Get access to the same vehicle valuation tool that dealers rely on. With Black Book, you’ll have insider data to accurately assess trade-in and purchase values—empowering you to negotiate the best possible deal.
Buying a car is already a complex process, and purchasing a vehicle in another state can make it even more overwhelming. With inventory levels fluctuating, many car buyers are expanding their search beyond to find the right vehicle at the best price. We’ll walk you through the entire process, from understanding the steps involved to figuring out tax requirements and transportation logistics.
What are the steps to buy a car in another state?
Buying a vehicle in another state is eerily similar to buying a car at your local dealership with a few exceptions. The steps to the sale are:
Place a deposit on the vehicle & sign the buyer’s order
Take delivery of the vehicle
At a high level, that’s how you buy a car in another state. Let’s break each step down a bit further.
Negotiate the OTD price
As with any car deal, the first step is to negotiate the OTD price with the salesperson or sales manager. When buying a vehicle in another state you’ll likely be unfamiliar with their taxes and fees. It is incredibly important that you tell the dealership what your zip code is so that they can calculate your taxes and fees based on your location. We’ll touch on this more below, but taxes are paid where you register your vehicle, not where you purchase it. If the dealership doesn’t know your zip code, they won’t be able to provide you with an accurate out the door price quote.
We strongly recommend that you reference the CarEdge OTD Price Calculator to verify that the dealership’s OTD price matches up with the correct tax, title, and registration rates in your state.
Come prepared with competitive financing
Do you know what happens if you arrive at the dealership without a competitive financing pre-approval in hand? The finance office will be THRILLED because to the dealership, they instantly realize they have the upper hand.
Dealers routinely mark up finance offers before presenting them to customers. It’s one way they make money. Be sure to bring a competitive financing offer from a credit union!
Arrange for a pre-purchase inspection
If you’re purchasing a used vehicle from another state there are a few extra considerations you should be aware of. First, you should absolutely consider arranging for a pre-purchase inspection to make sure the vehicle is in good working condition. Second, you’ll need to ensure the vehicle can pass your state’s inspection and emissions testing. By conducting a pre-purchase inspection you’ll likely become aware of any issues that would preclude the vehicle you’re thinking of buying from passing your state’s inspection.
To arrange for a pre-purchase inspection from out of state you have a few options:
Research and locate a local mechanic near the dealership that is selling the vehicle and arrange for them to inspect the vehicle. You can request the selling dealership to take the vehicle to the mechanic’s shop.
Research and locate a local dealership of the same manufacturer of the vehicle you are purchasing (for example find the local Toyota dealer if you’re buying a Camry from a Hyundai dealership), and arrange for the selling dealer to drop off the vehicle.
Use a service such as LemonSquad to send a mechanic onsite to the dealership to conduct the PPI for you.
Place a deposit & sign the buyer’s order
After an inspection report has been received and you’ve agreed to an OTD price, you’ll want to place a deposit down on the vehicle. When buying a vehicle in another state, the last thing you want to do is fly there, or arrange shipping, only to see the price change at the eleventh hour. To protect yourself from last minute changes, place a deposit on the vehicle, and also request to sign a copy of the buyer’s order. Request that the sales manager at the dealership does the same too.
Take delivery
The final step in the out of state purchase process is to take delivery of the vehicle. This is when you will meet with the Finance and Insurance Manager to review loan options and insurance products. As with buying a vehicle locally, you can (and should) come in pre-approved with outside financing and extended warranty coverage quotes.
Depending on what state you are purchasing the vehicle from, you may be able to “take delivery” remotely (sign all the paperwork electronically) and have the vehicle shipped to you. More on that below.
Can I buy a car in another state and drive it home?
Yes, if you buy a car in another state you can drive it back home to where you live. Unless of course you decide to buy a car in the state of Massachusetts …
In every state except Massachusetts you will receive a temporary license plate from the state where you purchased the vehicle. This temporary tag (also referred to as “drive off tags”) will allow you to legally operate the vehicle after purchasing it.
When you arrive back in your home state you will then go to your local department of motor vehicle and register the vehicle. This is when you will receive your permanent plates for the vehicle.
The Massachusetts Problem
Why is Massachusetts different from all the other states? That’s a great question. Their laws around vehicle registration are infuriatingly complex and cumbersome. Auto Influence wrote a great article on the Massachusetts Problem here: https://www.autoinfluence.com/the-ins-and-outs-of-temporary-plates/
When (and who) do I pay taxes if I buy a vehicle in another state?
When you purchase a vehicle out of state, you pay taxes in the state where you register the vehicle, not where you purchased it. The actual process of calculating the correct tax amount and remitting it to your home state can be handled differently.
For example, if it’s a neighboring state, the dealership where you purchase the vehicle will collect and remit the taxes and fees for you. You’ll then receive your permanent plates and registration in the mail. Many dealerships have software that allows them to calculate the proper sales tax and registration fees for different states, and in neighboring states they may feel comfortable handling that for you.
If you’re buying from a further away state, or if the dealership doesn’t offer to handle tax and registration remittance for you, you should contact the dealership’s title department to see if they can walk you through the steps you’ll need to take back in your home state. At this point it is also helpful to consider contacting a local dealership and asking them for assistance too. If you have a local tax professional they would also be able to help. You can of course also refer to your state and local tax laws and remit payment on your own.
Let’s say you purchase out of state and you pay for sales tax, but it is the wrong amount. What happens then? When you go to register your vehicle at your local department of motor vehicle you will either receive a credit from them, or you will owe them additional money.
If I buy a car in another state in 2025, can I have it shipped to me?
Yes, absolutely. This is a very common practice and could financially make a lot of sense for you. The dealership where you purchase the vehicle may recommend a particular shipping company and you should see what their quote is. You should also shop the quote and get bids from other providers as well.
Shipping options will range from open air freight to closed container shipping.
Can I buy a car in one state and register it in another?
Yes. The registration process is different in each state, however you can buy a vehicle in one state and register it in your home state. You’ll need to make sure the vehicle can pass your state’s emissions test and road worthiness inspection.
You’ll also need to confirm that the vehicle title is clear of any liens.
What if I have a trade-in?
If you’re buying a vehicle in another state and you have a trade-in, you should strongly consider treating your trade-in as a separate transaction from your purchase. More on that here: https://caredge.com/guides/car-trade-in/
Can I lease out of state?
Yes, you can lease a vehicle from another state, however some dealership’s will not allow you to. The complexity of out-of state leases is high, and some dealerships do not want the burden of mistakenly calculating the wrong taxes and fees on a lease. Before negotiating an OTD price with an out of state dealership, we would encourage you to ask them if they’re willing to lease you the vehicle with you being from another state. Be prepared to give them your zip code since each state treats leases differently.
Free Car Buying Help Is Here
In conclusion, buying a vehicle in another state can seem like a daunting task, but with the right knowledge and guidance, it can actually be a smart move that saves you money. By taking the time to research the laws and regulations in the state you plan to buy from, and working with a reputable dealer or private seller, you can find the car of your dreams without breaking the bank.
Ready to outsmart the dealerships? Download your 100% freecar buying cheat sheets today. From negotiating a deal to leasing a car the smart way, it’s all available for instant download.
In 2025, more drivers are opting to “factory order” a vehicle instead of buying one off the lot. This trend began during the new car shortages of the pandemic, and has stuck around ever since. For many car buyers, factory ordering is an unfamiliar purchase process and can be intimidating. We’re here to help you make sense of it all.
The steps to factory order a car isn’t too terribly complicated, however, for many, it’s an entirely unfamiliar process. Because of the ongoing chip shortage, many dealerships will likely proactively ask you to order a vehicle instead of purchasing one on their lot. Here’s the roadmap for factory ordering a car in 2025:
Go to the manufacturer website and build the vehicle you want
Print out your build sheet
Go to the dealership with your build sheet
Show the salesperson the build that you want
Request the out-the-door price (OTD) for the vehicle
Negotiate the OTD price
Agree to a selling price
Sign the buyer’s order (and get the sales manager to do the same thing)
Get a signed copy of the agreed upon build sheet
Leave the dealership
Follow up with the salesperson and request weekly updates on the status of your vehicle
Your vehicle arrives at the dealership
Research ancillary product prices (extended warranties, GAP insurance, etc.)
If financing, come in with a pre-approved bank loan
Meet with the F&I Manager
See if they can beat your interest rate or the prices on the ancillary products
Take delivery of your vehicle
Drive-off in your brand new car, truck, or SUV
The simple “18 steps to factory order a car” … Simple, eh? Let’s break things down a bit more.
Can I negotiate on a factory order?
Can you negotiate on a factory order car? Yes, yes, yes. You can, and you should negotiate the price of your factory ordered vehicle.
There is a common misconception that because you are “custom ordering” a vehicle you cannot negotiate with the dealer, simply because it is “custom”. That couldn’t be further from the truth. From the dealership’s perspective a factory order is just like any other car deal. It’s a piece of inventory that they’ll make front-end and back-end profit on. As a customer, you should treat it the same way too.
When do I negotiate on a factory order?
So when do you negotiate on a factory order? At the time of placing the order. Not when you take delivery of the vehicle!
This is another common misconception when it comes to factory ordering a car. You need to negotiate when you first place the order, not when you take delivery. Why? Because the dealership treats the ordered vehicle similarly to any other sales. When your salesperson/sales manager is putting together the “deal jacket” (industry lingo for all the paperwork associated with your car deal), they will have an out-the-door (OTD) price associated with the deal. That OTD price shouldn’t be MSRP + fees + taxes + tags/registration. Instead, if you negotiate with them it should be MSRP – dealer discount + fees + taxes + tags/registration.
If you don’t negotiate with them then, the assumption is that the deal is at MSRP, and your leverage (once the vehicle is on the dealer’s lot) is lesser. Especially in the current market where inventory is so scarce.
It’s also important to negotiate the price upfront, because you want to “lock-in” the price so that there are no surprises when you finally take delivery. More on that below.
What do I negotiate on a factory order?
What can you negotiate when you factory order a vehicle? It’s simple, all the same things you would negotiate when you purchase a car off the lot. Remember, if it’s taxable, it’s negotiable!
Negotiate on taxable fees (doc fees, processing fees, etc.), and on the vehicle’s selling price. In today’s market be prepared to negotiate off additional dealer markup. This has become very common because of the lack of supply.
Manufacturers incentives are applied at the time you take delivery of the vehicle, not at the time of placing the order. For example, if you order a truck today you will negotiate the OTD price with the salesperson and sales manager today. You will then take delivery of the truck 8 weeks later. At that time you will be eligible for any applicable manufacturer incentives that are currently active. You will not be able to retroactively receive the incentives that were in place when you ordered the vehicle.
That being said, you can ask the sales manager to see if they can “lock-in” the current incentives on the deal, however they likely will not be able to.
How do I negotiate on a factory order?
Negotiating a factory ordered vehicle is very similar to negotiating a vehicle that is on the dealer’s lot. If you are unfamiliar with that process, please consider going to Deal School, or signing up for a CarEdge Membership so that we can help you.
That being said, there is one distinct difference between negotiating a vehicle on a dealer’s lot and one that is ordered. That distinction is floor-plan assistance.
What the heck is floor-plan assistance you wonder?
You may be more familiar with “holdback” which is a form of “under the line” profit that dealerships collect from the manufacturer. In addition to holdback, dealerships also receive floor-plan assistance and advertising assistance from their manufacturer.
Floor-plan assistance is a set aside amount of money for each vehicle (it appears on most dealer invoices) that the manufacturer gives to the dealership to offset the interest expense associated with “floor-planning” the vehicle. You may not have known this, but car dealerships do not pay cash for their inventory. They finance it, just like you or I would. That means they have an interest expense on each vehicle that is on their lot.
Floor-plan assistance helps offset this cost for the dealership.
Why is this important? Because since you are factory ordering your vehicle and will likely take delivery within a few days of it arriving at the dealership, the dealer will not incur any meaningful interest expense. That means the floor-plan assistance from the manufacturer is pure profit for them.
Are there any “red flags” I should watch out for?
As you can tell by now, factory ordering a car is very similar to purchasing a vehicle straight off the dealer’s lot. It isn’t too terribly different, however there are some distinct changes in the process. That being said, are there any particular “red flags” you should watch out for when placing a factory order? The answer is “yes”.
The dealer won’t negotiate the price when I place the order
This is a major red flag. If the dealership isn’t willing to negotiate on the price when you place the order you can guarantee that two things will happen when the vehicle does arrive:
You’re in for a surprise regarding what the vehicle’s actual OTD will be; and
There’s no guarantee that the vehicle is even “your vehicle” when it does arrive.
We’ve heard too many stories of people “ordering” a vehicle and not negotiating the price in advance, only to have a nasty surprise when it finally does arrive at the dealership.
The dealer insists that dealer-installed accessories are required
Dealer-installed accessories are added by the dealer when they receive a vehicle. You’ve likely seen these on an OTD price worksheet in the past. Things like wheel locks, or LoJack are common dealer-installed accessories.
A common line you’ll hear from a salesperson or sales manager is “we can’t take that off, we put it on every car.” Well, the great thing about factory ordering a vehicle is that the dealership doesn’t have to install any of their accessories, because you’ll take delivery as soon as the vehicle arrives.
If the dealership is persistent about not removing them, that’s a red flag, because it’s a truly illogical argument.
The dealer won’t sign a buyer’s order or build sheet
You’ve negotiated your OTD price and you’re ready to put down a deposit to hold the vehicle. Woohoo! The only way to really make the agreed upon OTD price legitimate is to have a mutually signed buyer’s order. That, plus the deposit and the signed build sheet, make it clear that the price is the negotiated price.
If a dealership won’t sign a buyer’s order, that’s a red flag. You don’t want to arrive the day your vehicle is ready only to find out that the negotiated selling price you had is no longer agreeable to the dealership (this has been happening with more and more frequency as of late), and the only way to protect yourself from that is to have the signed agreement.
If they won’t do it, that’s a no-go.
The dealer didn’t request a deposit
When you factory order a car you will need to put down a deposit on the vehicle. This is typically $500 to $1,000. If the dealership does not request a deposit, or if they won’t accept your deposit, that means the vehicle you’re “ordering” isn’t really your vehicle. Just like the signed buyer’s order, if you can’t get a deposit down, you’re in for a rude surprise when the vehicle finally does arrive.
To “lock-in” your build and the OTD price, have both the dealership and yourself sign a buyer’s order, and put down the requisite deposit amount that they require.
I placed an order and haven’t heard from the dealership in weeks
This is an unfortunate, albeit common occurrence. If you’ve followed our steps and placed an order and then the dealership has gone silent, be sure to go up the chain of command at the dealership to contact someone in a leadership position to get information about your order. This is all about being your own advocate. We encourage you to use our email templates when contacting the dealership.
As a result of ongoing new vehicle production shortages, used cars, trucks, and SUVs are in high demand. This means that “rougher” and “edgier” used vehicles are making their way to dealership lots for sale to the public. One way to protect yourself from unknowingly purchasing a clunker is to look at a Carfax or AutoCheck vehicle history report.
Today we’re going to share a few stories from the CarEdge Community about AutoCheck and Carfax, and provide our recommendations for how you can protect yourself if you are buying a used car.
Let’s dive in.
How do Carfax and AutoCheck work?
Let’s start with the basics … How do these two companies work? AutoCheck and Carfax both operate in the same way; they source data from different places and compile that information into reports that are easy for a consumer to understand. With this in mind, it’s clear how the two companies compete. Who can get more (and better) data about a vehicle? That’s the challenge.
Carfax and AutoCheck both boast impressive lists of data partners on their websites. For example, Carfax says they have 112,000 data sources, while AutoCheck was developed by Experian and has access to all of their resources and relationships. Both companies provide compelling credentials as to why they are superior to the other. That being said, they both face the same issue: if data is not reported to them from one of their data partners, it will never show up on a report.
Which is more reliable?
This brings us to the most important question of them all … Which is more reliable? Carfax or AutoCheck? We’ll answer this question by providing a few anecdotes from our experiences, as well as what we’ve heard from CarEdge Community members who have shared their stories with us in the community forum or via Live Chat with our Auto Advocates.
AutoCheck doesn’t show damage, but Carfax does
Sadly, this happens more frequently than we’d like. Take for example the case of Chris, a gentleman in Alaska who purchased a 2019 Ford Fusion from a local independent dealership.
Chris went to the dealership, took the Fusion for a test drive, reviewed the AutoCheck report that the dealer provided, and purchased his car. A few days later he took it to the local Ford dealership because a light came on in the dash. Within an hour, Chris had a sinking feeling in his stomach when a technician came to him and explained that his vehicle had been in a severe accident. Chris, unbeknownst to him, had bought a clunker.
How could that happen? The AutoCheck had been clean. In case it wasn’t obvious, this is why we always recommend getting a pre-purchase inspection completed on any used vehicle (even certified pre-owned). That being said, what was scary about Chris’ experience is that Carfax had different data than AutoCheck—they did report damage to the vehicle (but not an accident).
Let’s look at the two reports, and some photos of the vehicle before it was repaired.
This is the AutoCheck report for Chris’ 2019 Ford Fusion.
As you can see on the AutoCheck report, the Fusion comes back “clean” and with an average AutoCheck score. Let’s look at the Carfax report.
The Carfax for Chris’ Ford Fusion shows damage, but no accidents.
As you can see on the Carfax report there are no accidents reported either, however there is a report of damage to the vehicle.
Right there on the Carfax report it says clearly “get the vehicle inspected before you buy.” Carfax knew about the damage, and AutoCheck didn’t. Chris obviously didn’t get the vehicle inspected, and he trusted the dealer who sold him the vehicle because they provided a “clean” AutoCheck.
Does this mean AutoCheck is inferior to Carfax? We’ll let you be the judge …
We heard a similar story from a CarEdge Community member named Kristen.
Kristen had a nearly identical experience to Chris. She bought a vehicle (and even got the extended warranty), only to find out a few weeks later that it had previously been in not only one, but two accidents!
Does AutoCheck not collect as much information as Carfax? Based on some of our communities experiences, it appears that way.
How to protect yourself
Get a pre purchase inspection
I know we sound like a broken record, but getting a pre-purchase inspection is one of the best things you can do to protect yourself when buying a used vehicle. A pre-purchase inspection isn’t bullet-proof, but it certainly increases the likelihood of you avoiding a fate like Chris or Kristen.
Ask your insurer to check the VIN
Another trick you can use to get more information about a vehicle is to ask your insurance company to check the VIN in their systems. Insurance companies have databases similar to Carfax and AutoCheck that they can access on your behalf. Once you’ve found a vehicle you’re interested in, call your insurance company and ask them what info they have on the VIN. If it comes back clean on their end, then get the pre-purchase inspection.
Understand that when you buy used you are buying “as-is”
In nearly every state, when you purchase a used vehicle you are purchasing it “as-is.” This means that no matter what condition the vehicle is, you are purchasing it as such. This doesn’t mean a dealership can sell you any clunker (vehicles have to pass state safety inspections to be sold), however it does mean that once they’ve sold you something it is entirely yours to deal with. The contract you signed stated it is being sold to you “as-is” and that the dealer cannot be held liable for the condition of the vehicle.
It is important that you understand the “as-is” concept, because your recourse post-purchase if something does go wrong is limited. If you’re like Chris or Kristen you have a few options to remediate the situation, however none are ideal. It is critically important that you understand you are purchasing the vehicle “as-is” and that you should be measured and pragmatic before signing the contract.
Currently, there is a global shortage of new cars, trucks, and SUVs. Manufacturers like Ford, GM, and many others have been struggling for months to supply their dealerships with enough new inventory to keep up with demand.
Market days supply, a metric that sales managers and industry executives track religiously, is at historic lows. Dealerships typically carry a 60 to 90 days supply of inventory. This means that if a dealership did not receive another vehicle, they would have enough inventory to meet demand for 60 to 90 days. To paint a picture of how dire the situation is, Subaru currently has an 8 day supply of inventory. 8 days.
Why is there a lack of supply? Because of an ongoing semiconductor shortage that has plagued the automotive industry for all of 2021, and likely into 2022.
The “chip shortage” as many are referring to it, and the subsequent new vehicle shortage have had ripple effects across the entire automotive industry. With fewer new vehicles available for sale, used car prices have skyrocketed. Used vehicles are worth 25% more right now than they were at this exact same time last year. Considering a car is a depreciating asset, that’s not supposed to happen.
It’s fair to say that we’re currently experiencing a seller’s market of unprecedented magnitude. That being said, many people find themselves in a position where they need to buy a vehicle. In that case, there are a few things to be aware of in advance of signing on the dotted line of your buyer’s order.
As we’ve learned from CarEdge Community members who work in dealerships and financial institutions, lenders are still financing vehicle purchases, even as loan to value ratios are severely out of whack. What impact will consumers face once the bubble bursts? Let’s unpack exactly that.
When you buy a car it depreciates. The exception to this rule has been 2021, however we expect that once new vehicle production returns to normal, all vehicles will depreciate as per usual.
Before the chip shortage, a car buyer could expect their new vehicle to depreciate about 20% in their first year of ownership. For many owners who financed their purchase, this meant that they likely owed more on their loan than what the vehicle’s market value is after one year.
How so? Consider this scenario.
If you bought a $40,000 car and it depreciates 20%, it’s worth $32,000 after one year. Even though the vehicle selling price was $40,000, you likely financed more than $40,000. This is because the selling price of a vehicle isn’t the actual, or total price you pay. The total price is what we refer to as the out the door (OTD) price. The OTD price includes all fees, taxes, and accessories. When you finance a vehicle you finance the OTD price, PLUS any ancillary products you purchase in the finance office (unless you purchase them in full upfront).
That means your loan amount will be more than the $40,000 selling price (unless of course you plan to pay taxes and fees in cash, or make a substantial down payment). Every state and locale has different tax codes (we calculate those for you in our free OTD Price Calculator!), and dealer fees vary from state to state (we’re looking at you Florida), but a general rule of thumb is that your OTD price will be 10% higher than the selling price of the vehicle.
That $40,000 purchase is actually a $44,000 purchase, and unless you’re putting some serious cash down, you can quickly see how you’ll be in a negative equity position the moment you drive off the dealership’s lot. Your loan is for $44,000 (with zero down), and the value of the vehicle you are purchasing (new) is $40,000. You’re already in a $4,000 negative equity position.
What we described above is a typical negative equity situation consumers would face last year (pre-pandemic). Our concern is what will inevitably happen to consumers in 12, 24, or 36 months from now. Their negative equity position will be magnitudes greater than the example we just shared.
What’s going on right now
New vehicles are frequently selling for thousands of dollars over MSRP. Consumers are buying and financing thousands of dollars of “additional dealer markup” simply because of the supply shortage. In 2021, on a new Kia Telluride with $8,000 in additional dealer markup, you may have financed $54,000 on a $40,000 MSRP vehicle. That’s a serious negative equity position!
This is a real out the door price worksheet from a CarEdge Member. Craziness.
That being said, many lenders are not approving loans without significant cash down payments. Lenders need to abide by loan to value ratios that make sense based on your credit score and history. However, from everyone we’ve met with, lenders are still lending, and somehow consumers are manufacturing a large enough down payment to justify getting a loan approved.
Right now, at this very moment, the new Kia Telluride you just bought brand new might actually be worth MORE now that it’s a used vehicle (what a crazy time we are living in), however that is exactly the “bubble” we are talking about. Everyone knows that the Kia Telluride you just bought with $8,000 in additional dealer markup isn’t actually worth more used than it was new. That’s the craziness of our current supply/demand imbalance.
So what happens in 24 months when that Kia Telluride price has normalized and it has deprecated the way we all expect it to? The owner who financed that purchase is going to be looking at a sobering reality, their Telluride will be worth considerably less than what they owe on their current loan. If they want to move into a different vehicle they’ll have a tough pill to swallow.
The same reality is playing out in the used car market. With used vehicle prices highly inflated, consumers are financing purchases on used cars and trucks that aren’t worth as much as they appear to be right now. The negative equity position they’ll be in will be staggering. The first impact of the “bubble bursting” will be the reality that millions of Americans will owe thousands of dollars more on their auto loans than what their vehicle is actually worth. This will have some interesting effects on vehicle sales in the near future.
By now you are likely familiar with massive “online” car dealers like Carvana, Vroom, and Shift. Each of these companies has gone public over the past few years, and with valuations north of $50B, each has a lot of money to invest in growing their business.
What’s interesting about their business model (and Carmax’s too) is that they make most of their money not selling cars, but on selling loans, and ancillary products (extended warranties) tied to the purchase of a vehicle. To sell a loan or an extended warranty, you have to sell a car. Selling a car is actually really expensive. You have to find a vehicle to buy, recondition it so that it’s “showroom” ready, and then market it for sale.
Even with all that overhead, there is enough money in loans and extended warranties (and occasionally in the actual sale of the vehicle) that they make money (or at least make enough money to justify raising more capital from investors).
What happens when the bubble bursts and used vehicle prices fall? Each of these dealers will be looking at their portfolio of hundreds of thousands of VERY expensive cars they paid for that are NOT worth what they paid for them. Depending on how quickly prices fall, each of these companies could be looking at hundreds of millions of dollars in inventory that is worth less than what they paid for it.
In a “post bubble burst” world we’ll be looking at quarterly reports from each of these companies that discuss how they’ll need to offload inventory at a loss to free up cash to be able to purchase new inventory at a lower price. This practice is called cost averaging, and it’s inevitable it will happen. The companies that don’t handle this well will certainly suffer, and as consumers we may be able to benefit from some sort of “fire sale” if/when it happens.
There will be less in-market car buyers over the next five years
The third impact we see when the bubble bursts, is that there will likely be fewer in-market auto buyers. Like we discussed above, with expected negative equity positions to be very large, there will likely be a substantial number of buyers who take themselves out of the market when they realize that they owe thousands (if not tens of thousands) more on their current vehicle than what it is worth. We expect that many people will decide it makes more sense to hold onto their existing vehicle than “roll the negative equity” into a new loan and try to purchase another vehicle in 12, 24, or 36 months.
How can you protect yourself
If you need to buy a car in this market, there are a few things you can do to protect yourself.
Step one
Become educated about the market situation. Reading this article will help you, and we also suggest you watch a few of our recent YouTube videos to get up to speed.
Step two
Be aware of your local market conditions. Although the supply shortage is global in scope, be sure to understand your local market conditions by running a Market Price Report.
Step three
Get support negotiating with the dealer/seller. Post your OTD worksheet to the CarEdge Community Forum, or live chat with our Auto Advocates On Demand. No matter what, get a second set of eyes to review your deal before you sign the dotted line.
Step four
Get pre-approved for financing instead of relying on the dealer!
Step five
Be patient! We’ve heard from dozens of community members that they’re still able to get fair deals right now. It takes patience and persistence. You’ve got this.
When it comes to buying a car, there are definitely no “magic words” that will convince a salesperson to give you an amazing deal, but there are a few phrases that can give you leverage in negotiations. Ready to learn how to negotiate with a car salesman? Great! Let’s get moving.
“I’d Like to Discuss My Trade-In Later”
Car buyers with a vehicle to trade should get familiar saying “I’d like to discuss my trade-in later.” When selling and buying a car at the same time it is best to treat them as two separate transactions. A salesperson will always want to “work their magic” on the numbers and make it look like you’re getting a better deal than it is when you negotiate the trade-in and the new vehicle purchase price at once.
So keep it simple with one of the most vital car buyer negotiation phrases. Every time that the salesperson brings up your trade-in while you’re talking about the new car, remind them that you’d “like to discuss my trade-in later.”
Chances are that you may even need to come up with a few versions of this phrase, since the salesperson is likely to bring up the value of your trade-in more than once.
The vehicle purchase process is terribly confusing. Here at CarEdge we strive to teach our members about all of the numbers involved in a car deal before they even contact a dealership so that they can stay in control of the process. One of the most vital (and obvious, albeit challenging!) numbers you should know, is the value of the car that you want to buy.
Unlike buying a refrigerator, a sofa, or literally any other item, buying a car entails hours of gamesmanship over what the “price” of the vehicle actually is. Be prepared to say “I know what the car is worth” to a salesperson, and feel confident that you actually do.
By the time you go to the dealership or begin email negotiations, you will have used the Market Price Report to know exactly how much you should be paying for your car. If you’re looking to buy a used vehicle, you will have run it through CarEdge’s Black Book vehicle valuation tool to get the same pricing information the dealer has, immediately leveling the playing field. The purpose of this phrase is to let the salesperson know that you’ve done your research and you know what you’re talking about.
“I Like This Car, But I Don’t Love It”
I’ve said it before, and you’ll hear me say it again … You don’t want to act too eager when you are buying a car. “I like this vehicle, but I don’t love it,” is one of the important phrases you can say to a car salesman to keep control of the conversation. Your salesperson should know that you like the car and that you might buy it, but you’re not so in love with it that you’re going to pay more than it’s worth.
Don’t say this phrase and expect any response. Just say it during your test drive to show that you still need to be convinced that the value is right. It’s one of our car buyer negotiation phrases that’s somewhat subtle, yet important. It’s all about keeping your cards close to your chest.
As an added bonus, this phrase can be a good reminder to yourself that you should walk away if you don’t get a good deal. It’s easy to get caught up in the emotions of buying a car, but by repeating this phrase, you can stay in control of the negotiations.
Are you buying a new vehicle, or are you factory ordering a car? Great, ask to see the invoice price. Having the dealer’s invoice will give you much more information that you can use during your negotiations. In fact, this is one of the most important phrases you should say to a car salesman. When you know the dealer’s invoice price, you’ll be able to propose a fair deal with a fair amount of markup.
There’s nothing that a salesperson wants to hear less than this phrase. They want to sell you a car today, not tomorrow. Most salespeople know that if you leave the lot, you might not return. They would prefer to keep you there, make you happy, and sell you a car. However, if you aren’t reaching the right numbers in your agreement, it might be time to leave.
You deserve to be treated properly and to get a fair deal on your vehicle. That’s why this is our top suggestion for buyer negotiation phrases: It gives you a chance to stand up for yourself and retain control of the negotiations.
Use our step-by-step car buying guide
Do you want to learn more about how to negotiate with a car salesman like a pro? We created our step-by-step car buying guide to coach you through the phases of buying a vehicle like a pro. Check it out here!
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