Knowing the dealer's cost gives car buyers an edge

PERSONAL FINANCE

October 04, 1992|By Knight-Ridder News Service

DETRIOT — Detroit--Dickering over a new car is a daunting task for most Americans.

Unless you know how much the dealer paid for the car, it's difficult to know where to begin or end the negotiations. And outwitting a car dealer is a tall order even for an experienced negotiator.

"As a cultural group, Americans don't like to haggle, and most of them are completely unprepared to haggle because they don't do their research," said Peter Levy, publisher of IntelliChoice Inc., an automotive information service in San Jose, Calif.

The result: Customers pay more money.

Thanks to Mr. Levy and other publishers, researching a new car purchase is easier than it used to be.

Consumer Reports recently published its "New Car Buying Guide, 1992-93 Edition." The 160-page book, which costs $8.95 and is available at bookstores, was compiled by the editors and technical staff of the nation's best-known product testing publication.

The book profiles and rates more than 100 of the most popular models according to cost, reliability, comfort, convenience, fuel economy, frequency of repairs and customer satisfaction.

It includes chapters on dealing with the dealer, choosing a safer car, selecting optional equipment and buying child safety restraints, tires and burglar alarms. The book also includes the results of Consumer Reports surveys, which asked subscribers to the magazine whether they would buy their cars again and how frequently they had them repaired.

The optional equipment section is especially helpful, advising buyers to consider buying anti-lock brakes, an air bag and a burglar alarm to qualify for insurance discounts. It also tells buyers to stay away from special maintenance agreements and rustproofing and fabric packages, which usually are unnecessary.

But the buying guide won't tell you how much the dealer paid for the car.

For that, you have to call Consumer Reports Auto Price Service at (313) 347-2985.

For $11, the company will fax you a computer printout showing the current list price, the dealer's cost, prices for factory-installed options and existing factory rebates.

Mr. Levy approaches the problem from a different angle.

The two guides he publishes -- "The New Car Buying Guide" and "The Complete Small Truck Cost Guide" -- profile and rate vehicles according to what it costs to operate them for five years.

Costs include depreciation, insurance, financing, state fees, fuel, repairs and maintenance.

The books also tell you what you can expect to pay for optional equipment, tuneups, destination charges, taxes and fees.

Each profile also lists a "target price" for each vehicle -- what you can reasonably expect to pay. Both books list the best values according to size and price.

The books are expensive -- $39 each -- but they provide a wealth of knowledge about buying cars and trucks. IntelliChoice says the 1992 editions should be available at area libraries.

Copies may be purchased by calling (800) 227-2665.

IntelliChoice offers two other services.

"The ArmChair Compare Report" is an exhaustive side-by-side comparison of any two vehicles of your choice. The $19 printout lists dealer costs, optional equipment prices and the approximate value of your trade-in.

"Just the Facts" is a detailed comparison of vehicles within a specific market segment. The report costs $14.95. To get either report, call IntelliChoice's toll-free number.

Once you have done your research and narrowed your choices to a couple of cars, you're ready for the next steps:

Visit the showroom.

Carefully inspect the car. If it passes muster, take it for a test drive. If you fall in love with the car, don't let it show, otherwise the dealer won't have an incentive to give you the best deal.

Then, show the salesperson your work sheets and ask the salesperson to make an offer. Let him or her know you plan to shop around and don't succumb to high-pressure tactics. A legitimate deal is as good tomorrow as it is today.

Be sure to find out about any rebates and hidden costs.

Keep your transactions separate. Buy the new car first. Then, shop around for the best finance terms.

Then, sell your clunker. You'll probably get more money if you sell it yourself, but trading it to the dealer involves less hassle.

Whatever you do, consult "Kelley Blue Book," "NADA Used Car (( Guide," or call Consumer Reports' Used Car Price Service at (900) 446-1120. The call costs $1.75 per minute, and you should expect the call to take at least five minutes.

Close the deal.

Before giving the dealership a deposit, make sure you can get it back if the deal suddenly turns sour. Read all of the paperwork before signing and demand changes in terms that are unacceptable.

Don't begrudge the dealer a profit.

"Bear in mind," Mr. Levy said, "that 'profit' is not a dirty word, and that no dealer is going to sell you a $10 bill for a buck and remain in business."

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