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Car Buying GuideIntroduction"Just click here and this beautiful convertible can be yours for $1 under invoice. Unbelievable! And we've got Zero Percent financing. Even more unbelievable! And we'll give you a free computer when you buy from us! And we guarantee the value of your trade-in!
Did you know a dealer or online auto service can sell or lease you a new set of wheels for exactly what the dealer paid the manufacturer and still make $500 to $1,500 on just the car itself? Did you know that "Zero Percent" financing may cost you more than financing at a bank or credit union—even if the bank or credit union's rate is 7 percent? Do you hate dealing with dealers and look forward to buying or leasing a vehicle online—or from a buying service—just so you won't have to deal with the dealer yourself? Guess what: you have to deal with a dealer, even if you use a buying service! All new vehicle sales—repeat, all—have to involve a dealer. Do you think the Internet has made it safer for you to research and/or acquire a new vehicle? Think again! In just the past three years, the entire auto business has been ripped apart, reinvented, and re-launched. "In an instant, your privacy, your money, and your good credit can be stripped away—and that's if you're dealing with the 'good' car guys!" That quote, from the new edition of my book Don't Get Taken Every Time, sums it up. (Read the Introduction and Chapter 1 of the book.) That’s why I’ve written this special buying guide for you. For over 20 years, I’ve tracked the inner workings of the auto industry. As President and co-founder of the non-profit Consumer Task Force For Automotive Issues, and as co-founder of the Privacy Rights Now Coalition, I’ve pretty much seen it all when it comes to wacky sales gimmicks, deception and consumer abuse. And, it’s my sworn duty to keep those things from happening to you! And that’s why this IQ guide is unique to Educators. Three years ago I wrote that Educators has the most innovative car programs in the country. Now with their new programs, I still believe that. the Educators lease program, for instance, is the only lease program I support in the country. That says a lot about the integrity of your credit union. Something huge: You probably don’t know this either, but I’ve never recommended a credit union car program. For me to recommend it says a lot about Educators vehicle efforts. Educators leasing program contains none of the tricks or pressures I write about in this guide. And their program works hand-in-hand with the steps I outline in this guide. And will this guide work! If you follow this guide, you can probably keep thousands of your hard-earned dollars in your pocket rather than in the dealer's. A major promise up-front: IQ is about educating you, not trying to hype you. This program provides you an oasis from the pressure, confusion and deception that is rampant in the auto industry and on the Web. And it gives you straight answers. For instance, where is it cheapest to finance? If Educators determines that it would be cheaper and better for you to finance at some other institution, they’ll send you there. Think about that! Do you really think any other financial institution would do that? Educators makes that promise because their goals are different than the other players in the auto industry. A dealer or their finance sources have two objectives: to sell you their product or service (whether or not it’s the right product for you) and to sell it to you at the maximum price you will pay. Educators’ job, on the other hand, is to make sure you buy what’s best for you and to make sure you pay the least for it. They’re not just being noble, either. Since you own part of the credit union, Educators’ financial well-being is linked closely to your financial well-being: when you prosper financially, they prosper. And since Educators is not-for-profit and owned by you, their prosperity translates into money and benefits for you. Nice! Any questions? Why not e-mail me directly at This e-mail address is being protected from spambots. You need JavaScript enabled to view it ? And thanks for reading. Your pocketbook, as they say, will thank you. REMAR SUTTON Educators' Consumer Spokesperson IQ Car Buying Guide is prepared by Remar Sutton and Associates and licensed to Educators Credit Union. Copyright 2007. All rights reserved. Car Buying Webinar   
Remar Sutton’s Car Buying Webinar
Educators’ Consumer Advocate, Remar Sutton, has been considered America’s expert on the car buying process for 27 years. His book on the topic, Don’t Get Taken Every Time, is the best-selling book ever written about the car process. Remar has also been the expert on car buying for virtually all the national media, from 60 Minutes, to Dateline NBC, to the TODAY Show and PEOPLE magazine. Remar presented this webinar for ECU members on Wednesday night, May 19th, and we’ll feature it here on IQ’s home page until June 10. We’ve also placed links to ECU’s car buying guide—written by Remar—right here, too. He refers to the guide during the webinar. Let us know if you find this helpful, and if it is, tell your friends. The webinar will be available only until June 10.
1. Dealership Tactics1WHAT'S REALLY HAPPENING DOWN AT THE DEALERSHIP?
The pressure game starts before you go near a dealership, either online or in person. Just look at the dealer ads: they promise low payments, sales, big money for your trade and respect for your intellect. But, as with most selling, these promises come with some crossed fingers. Did you know that many dealers make more during sales than they do at non-sale time? That's because we consumers automatically equate the word "sale" with "save." That's dangerous math. Dealer advertising really has another purpose: To get you to rush down in a fit of excitement ("Really? Just $99 a month?!") without stopping to think. The “Track” System Takes Over. A “track” system is an automobile sales program designed to put every customer through the exact same sales steps with the sole intent of selling that customer instantly for the maximum profit. The key words here are “instantly” and “maximum profit.” When you arrive at a dealership (or log-on to most auto websites) the dealership begins to “work” you: put you through the track system. The objective is always the same: Get you to pay more for every item and service than you were planning to pay. Want to spend $450 a month? A savvy dealership will get you to pay $550. Or they will happily sell you a car for $450 per month—but it will be a car you could have bought for $350 per month. Nice of them. The dealership is concerned about its profit, not your budget. The people at virtually any dealership and most websites and buying services, friendly though they may be, have a little different objective in the car transaction than you do. Their goal is always to maximize profit. And that might mean leaving out an important fact or two. To take one example, what would you do if you owned a dealership that sold cars ranked lowest on the government crash safety reports? Would you tell all your customers: "Oh, don't forget—our cars are the most dangerous on the road!" See the problem? To survive, the dealership must either lie about the dangerous test results, or simply forget to talk about the results. What’s the outcome of this? The sellers of automobiles generally can’t give you good advice about what you should spend, number one. No salesperson in the auto industry ever prospered by volunteering to cut the price on every sale or always telling the whole truth about its vehicles. Number two, the sellers of a particular automobile generally can't give you the answers you need to questions about such matters as a car's safety, reliability or resale value. But these questions are important, aren't they? And you'll need the answers before you even look in the direction of the dealership. Why? Because once you're engaged with these folks, the "track system" will take over and speed you along recklessly whether you like it or not. Dealership TacticsHere’s a look at a few of the tactics track systems use to “work” you. You stop into the dealership simply to pick up a brochure. Even though you have no intention of buying, the smiling salesperson requests your driver's license, your Social Security number or simply your address. Or maybe they want to register you for a fabulous free trip to Paris. Even though you haven’t given permission, many dealerships will now search their databases and quickly open a file on you. And because many dealerships are now owned by conglomerates that already have information on you, the dealership has an informal “read” on your credit without even pulling a credit report! With that informal “read,” the dealership then begins to plan the maximum profit they can make on you, based upon your credit worthiness. And you really only stopped into the dealership to use their restroom. The Dealership T.O.s You The “Note” System The Four Square System Then they begin to "work" you on each square separately. You wanted to pay $20,000 for the car? They ask for $40,000! Very slowly the salesperson negotiates down, constantly scratching through figures. By the time they finish, the paper is illegible, you're frazzled, but the salesperson is smiling. You've agreed to pay an additional $1,200 to $1,500 profit. The four square system is probably the worst system in use today because it was designed solely to confuse you and produce some very nice profits. Don't deal with dealerships that use this system. Spot Delivery, or “Yo-Yo” Selling The real danger in Spot Delivery: Spot Delivery has become a fraudulent selling technique at many dealerships. These dealerships deliver you a car on any terms you want. Then a few days after you’ve taken delivery, they call you up and say “Oops, your contract wasn’t approved at the figures you wanted. We need an extra $1000 in cash, your payment has gone up $300 per month and we’ve added 12 more payments!” What can you do if that happens? Usually nothing. They’ve already sold your trade-in, and you unknowingly signed an agreement to let the dealer raise the price! This type of Spot Delivery is called “yo-yo selling” by unethical dealerships, and is endemic in the auto business. It is also the subject of hundreds of lawsuits at this very moment. How do you protect yourself from spot delivery? Never buy or take delivery of a car on your first visit to a dealership or a website. An IQ tip: By financing with Educators, you are totally protected from yo-yo selling. The “Business Advisor” or “Financial Counselor” Scam And if the dealership can convert you to their financing, they'll sell you credit life and credit disability insurance that's almost always more expensive than a credit union's or a bank's but sounds downright cheap on a "pennies per month" basis. Then they'll sell you "protection" packages (rust proofing, undercoating, fabric conditioning) "for just $19 per month." Why, you can afford that! But over 60 months, you will pay over $1,140 for products that cost the dealer $100. The same approach works for extended warranties or mechanical breakdown insurance, too. Daily the methods used by many dealerships and online selling organizations grow more sophisticated and subtle. For instance, many dealerships now track customers' movements by computer, rate their moods on scales entered in computers, and flash their progress in the buying process on computer screens so managers and other salespeople can monitor the dealerships' careful plan to sell. How can you avoid the traps? Go right on to Chapter 2: Buying a Vehicle the IQ Way. IQ Car Buying Guide is prepared by Remar Sutton and Associates and licensed to Educators Credit Union. Copyright 2007. All rights reserved. 2. Buying a Vehicle2BUYING A VEHICLE THE IQ WAYMANY NEGOTATIONS, NOT ONEBuying a car isn't one negotiation, it's many: your trade, the new car you're buying, the financing—and the newest, most popular profit centers—warranties, protection packages, alarm systems and other add-ons. If you don't know what you're doing, you can save money in one area and pay too much in the other; no fun at all. That's why dealers can sell cars for "no profit" and still make thousands on you. And that's why you need to pay very close attention to the right steps. THE RIGHT WAY, STEP-BY-STEPIf you really want to save money and still like your car after the fourth payment, you'll have to look at the car-buying transaction in a new way. Most people find a car and adjust their budget to fit that car's payment. That’s the wrong way, and usually means you end up eating pinto beans for years on end. The IQ approach doesn't start with the car at all; it starts with your budget. IQ also encourages you to slow down rather than speed up. Emotions in car buying should come after you've done it right. And we define "right" as saving money and buying the right car, too. Doing it our way, versus simply following the dealership's lead, can literally put thousands in your pocket. So, throw out the conventional thinking and consider this:
Right now, based upon your budget and your old car, you have an exact amount of cash available to you to buy a new car. That amount of money is called “Available Cash,” and it’s—logically enough—made up of all the cash you have available to buy a car. “Available Cash” is made up of three things:
Understanding “Available Cash” Helps You Understand Your Budget!Here’s an example of “Available Cash.”
Know your Available Cash figure and you’ll always be on budget! What’s your personal Available Cash figure?That’s easy to determine. Use the calculator in the right hand column after you complete the following steps (You can use our Available Cash Worksheet). Use these steps to figure your Available Cash. 1. First determine a “wholesale” value for your trade-in.“Wholesale” is the amount of money a dealer will pay for your old vehicle. But “wholesale” isn’t a definite figure, the amount can vary from dealer to dealer. At most dealerships the objective, incidentally, is virtually always to give you as little for your old vehicle as possible. If you are very smart, you need to determine your individual vehicle’s wholesale value. Here are three ways:
What if you still owe money on your trade-in? If you still owe money on your current vehicle, you will need to know its “pay-off” to figure how much “equity”— cash value—the vehicle is worth. For a rough estimate of the amount owed, multiply your payment figure by the remaining months in the loan. Subtract that figure from the vehicle’s wholesale value to determine a conservative estimate of the vehicle’s equity. For a more accurate figure, call your financing institution and ask for the pay-off (or “loan balance”) amount. You’ll need your loan account number to get that. Write your pay-off and equity on your Available Cash Worksheet. 2. Now think about what you can really afford to pay each month on a vehicle.Do you want to pay more than you’re paying now? Would it make your life easier if you had a lower payment? You decide. If you need assistance, call us at 262-886-5900 or 414-325-2500 and talk to an Educators loan officer — they are always willing to help. Once you decide what would be a sensible payment for you, write the figure on your worksheet:
3. How many months should you finance?Educators will finance up to 72 months, based on the age of the vehicle. But the truth is we hope you won’t stretch out your payments to the longest possible time. Financing longer means you’re paying vastly more money in interest, and may owe money on your vehicle for years after its useful life is over. To determine how many months you should finance, call the loan department at 262-886-5900 or 414-325-2500. By financing for the fewest months that will fit your budget you actually can buy more vehicle. For instance, the difference on a $30,000 loan financed for 48 instead of 60 months is only $4 a day. Pay the higher payment, finance for 48 months rather than 60, and you'll save over $2,000 in interest. Great! You’re already saving money. And wouldn't it be nice not to have car payments for that fifth year? So how many months should you go? Jot that number on your Available Cash Worksheet:
4. How much other cash do you have on hand that you plan to spend on a new vehicle?Are you looking at a car with a rebate? Include that figure here. Do you have savings that you plan to use as additional down payment? Include that figure. Now, let’s use the facts on your worksheet to determine your Available Cash using the Available Cash Calculator in the right hand column. Need help? Just call Educators or stop by for assistance. When you finish, congratulate yourself. Your Available Cash figure rules! To stay within your budget, Available Cash is all the money you've got in your car buying account. That's all the money you have to pay for everything: cost of car, taxes, other charges, insurance, etc. Exceeding your Available Cash is like bouncing a check on your budget. And you know you don't want to do that. IQ Car Buying Guide is prepared by Remar Sutton and Associates and licensed to Educators Credit Union. Copyright 2007. All rights reserved. 3. Research Before Buying3RESEARCH BEFORE YOU SHOP!
For instance:
Resources for ResearchThe following resources available online can help you find the information you need to choose wisely. Please remember that these are third-party sites that have no relationship to the credit union and contain information the credit union has no control over. These are sites, however, that I have found provide generally sound, helpful information.
Now it’s time to shop for the one vehicle you like!Like a chocoholic's first whiff of a candy factory, your first visit to a dealership or website poses the maximum danger to your pocketbook. Those new or newer cars look so good. And you've waited so long. Whether online or in person, sellers know how to turn up the fires of your enthusiasm and singe your reason. So put your emotions aside. Be wary. Slow down. Save the emotions for the moment you finally drive away on budget in your shiny car with an extra thousand or two in your pocket. Now that's something to get excited about! Big IQ tip: For 25 years, I’ve told people that buying the right used car is one of the smartest things you can do. New cars are the worst investment in the world. They depreciate in seconds, thousands of dollars, the minute you drive off the lot. Why pay that depreciation? See if Educators has a very late-model used vehicle that fits your needs. You’ve seen those vehicles at many of the branches. Why not walk over to one or check out Educators online inventory? “You’ll never catch me buying a ‘used’ vehicle,” you may be saying. Put that thought away, and take a look. Even if you don’t buy it, looking at a late-model used vehicle will bring you down to earth when it comes to the real value of vehicles. If you end up leasing used from Educators, you won’t need most of the warnings in this book. They fully disclose exactly what you are paying for and include a 3-day return policy and 60-day mechanical repair guarantee. Neither exists at other used car dealerships. You can easily view their inventory by clicking here. If you end up buying used from some other source, we’ve got a special Used Car section for you later, and the information we give you is priceless. You’re still thinking new, anyway, ey? Okay. Here’s how to do it right. IQ Car Buying Guide is prepared by Remar Sutton and Associates and licensed to Educators Credit Union. Copyright 2007. All rights reserved. 4. Buying a New Vehicle4BUYING A NEW VEHICLE THE RIGHT WAY
Simple Rules To Remember1. Narrow your choice to one or two models or makes before setting foot on a car lot.Why? Trying to think about a big list will do nothing but confuse you. Cautions for your first dealership visit: You are under the microscope at a dealership. Many dealerships already have you in a database. Most are anxious to pull a current credit report on you. All want to use information about you to maximize their chances to make a big profit. Don’t let that happen! Unless you definitely plan to finance at the car dealership, don’t allow any dealership to pull a credit report on you at this stage. For instance, many dealerships will ask for a copy of your driver’s license before they will let you test-drive a vehicle. A dealership has a right to know if you have a valid license. But you don’t have to allow them to request a credit report at this stage. How to stop this? Say up front, “I do not authorize you to pull a credit report on me.” 2. Now, choose two nearby dealerships that stock the vehicle you like.If you've done your homework, where you buy isn't important as long as the dealership is reputable. Note from Educators: Educators Auto & Lease offers a "New Car Dealer Referral Network”. Local dealerships have agreed to provide Educators members with special, no-haggle pricing. If you would like to choose your two dealerships from this network, contact an Auto & Lease representative at 262-780-9214 or 262-884-6675 for details. But even if you chose "New Car Dealer Referral Network” dealers, please continue to follow the information and cautions in this guide carefully. We cannot ultimately control what individual dealerships do. 3. Find only one car at each dealership.You can’t buy three cars. Keep it simple: Find the one you like the best. 4. Take control of the transaction.Tell the salesperson you are not buying a car today under any circumstances, but you will buy soon. Today you are just shopping and fact-finding. Check the car out. Take a test drive. But be firm and don't let the salesperson lead you into any discussion of buying today. If you start to feel pressure or confusion leave immediately. 5. Copy all the information from the Manufacturer's Suggested Retail Price sticker before leaving the dealership (MSRP, not the dealer’s sticker).The MSRP is the sticker with the lowest price on the vehicle’s window. Copy all the dollar information from that sticker. For instance, the vehicle’s base price, then the name and price of options. (Use our “Auto Shopping Worksheet.”) For now, ignore the dealer's sticker, which is always higher than the Manufacturer’s sticker. The dealer sticker contains hugely inflated profits. 6. Compute the dealer’s invoice cost.A very important step. Call an Educators Auto & Lease representative at 262-780-9214 or 262-884-6675 and they’ll help you do this or use one of the online price guides below to calculate this amount. Why? Dealers want you to negotiate down from their inflated asking price, a very expensive way to negotiate. The IQ approach negotiates up from what a dealer paid for the one car you like. Don't ever think percentage discounts from dealer asking prices; don't ever think "sale" price. Know what the dealer paid for the car you like and negotiate up from that. You may use a good online service such as Edmunds.com or nadaguides.com to determine the dealer’s cost. Just remember that these are third-party, commercial sites that have a number of ads and links with a primary interest in selling you something. 7. Check to see if the car will fit your “Available Cash”: Here’s the moment of truth.After you pay for the car, and give the dealer a profit, and pay tax and other charges, will you still be in budget? We have a simple IQ Vehicle Buyer’s Fact Sheet to help you compare your figures and determine this. But first decide how much profit you want to pay a dealer, the last variable in the transaction. What's a fair profit?You have a perfect right to pay all the profit you want. But if your objective is to pay the least profit a dealer will take for the car, you'll need to start negotiating up from what the dealer paid the manufacturer for the car. That figure usually already has "hidden" profits in it. And at times, a dealership will be happy to accept "cost" rather than lose a sale. The only way to know whether a dealer will do so is to offer that figure and stick to it for a while. But if starting at "zero" bothers you, add any figure you'd like as a profit figure. IQ Car Buying Guide is prepared by Remar Sutton and Associates and licensed to Educators Credit Union. Copyright 2007. All rights reserved. Read more...Page 1 of 2 12 |
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Listen to the hype—whether it's on TV, online, or in print—and you'd think saving money on a vehicle is as easy and fast as flipping the TV remote. Wrong!
To win in any auto transaction, you first have to understand what the other side is trying to do to you, and why. Since “the other side” always includes a physical automobile dealership—even if you’re buying or leasing from an online service—I’m going to take you inside a typical dealership right now. What’s really going on down there?
Don’t go near that dealership! Once you know how much Available Cash you have, get the hard facts about the vehicles that fit your Available Cash figure before you go any further.
Ready to match wits with the dealership? Good! You can match wits and win. Just keep reading.