in all high schools across America!!
Focus on a specific vehicle
After reviewing local market conditions with the Market Price Report, you’ll want to turn your attention towards focusing in on a vehicle or two to negotiate with the car dealer. How do you choose which one to focus on? We recommend you use our Negotiability Score as an indicator for which you should focus on (the higher the score, the better). That’s what Clark did.
Clark knew the days on lot for the specific vehicle, the market conditions in his geographic area, and was ready to contact the dealer to negotiate the out-the-door price. He did something that we highly recommend as well, which is to get a copy of the CarFax before going too deep into the sales process.
We also recommend (although Clark did not do this) getting a pre-purchase inspection on any used vehicle you purchase. It’s a relatively small investment that gives you the peace of mind to know that the car you’re buying isn’t a clunker.
Once those two steps are complete you can then contact the dealer to negotiate the out-the-door price of the vehicle. From Clark, “Long story short After talking about the black book numbers and COVID situation I made an offer of $28,000 + TTL. They came back with an offer of $28,164 + $300 dollar fee for a total of $28,464. Just at what your Dad suggested. (see offer sheet attached)”
Be pre-approved for financing before you go to the car dealership
Most car salespeople are trained to ask you how you plan to pay for your purchase, cash, finance, or lease. Our advice is to say you’re open to financing through the dealership if their rates are competitive (unless of course you don’t plan to do that).
That being said, you should absolutely secure pre-approved financing from your local bank or credit union before going to the car dealership. That’s exactly what Clark did, “I was pre-approved through my credit union at 3.19% (60Mo) …”
Then Clark did what we recommend all car buyers do; he gave the dealer a chance to beat his pre-approved rate:
“I gave them (the dealer) a chance to beat that which they did at 3.05% (60Mo).”
That is a textbook example of how to negotiate with a car dealership. That is how to buy a car 101!