Recently, my wife and I decided it was finally time to say goodbye to the minivan and get a different family vehicle – immediately causing a constant feeling of low-level stress.
Having bought several new and used cars over the past thirty years, I’ve had a range of negative experiences. Each time, I learned a small lesson and promised myself I would never make that particular mistake again.
So, this time, I was determined to do my homework, be patient, buy a car and drive away without kicking myself or experiencing buyer’s remorse. I’m happy to say I was successful – my wife and I are very happy with our new vehicle, so I thought it might be useful to share the step-by-step actions that I found most useful.
Do not go to a dealership without doing your homework on what features you want and – equally important - what features you aren’t willing to pay extra for. Use manufacturer build and price tools to fully understand your choices.
Continue reading for all the details and analysis.
In subsequent articles, I will detail the different aspects of buying a new car, but will start with the basics of choosing what sort of vehicle you want and with what features.
The Honda CR-V was recently ranked #1 for affordable compact SUVs, so on the assumption that this makes the CR-V interesting to many people, I will use it in my examples and discussions. I also strongly recommend that you have 2 or 3 alternate models in mind, so that you can eventually negotiate between different manufacturers or leverage potentially better incentives since they are constantly competing with each other. For compact SUVs as ranked in the link above, for example, I like the look of the Honda, Mazda, Ford and Toyota options.
For purposes of this article, when I want to compare a second vehicle, I will use the Ford Escape, simply because I like the styling a bit more than the others.
I’ve always found TV and print advertisements for great deals on cars to be pretty misleading. The largest reason for this is that the price quoted is sure to be the lowest-end version of a particular model, without any of the features I would consider minimum. Let’s take a look at Honda incentives and Ford incentives as examples. (It is probably a total coincidence that the monthly cost is exactly the same for both, don’t you think?)
“Look honey, we can get a new Honda CR-V or Ford Escape for only $209 per month!” I’m pretty sure I heard that or similar statements from my wife several times when we started thinking about replacing our mini-van.
These offers sound like great deals – and I’ll come back to these offers in other posts when I look at cost and financing, but for now, let’s look at the specific model features that are identified:
- All wheel drive (AWD) or Two wheel drive (2WD). I personally want all wheel drive, so that during the winter, we can get around even when it gets icy or snows.
- LX version on CR-V and SE version on the Escape. What does that mean in terms of features?
- Total due at signing. $1,999 for the CR-V and $3109 for the Escape. Hmm, makes me think I might get some more features on the CR-V if I paid more at signing.
At the end of the day, the monthly payment or lease is determined by what price you negotiate and how much money you pay at signing, so one key step is selecting just the features you want.
Define Your Required Features
The starting point is to know your own requirements. Do you want AWD? What about a foot activated lift gate? Do the exercise for yourself and try to be honest on what is required versus just nice to have.
For me, if I was buying a compact SUV, I have only a few must have features (two of these may or may not have been identified by my wife – but that just makes it more of a requirement.)
- AWD. I definitely want all wheel drive.
- Leather seats. Personal preference, but we want leather seats and are not willing to compromise.
- Heated seats. Again, personal preference.
That is really about it. I want an FM stereo, but am not willing to pay extra for CD or Satellite. I’d take other features, but really don’t want to pay for them. I might be willing to pay extra for a back-up camera, but I’ll have to see what cost it adds.
Identify the Lowest Cost Model that Meets Your Requirements
So, the next step is to go to the vendor sites and do a bit of research to see which model has your features. Most of the vendors have the ability to Build and Price models that lets you select available features. Keep in mind that this is not the price you should pay, but is the starting point for negotiation.
- Honda CR-V. Honda CR-V web page includes a build and price link.
- Ford Escape. Ford Escape web page includes a build and price link.
Doing a few builds, here is what I found out for my requirements. Note that I skipped models (e.g. 2WD) that obviously didn’t meet my AWD requirement.
|Model||AWD||Leather||Heated seats||Build MSRP (base)|
|Honda CR-V LX AWD||Yes||No||No||$24,370|
|Honda CR-V EX AWD||Yes||No||No||$27,300|
|Honda CR-V EX-L AWD||Yes||Yes (included)||Yes (included)||$29,950|
|Honda CR-V EX-L AWD
|Ford Escape S||No (FWD only)||No||No||$22,005|
|Ford Escape SE||4WD
|Available ($2590)||Available (with leather)||$30,295
|Ford Escape Titanium||4WD||Yes (included)||Yes (included)||$31,255|
|Ford Escape Titanium
These results are interesting. Though these vehicles are similar, the MSRP for the Ford Escape models are a bit more expensive than the CR-V models. I also know any deals for the LX are not going to work me, since I can’t get leather seats in the LX.
This took a bit of work, but what was it worth to me? Based upon this research, I can now say with 100% confidence that I will not pay more than $29,950 to get the model and features I want. I might still get a Ford Escape, but only if they are willing and able to match the lower price – I’ll cover more on that in an upcoming post.
Beware of Pre-built Models at Dealerships
Above, I also built “fully loaded” configurations for each vehicle to illustrate how a dealership MSRP can really climb when other options are included. The best reason to do your prep work is to understand the features that you do not want to pay for.
Many pre-built vehicles will include features that you don’t want, but you will have to pay for if you don’t know what you want. A dealer will very reasonably quote you a price that includes door guards, satellite radio, mud flaps, tow bars because those features are already included for that vehicle. Know what you want, so you can refuse to pay for any feature you don’t want.
True story, when I was at the dealership negotiating for our new vehicle this spring, the dealer had a model with the color and features I wanted, but they had already added things like “Door Edge Guards” and “Wheel locks” which they included in the quote, adding about $1350 in “value” and cost. The result to me was that they simply added $1350 to the vehicle price for things I did not require. I told them I was happy if they wanted to throw that all in for free in order to sweeten the pot and close the deal immediately, but I was not willing to pay for features I did not want.
By doing your homework in terms of model and features, you will be able to set boundaries for yourself and the dealer and be confident in a position of power.
Watch for my next post on this topic where I will share my tips for negotiating the MSRP we identified above down to save you thousands of dollars.
Best regards ~ @securityjones