Comment by rkalla | Hacker News Reader

Comment by rkalla | Hacker News Reader

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Having read this piece before as well (it was very interesting) there is no surprise that the classic car-buying experience is so combative... it would be like going to a shark-petting zoo where you are required to cover yourself in blood before entering.

That being said, I'll share two stories incase they help anyone...

[1] I have 5 friends (from different social circles and age groups) that have used Carmax to both buy and sell their cars (new and used) -- they have ALL come back with praise for the company on the process, even after comparing car prices online diligently before heading in. Similar the Saturn promise of "no haggling" this shopping experience seems to be fairly solid. I have not done it yet, only what I have heard.

[2] My best experience buying 2 new cars as well as a friend buying 2 new Subaru's that I shared my strategy with went as follows:

Read owner's forums for the car(s) you are considering; Edmunds and standalone owner forums were great for this.

Get a sense for the average price people are paying for the cars around the country. If you see a range of $33,000 to $36,000 then use an average of $35,000 (for example)

Call a local dealership, tell them the car and trimline you want and exactly how much you will spend OUT THE DOOR (always out-the-door) and to call you back if they can do it.

Sit at home and wait for a phone call.

Go in, look at the car, sign the papers and drive home.

I had two trade-ins when I did my cars so my out-the-door price was lower by how much I estimated a fair trade-in value for my used car was (using kbb.com and edmunds.com and some common sense)

Overall the ease of the process was great with no BS and no haggling.

If you like haggling or your goal in buying a new car is to mentally crush the sales agent, then you won't need this strategy... but if you hate wasting your time and want to get a fair price, it works wonderfully.

1. I've found CarMax to be very fair with regards to selling them vehicles. Process was easy and cash out the door is always nice. I've never purchased from them though. As for Saturn, they're now defunct. That was probably more to do with the quality of their vehicles in the past 5 years than the buying experience.

2. Don't waste time with phone calls. The classic way is dealing via fax, but now it's easier to use email. In my last purchase I knew the model and trim level I wanted, but didn't care about color. I emailed every dealership within a ~1.5 hour trip from my house and told them what I wanted and how much I was offering. I got someone about an hour away to agree. The dealer 15 minutes from my house agreed to the same price after I told them.

I found CarMax to be pleasant to deal with, but they have awful prices, both when buying and selling. For example, they offered me $5000 for my car, which I ended up selling pretty easily to some guy on Craigslist for $7500. Of course there's more hassle with a private sale, but not $2500 worth of hassle.

In my case I got $4000 someone was only willing to buy for $3500. It just depends on the vehicle.

I've just been learning quite a bit about the business of car sales. Car dealerships make most of their profit in the parts and service departments of their store, so it's definitely in your favor to run your best offer past your local dealership. They are more likely to take a smaller profit on your purchase in the hopes of having you get your scheduled maintenance performed in their shop.

On high end cars there are even better deals if you pre-buy the 2/3 year 100K maintenance package. You get the services at a bit less than list price, or a free hire car.

They use it to get you to come back into the dealer every few months AND they hope you will buy another new car from them when the warranty runs out.

The dealer makes a huge profit on you taking back a full service history high end car as a trade-in

Last car I bought was a Scion, and they also have the no-haggle policy. One night I was browsing dealerships' inventory online, and spotted a model I liked. Called the dealer the next morning at 8, was driving my new car at 10.

The only part of the process that sucked was where the F&I guy put a serious hard sell on me to try to get me to buy gap insurance and extended warranty.

Everything else went smoothly and the dealer even gave me a higher price for the trade than I was expecting. Their Internet access was down when they were trying to look up blue book price, and so the guy just made up an opening offer that was $500 more than I was hoping to get.

Didn't know Scion did the no-haggle thing, thanks for the heads up on that. Also imagine the F&I hardsell is how they make up the difference... was the sales agent you were working with responsive/nice/etc or did he seem impatient and wanted to get the deal wrapped up quickly?

The salesman seemed really nice and things went well with him. It was my understanding that he mainly only sold Scion vehicles and he had drank their koolaid in terms of how they wanted to sell the things. That is, "the price is the price, and if that's what you want to pay then great, let's skip the games and get you a new car."

The F&I guy however reminded me of exactly the classic skeeziness you expect from a car dealership. Scion is just a sub-brand of Toyota and you buy at a Toyota dealership, so once you get to that point in the deal you're working with the same person you would if you bought a Camry instead.

Very interesting; appreciate you sharing that.

"no-haggle policy."

No haggle is only good if you are a below average negotiator. If you are above average or good you will get a better deal negotiating since others will overpay.

For what it's worth, GAP is a really good insurance to get. It protects you from other people hitting you the say after you buy your car/any time you're upside down; and it doesn't cost much more for the peace of mind. I know some people think nothing will happen to them, but personally I wouldn't want 10k hanging over my head in some unlucky situation.

It's also very much -EV. If you can bear the risk of having 10k hanging over your head--which you should at any reasonable level of savings--it's still a bad call.

Because most people in this country have some level of savings and aren't living paycheck to paycheck. Also, most people can definitely afford to go out and buy another new car three months after they just bought one...

Sorry, I still don't see it. Especially since gap costs a grand total of ... $500 sometimes? $30 a month for a while others? Numbers are varied on the internet, but ... it's not much compared to 10k.

Worst comes to worst you can get a perfectly serviceable car for less than $10k anyway, and arguably, if you're living paycheck to paycheck and spending more than $10k on a car, you're making a mistake by doing so.

But that's taking this $10k figure at face value. Gap insurance is supposed to cover the difference in value between what you still owe on the car and what the market value is if it's totaled. How do you make the numbers come out to a $10k gap? Odds are you're not only buying a new car (which was your first mistake) but you're buying a fairly expensive new car. And you're living paycheck to paycheck.

Sorry, it doesn't add up. The general advice is to keep six months of living expenses saved up. If you have that level of savings, plus the income that allows you to spend that much on a car, you have enough money to take the EV-maximizing route. Otherwise, you're being financially irresponsible spending that much on a car in the first place, much less on -EV addons like gap insurance.

In any case, what I said still holds: if you can afford to bear the variance, you're still better off maximizing your EV.

(Another EV-maximizing tip: whenever you're offered an extended warranty, instead of buying the warranty, take the cost of that warranty and put it in a separate savings account. If something you own breaks, use that savings to repair or replace it. They wouldn't sell the warranty unless it was profitable for them. If you sell yourself the warranty, not only will you have the money set aside for your stuff, but you'll get to keep the profits as well.)

i'm sorry. that tip is a good one, but not for the reasons you gave. it's only a good idea because saving more is almost always a good idea.

if someone is unlucky the money they set aside from this wouldn't be enough to cover the costs of repair / replacement. Warranties are similar to insurance, in that risk can be spread out over the pool of customers that bought the warranty. As long as its unlikely that a customer will have to use that warranty, a warranty can be offered for a price that's much less than the average cost of repair / replacement.

If you're the only one contributing into a warranty / insurance pool, risk isn't spread out at all. You might end up being fine, but its also possible that a lot of your stuff will break at once, and you won't have the money to replace everything. That might be unlikely, but you're still taking a personal risk.

The risk is spread out over all the different purchases made by you or your family. The risk that everything breaks at once isn't particularly high, since things tend to fail independent of each other. You're still bearing a risk, but it's also an EV-maximizing move.

Or you could pay up front/at regular intervals (health insurance? homeowners insurance? renters insurance? Car insurance? extended warranties, etc), and reduce the surprise factor, thereby permitting you to spend money on other things, knowing you won't need to spend more money on {car, house, health} because it's already taken care of ahead of time.

To some people, the value of peace of mind is huge.

When I tried to use Carmax it was very pricey. As in, it was only a small bit cheaper than the retail prices offered by dealers, retail prices that everyone knows you can take thousands off.

If you don't mind sharing, what car were you looking at?

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