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Before You Buy: Car Shopping Tips

By Navid Boostani | June 15, 2016

If you’ve decided to buy a car, you may be feeling a little daunted by the process. You’ve heard that you can save a significant amount of money by simply doing your homework and walking in prepared. But you’re not sure how to prepare yourself.


Don’t worry – we’ve got you covered. We sat down with Phil Lundteigen, a former business manager at a Subaru dealership, who gave us the inside scoop.

Insider tips for saving money when buying a car


Stay Focused

The best salespeople don’t really ‘sell’ you at all. They’re friendly, helpful, likeable and patient. And you often end up paying more because of it. If someone provides really good service, you’re less inclined to haggle or reject add-ons that you don’t really need. Remember: you’re not here to make friends. You’re here to buy a car, at the lowest price you can get.


Shop Online

If you already know what you’re looking for, the best way to save money is to avoid the sales team altogether and shop online. This is your easiest, cheapest, and most convenient option.


Sites like offer two important advantages:

  1. You can find out the ‘invoice price’ of the vehicle you’re interested in. The invoice price is the base cost from the manufacturer, i.e. what the dealership actually pays for it. Having this information up front gives you a more accurate reference point than the retail prices you see advertised.
  2. You can actually have local dealerships compete for your business directly on the website.


You can walk into a dealership, pick a car in the showroom, and offer invoice price plus, say, $500 (or more for a higher end model). In most cases they’ll do it: it’s a car moved, so they get credit from the manufacturer for selling a car, and will also earn the opportunity to up-sell and cross-sell you in the business manager’s office (where you sign all the paperwork).


Lundteigen emphasizes that online shopping is the absolute best way to save money on a car purchase. But if you’re not sure what kind of vehicle you want, or can’t shop online for some other reason, there are some other ways to get the best possible deal for your car.


Use Sales Pressure to Your Advantage

If you’ve ever been on a car lot, you’ve probably felt the pressure to buy, buy, buy! But if you think about from the point of view of the salesperson, he or she is facing just as much pressure to sell, sell, sell! Most sales-driven companies set monthly targets for their employees, and car dealers are no different.


Knowing this, you can be strategic about your timing. Visit the dealership around the 20th of the month, when the pressure to hit monthly sales targets is highest. Find the sales manager’s office, and you’ll see the salespeople’s names up on the board. They’re usually listed in descending order based on the previous month’s sales, with the best salesperson at the top. You don’t want that one. At the bottom of the list, you’ll find the weakest salesperson – the one who is most likely to be struggling with this month’s targets. That’s the one you want. He or she will be much more likely to give you a deal in order to make a sale.


Make them Compete for Your Business

The sales team faces internal pressure, but they know that they’re also competing with every other dealership in the area for your business. Lundteigen says:

Walk into a dealership and say, “I just came from another dealership and I’ll be going straight to the next one after this. I’m looking to buy a ——, what’s the best deal you can give me? You get one shot at it.”

This approach cuts through a lot of the sales fluff and gets you right to the lowest price.


Just Say No

If you want to save money car shopping, it’s not just the ticket price of car to think about. Anything you buy through the business office (like undercoating, fabric protection, extended warranty, protection packages, supplemental life and disability insurance, etc.) has a much higher margin than the car itself. And because the margins are so much higher, there’s an incredible amount of pressure to sell these add-ons. In fact, many times a dealership will sell a car at a low profit (or even at cost) with the hopes of getting the customer in the business office, especially if the business manager has proven track record.


Our expert recommends that you “just say no” to whatever they try to sell you in the business office.


Here’s an example: if you’re buying a $30,000 car, you could be offered $5,000 worth of add-ons. Does it make sense to buy these? In most cases, the answer is “no.” You’d be much better off putting that $5,000 in the bank and self-insuring against the potential risks that those add-ons were created to protect.


On top of that, the definitions for what various insurance policies will cover can be very narrow. You should definitely have life and disability insurance, but you shouldn’t be buying it from your car dealer.


Crunch Your Own Numbers

This is important: when leasing or financing your car, don’t let the dealership tell you the math. Double check it, using a calculator like this one.


Mistakes happen, but it’s also not uncommon for the manager to quote you a monthly payment figure that is a slightly higher than for the car alone. If you’re expecting your payment to be about $100, and they say it’s $120, you’ll think, “yeah, that sounds about right.”


Then, using this higher monthly payment amount, they may say that they’ll “throw in” such-and-such add-on. What they didn’t tell you was that the monthly payment they quoted you already accounted for that add-on that you actually don’t need. You don’t know it, but you just bought an extended warranty. Any time they offer to “throw something in”, your BS detector should go off. Dealerships are in the business of making money, not giving things away for free.


Read the Fine Print

Pay attention to every single item on the bill of sale. Don’t let a business manager rush you through it. And don’t feel bad about asking nitpicky questions. Occasionally dealers will include items onto the bill of sale that you didn’t ask for. Plus, errors in finance or lease payments can be easy to miss (especially if the difference in monthly payments is small). But those small differences become big ones over the course of the financing period.



Don’t be afraid to ask the dealer to reduce or waive certain fees. There are some legitimate fees, like freight and PDI (Pre-Delivery Inspection), that aren’t negotiable.

An “Administrative” or “Documentation Fee” is nothing more than a cash grab. If you ask what it’s for, they’ll tell you it covers the vehicle registration fee, and the lien index search (actually about $15). They will absolutely waive it if you ask, and stick to your guns. After all, they want to sell you a car.

If you’re financing, they’ll probably add in a financing fee. “It’s bull****,” says Lundteigen. “The banks are not charging this, nobody’s charging this. It’s just the dealer trying to get more money out of you.”


Be Wary of ‘Deals’

As a general rule, it’s always better to pay cash. Dealers will offer super low interest rates, which generally means they’re working with the lender in some capacity. But there’s always always a cost. You’re either paying more in fees, or the base cost of the vehicle. In most cases, you’re better off going to your own bank and taking a loan for the vehicle, instead of using the dealer’s in-house financing.


New Isn’t Always Best

Never buy the latest and greatest, says Lundteigen. Even if you want a brand new vehicle, buying last year’s model can save you a bundle. There’s always a lot of inventory and the incentives to get these cars off the lot can put dollars back in your bank account.


Used Cars

When you buy used, your biggest concern should be the post-purchase costs – repairs and maintenance. Unlike with a new car under manufacturer’s warranty, you’re on the hook if anything goes wrong post-sale. Even when there’s an inspection done, you’re potentially buying someone else’s problems. Lundteigen stresses that you should not buy an aftermarket warranty, as it often excludes pretty much everything you’d actually end up making a claim for.



Finally…Know What You Want

Why are you buying a car? What do you need it to do? Be clear on your reasons for making this purchase, what you need that vehicle to do, and what you can afford, long before you step foot into a dealership.


Most of us hate trying to become experts in fields that we’re just not interested in, such as vehicles. We’ll forego the research and pay far too much, for far too long. The person we are 5 years from now will be really, really annoyed at the person we are today, making these decisions. Keep that version of you in mind. Get the painful research done, and start your vehicle purchase with a calm, centered approach.


Future you will really appreciate the effort you put in.


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Navid Boostani

Navid Boostani

Navid is a co-founder and CEO of ModernAdvisor. He is a problem-solver and is passionate about bringing affordable and unbiased investment management to all Canadians.