First time new car buying advice

Buying a car is exciting and intimidating. Going through this process for the first time, my wife and I learned a lot.

There’s a lot of great material online but my favorites are:

Comprehensive Reddit Walkthrough

6 minute video

Identifying Make & Model

We wanted to get an economically friendly, new car. A friend pointed us to a great site called Greener Cars that ranks all cars by environmental impact. Chicago doesn’t have a high plug-in charging density so we sadly had to eliminate all electric options. That left us with 3 sedan hybrids:

• Hyundai Ioniq
• Honda Insight
• Toyota Camry

Narrow to Trims

Each of our eligible make/model combinations came in 3 different trims (essentially tiers). While more premium trims add more luxury features, they also drop MPG and the greener cars rating. Restricting just to trims that had no drop-off on greener car rating, we filtered to 3 trims:

• Hyundai Ioniq Limited (high trim)
• Honda Insight EX (medium trim)
• Toyota Camry LX (low trim)

Test Drive — Scheduling

The Reddit article recommends making a first trip to dealerships with the pure intention of testing cars and figuring out which one you actually want. Test driving is an illuminating process and there’s no need to add the complexity of the sales process.

We researched dealer locations nearby and found a Hyundai, Honda, and Toyota dealer cluster within a few minutes of each other. That enabled us to conveniently do back to back test drives for easier comparison. The online sites of most dealers are quite painful to navigate so I called to schedule test drives.

Test Drive — Day of

We decided to “make a day” of the test drives to ensure we didn’t feel rushed. I recommend bringing a notepad so you can jot down notes right after you finish the test drive. We also made sure to include a break by finding a fun lunch place between test drives 2 and 3.

Our experience at the dealerships for test drives varied widely. Two were really easy in and out experiences. They made a copy of the driver’s license and we got in a car that was right outside. It was seamless and they totally understood it was just about the test drive. The total process was about 30 minutes between the test drive and few minutes inside the dealership. But the third dealer brought us into the sales area, asked a bunch of questions around our interest to trade-in and if we were looking to lease vs. buy. They took 15 minutes to grab the car from another location and delayed our departure so their sales manager could try to pitch us to start the buying process then.

Decide on a car

My wife is the primary driver and realized during the test drive that Hyundai was out because she hated the touch screen. It was much tougher between the Honda and Toyota, and we did have to get a spreadsheet involved. We looked at:

• What people actually pay (TrueCar Price Curve, CarGurus)
• Greener car score
• IIHS safety rating (so much detail on that site)
• MPG
• Comfort driving
• Aesthetics
• Helpful alerts (blind spot, collision warning, lane departure)
• Rear view camera
• Stick vs. button gear shift
• Warranty

When we got really stuck, we asked and answered the question “What would have to be true for this to be my best option?” That helped us realize that we most wanted a small car that was fun to drive, leading us to the Honda Insight.

Get prices over email

Knowing we wanted a 2020 Honda Insight EX in Aegean Blue, I went onto the Honda website and found all the dealers within a 45 minute driving radius. While often obscured, each dealer website did have an online contact form. I reached out to 16 dealers and would recommend filling out the contact form with a template like this:

“Hello, I’m looking to purchase a 2020 Honda Insight EX in Aegean Blue. Could you send me your lowest out the door price (inclusive of taxes and fees) along with a VIN number? I’d prefer to communicate over email so please contact me at [].”

You do get put on a bunch of spammy lists so it would make sense to use a burner email. Some dealers made phone number a mandatory field on their contact form but didn’t have any smart validation so I just put in their phone number, forcing them to engage over email.

I created a spreadsheet with the following columns to keep track of all the inbound

• Dealership Name
• Price
• Full breakdown of price (car, state/county/city tax, doc fee, title, registration fee, any other fees)
• VIN number

The dealer funnel I got:

• Contacted: 16
• Responded: 10
• Provided Price: 8
• Sent over a VIN: 4

Call the top 3

I recommend moving over to the phone at some point in the process. Dealers are hesitant to give their best price over email due to fear you’ll shop it to another dealer. I recommend doing this when you have a lowest 3 dealer prices. I called each to fulfill the following objectives:

• Get a full breakdown of the price including all fees and taxes. They are slippery so it took me awhile to get everything that went into the quoted price
• Since a few of the dealers were across state lines, comparison got messy because the out of state dealers took fewer taxes, artificially making their price look lower since I’d have to pay the rest of the fees when registering the car anyway
• Get the VIN (vehicle identification number) — this may relate to the stock number but make sure you have the actual VIN to verify this is a real car
• Ask for the window sticker to check that the specs match what you’re expecting
• Verify that the car is on the lot

You should not need to pay any sort of deposit. When that came up for me, the dealer didn’t actually have the car so I dismissed them.

Finalize

Secure a final quote by getting down to a deal you fully understand. Call back the dealer you plan to go with and keep asking questions until you’re comfortable.

• Decide if you want a locked in price or not. You’ll likely get the best price if you make one final push at the dealer, threatening to walk away. We decided to pay a slight premium for the certainty of a known price. I called the dealer we purchased from and confirmed, “If I come with the agreed $x, that’s the final deal, right? There’s no other costs necessary for me to drive off the lot?”
• Check for any non-monetary conditions. My dealer wanted to do a hard credit check even though I was paying in cash. From what I’ve seen, there’s no reason a dealer needs to hard credit check you unless you are financing with them so we were able to negotiate that away
• Verify one final time the VIN and window sticker are still for the same car you’re expecting

Go to the dealership

Dealers will push from the first email to schedule a time to come into the dealership. Wait to do this until you have all the above done.

• Prepare for the back-office — The negotiating is not done once you’ve finalized a car and price. In a way, its only really just beginning because new cars are a commodity and dealers can make a great profit off all the insurance, warranties, etc. you get in the “back office” or “F&I” (finance and insurance)
• Schedule a pick-up time right before closing. Many people will tell you to buy at the end of the month/quarter because dealers have quotas and it may be economically rational for them to sell to you at a loss to get over that quota. I’d add that the F&I person just wants to go home if you arrive in their office 15 minutes before closing so that may also accelerate the process for you

Transition from having no car

The Reddit guide and YouTube video above have good advice if you have an existing car and how to handle the trade-in. But if you don’t:

• Shop for insurance a few days ahead of time to ensure you have a policy start date ready for the day you drive
• Make sure you have a parking plan

Purchase in cash

The dealer was OK with a personal check if we were OK with a credit check. Alternatively, I could pay via cashier check and went with that option. Your bank may have a retail location but I had to call a number to order mine. Make sure to have the cashier check sent to you with yourself as the recipient. If your deal goes sideways, you can go to a different dealer and use the same check. Like a personal check, you just have to endorse it for them to cash it.

To the point that you may be able to do some final negotiating at the dealer, ask if they have a credit card maximum (mine had $3k). If you want to do some final negotiating at the dealership, get a cashier’s check for an amount $3k less than the agreed upon price with the hope to negotiate it down last minute and pay the remainder on a credit card.

Buy the car

Our dealer asked for our drivers licenses and insurance information in advance to prep the paperwork. Since it was almost closing time and all the pre-work was ready, we were in and out in less than 45 minutes. Most of the time was spent with our salesman walking us through all the car’s features after we purchased the car. Off we went! Good luck!