How to Buy a New Car
or, "Car Salesmen Are Stupid"

by His Daddy
June, 2003

The Problem

I decided recently that I needed a new truck. This was mostly brought about by a stranger back in January who decided to steal my 1991 Jeep Cherokee. That fiasco, mind you, is going to be a whole different article in itself. When the pictures are developed, I'll write the foolish thing.

Still, because I was without wheels of any kind, it was important that I buy a vehicle. Buying a car is a stressful enough thing to do when you already have one, nevermind when you have no wheels, and have to bum a ride even to the supermarket. "Hey Joe, could you pick me up so that I could go shopping?" You want to talk about feeling like a social leech...

The Biggest Problem

In all my research, I found that the hardest part of buying a new car was figuring out which one I wanted! I mean, you'd figure there'd be so many little aspects to think about, when in reality, the only truly challenging one was just picking a car to buy! I knew I wanted an SUV, but I wanted one I liked, did the things I wanted, didn't break down after a year, and wouldn't become a money pit.

Why is it that all the SUV's Consumer Reports like look very much like dorky station wagons?

To get started, I picked a few SUV's of which I liked the look. The trucks that made the original pick were the Ford Explorer, Nissan Xterra, Chevy Trailblazer, Jeep Cherokee, and the Toyota 4Runner. They all had their advantages and disadvantages asthetically. Still, I had to find out whether they were worth my money. I made a small investment in a year's subscription to ConsumerReports.org, the website for the Consumer Reports magazine (or whatever it is). According to them, any car that doesn't look like the station wagon that took college-placement classes wasn't worth your time. Consumer Reports pretty much slammed every SUV that was worth driving.

Taking their advice with a grain of salt, I decided to simply compare the aforementioned five cars against each other. They all sucked for gas mileage, but considering my 1991 Jeep Cherokee had been giving me about 12 miles to the gallon, they were all drastic improvements. The only thing that separated the five trucks seemed to be that all of them but the Xterra looked like they could go off-roading, but weren't built to do so. Every manufacturer claimed their cars were durable, but that's "durable," where "off-roading" meant pulling into your driveway, or a parking lot at the grocery store. The Xterra was the only one that was factory built with a strong suspension.

It performs like a truck, and it looks like a truck. You can feel like a man behind the wheel of an Xterra... especially if you're a woman.

So, I decided to go with the Xterra. It's a real tough truck, yet it handles as well as a sedan off-road. That's probably because it's designed to be driven there. Take your sedan off-road, and it drives like a beached whale. Then again, drive a Jeep Wrangler at 70mph on the highway, and it drives like a flying wall. It's all a matter of perspective, really.

None of this matters, you see. I'm going to tell you about how to buy a car. More importantly, I'm going to teach how you car salesmen are not just liars, they're stupid.

Like, real, real stupid.

Overview of Buying a New Car

Before I visited my first car dealership, I did all of my homework on the Internet. I went to Nissan's web site, and learned everything I could about the truck. When looking at vehicles, they all seem the same. For one model, there may be the SE, and the XE, and the XE+, and the SE-SX, etc. It's all rather dumb, but it's a way for the manufacturer to make each model seem that much different from the next. In all reality, they're basically the same car, only some of the options are different.

Most likely, they're filled with options you want, and options you don't want, but have to buy in order to get the vehicle. That could be a whole article in itself, so I'm not even going there.

After I found the car I wanted, complete with every option I wanted, I decided to get the best price on the truck. I visited Kelly's Blue Book (www.kbb.com). This place is great! It shows you how much the truck costs on the retail market, and then how much it costs the dealer! In reading this site, you are told how much the dealer paid for the truck, in addition to what the "retail" value of the car is. Retail value is simply a marked up price that you should never pay, but a lazy person who never reads an article like this, or the billion other web sites out there saying the same thing, will simply pay this price. That's why there's a car company called "Saturn," and it's doing well. Lazy people buy for sticker price, and make it that much harder for people like you to buy cars. These people believe that the dealer actually paid just about retail price.

No, we didn't add the glow! This is how this dealer represents himself on his own web site!!!

And if you believe that's what the truck cost the dealer, I've got a 1991 Jeep Cherokee I'd like to sell you.

The Money Game

Yes, it's true -- the dealer did pay "dealer" price for the truck (note, this is not "sticker" price -- "sticker" price is the "retail" price mentioned above). The problem is, even though he paid the lower "dealer" price, the dealer's going to get tons of that money back on top of that! There are two big, ditry terms in car sales: dealer holdback, and loan referral.

Dealer holdback is an amount of money that is refunded to the dealer when he reports to the car manufacturer that he sold the car. So, if the car costs $30,000 and the holdback is 2%, if the dealer sells that car for $30,000, the manufacturer sends him a check for $1,200!

Did you catch that?

That's right, the manufacturer pays a kickback to the dealer for selling the car, and it's legal. So, when you look at the "dealer cost" of the vehicle, you're not looking at what the vehicle actually cost the dealer, you're looking at what he paid for it before kickbacks! That means that the dealer, with the help of the manufacturer, inflates the cost of the vehicle to make you pay more!

And that's before the regular inflation before sticker price. How much of a sucker would you be for paying sticker price now?

So, how do you deal with dealers and salesmen (and what's the difference)? How do you buy something from a snake? ARE dealers really even snakes?!? Actually no, they're rather stupid human beings.

Find out in the next installment!

Next Lesson --> How To Buy A Car part II: Car Salesmen Are REALLY Stupid!