Are you thinking about buying a new car, but dreading the dealer haggles that come with the purchase? There are a number of car-buying services that say they’ll do the negotiating dirty work for you, and save you thousands of dollars in the process.
These services are often just a mouse click or phone call away. Fees range from free (if you’re a member of one of their affiliates) to anywhere from $200 to $400, with about half of the amount due upfront.
Buyers typically begin by calling the car-buying service or filling out information online.
“People go to our Web site and put in their contact information,” says Marcus Sanchez, chief operating officer of No Haggles, a car-buying service in Warner Robins, Ga. “Then, one of our automotive specialists calls them back and conducts a 15-minute interview.
“They get all the information about the vehicle the buyer wants, their trade-in (if any) and their credit information for financing. Then, we go to work looking for the vehicle.”
New vehicle searches make up the bulk of the car-buying service business. Because common car models are readily available at dealerships nationwide, the process is fairly quick.
Between three and five days typically pass from the time you contact a car-buying service to the moment you drive your new car off the lot. Special orders can take longer.
“We have a 72-hour turnaround time,” Sanchez says. “Sometimes, we’re even able to turn it around within a few hours. It depends on what the customer’s looking for and the availability of the vehicle.”
Car-buying services try to negotiate a price with the dealer that’s close to invoice price, which is the amount the car manufacturer charges the dealer.
“Once we’ve secured the vehicle, we’ll get a printed buyer’s agreement from the dealer with that dealer’s signature on it,” Sanchez says. “Then, we’ll share that information with the consumer and set an appointment for delivery.”
Car-buying services can make the shopping experience less of a hassle. But are these services a good deal? Before you try one, here are six things you need to know.
“Ask your friends if they have any recommendations,” Fix says. “Once you have some names, contact the Better Business Bureau to see if they have any information on the company.”
If you don’t know anybody who has used a car-buying service, ask to speak with past customers, Fix says.
“Ask the car-buying service to give you the names of past customers, and then call them,” Fix says. “Ask what they liked and didn’t like about the service. At the very least, if you decide to use the company, you’ll know what you’re getting.”
Tarry Shebesta, president of the Cincinnati-based Automobile Consumer Services, agrees that choosing the right car-buying service makes all the difference.
Some car-buying services give you a price that’s close to invoice, but neglect to tell you of added dealer fees and other costs that suddenly appear when you go to pick up the car and sign the paperwork, he says.
“That good deal you thought you were getting is not such a good deal anymore,” Shebesta says.
A better option, says Shebesta, is to find a service that will prepare the paperwork for you ahead of time.
“Make sure you get a copy of the buyer’s order before you go into the dealer,” he says.
Car-buying services are often able to negotiate prices because they have relationships with dealers — they’re bringing them customers on a regular basis. This could lead to a conflict of interest.
Before selecting a car-buying service, find out if they’re receiving compensation from any party other than the car buyer.
“Ask the service if they are a buyer’s agent. That’s different from being a broker,” Shebesta says.
Buying services may also offer additional financial services on their own, like auto loan financing, lease financing, extended warranties and gap insurance. If you’re considering them, be sure to shop around first.
Also, make sure you understand the company’s refund policy, especially if the company is unable to locate the vehicle you want. Many companies will require a partial payment upfront, and that portion often is nonrefundable.
“Different states have different laws about refunds,” Fix says. “My advice is to read everything in your contract before signing.”
Services offer a lot of help
Car shoppers who loathe the very thought of setting foot into a dealership will be relieved to find that car-buying services are willing to do most of the grunt work prior to the purchase.
Usually, customers are in and out of the dealership in an hour.
Car-buying services generally do all the negotiating for you. Once they’ve hammered out a deal, they send the contract and give you time to review it.
“When customers walk in the dealership, they should have the buyer’s order in their hand,” says Rick Hall, president of No Haggles. “Everything should already be discussed and settled with us, the customer and the dealership. There should be absolutely no haggling. Usually, customers are in and out of the dealership in an hour.”
Car-buying services can also help with last-minute snags.
“We tell the consumer that if anything changes or the dealer tries to get them to sign something else other than what they’ve agreed to, to call their automotive specialist,” Sanchez says. “That automotive specialist will call the dealership contact person to get the delivery process back on track. We’ve had to make a few calls to get things back on track, but we haven’t had any major problems.”
Some companies follow up to make sure the buyer received the agreed-upon price.
Steve Oxsalida, an account representative who manages the car-buying program at Tampa, Fla.-based AAA Auto Club South, says that when a member purchases a car through the AAA program, the dealer is under contract to send AAA copies of the buyer’s order, manufacturer’s invoice, trade-in information and other purchase details.
“We audit the transaction and verify that the member did receive the AAA (negotiated) price,” Oxsalida says.
If the customer was overcharged, AAA collects the overage and returns it to the customer, Oxsalida says. He says the entire auditing process takes about six weeks.
“The biggest misperception in the marketplace is that if a customer buys a car at invoice, they’ve gotten a good deal,” Sanchez says.
Hall says people who shop at no-haggle dealerships often make this mistake. They look for a good price, but forget about trade-in and financing.
“People can be disarmed, especially at no-haggle dealerships,” he says. “They pick out the vehicle and accept the price, but then they are walked into the finance office.”
If shoppers haven’t researched their options, they may end accepting a loan with lousy terms.
Sanchez says a car-buying service should help the buyer negotiate all three areas — price, trade-in and financing. Otherwise, the consumer could lose thousands of dollars.
To help negotiate the price of car trade-ins, some companies ask buyers to send in pictures of their old car along with a written description.
“Our pricing structure is to negotiate 1 percent over invoice for cars, but 3 percent over invoice for high-line vehicles like Lexus, Mercedes and BMW,” says Oxsalida.
However, some cars may not be included in these guidelines.
“There are also vehicles that are excluded from our program based on supply and demand,” Oxsalida says. “For example, a new model coming out that already has a waiting list would be excluded.”
Dealers have little incentive to negotiate on those cars, he says.
Shebesta says his company also runs into the occasional roadblock when trying to negotiate a good price on popular models.
“We try to get prices as close to invoice as possible, minus any rebates,” says Shebesta, who notes that any rebate savings are passed on to the customer.
“However, there are certain popular cars that are going to be sold for sticker (full retail price),” he says. “If that’s the case, we’ll tell you. The only thing we could do is make sure nothing else gets added on to the price. With really popular cars, the dealers do like to add on things which increase the final cost.”
Car insurance companies, credit unions and even energy cooperatives sometimes offer complimentary car-buying services to members.
“I had a car accident and totaled my car. I didn’t want to buy a new one at first, but my car insurance company recommended a buying service,” says Zoe Wolf of Atlanta, who used No Haggles because her insurance company picked up the tab.
“I had a new car within a week. The experience was absolutely and totally painless.”
I had a new car within a week. The experience was absolutely and totally painless.
Oxsalida says AAA Auto Club South offers its car-buying service free to members. Annual memberships at AAA South are generally under $100, but each geographic region is independently operated, so rules may differ.
“Not every AAA club has a car-buying service, though, so you have to check,” says Oxsalida. “Some clubs may buy the cars outright and then sell them to members.”
However, buyers who do their homework and are willing to negotiate will probably find as good a price or better searching on their own.
“You can absolutely get a good deal on your own,” Fix says. “The key is doing your homework.”
Many buyers can find good deals for cars through classified ads or other sources, all without having to pay for a car-buying service.
Shoppers who go it alone are likely to have better luck if they first research the cars in which they are interested.
“To learn about car values, research car sites on the Internet,” Fix says. “Know the cost of any extra features for the model you’re looking for.”
Buyers who are properly prepared also have a big edge when they walk onto the car lot, Fix says.
“When you walk into a dealership armed with information, it makes a huge difference,” she says. “The dealers know you’re not there to play games.”