Every new-car buyer wants a good deal, but what actually makes a good deal? We at Portland Auto Approval Center wants you to secure for yourself the best deal possible, so here are the things you should pay attention to when discerning if the new-car deal is exactly what you deserve.
Car Purchase Price
You can find out if you got a good price for the vehicle by comparing that price with what others paid for the same vehicle. You can check online resources to see how similar cars are priced locally. It is a good idea to visit Edmunds.com and find out what they call the True Market Value (TMV), or the estimated average price of what other car buyers in your area paid for the same vehicle with the same options. Along with the TMV, the website will also show you the invoice price and the manufacturer’s suggested retail price (MSRP).
A good deal includes only legitimate additional fees. The three fees recognized as legitimate are the state and sales tax, documentation fee and motor vehicle registration fees.
Of course, the state has a cut on your new auto purchase. Because you live in Oregon, you will not be charged a sales tax. As the name suggests, vehicle registration fees cover the expenses related to registering the vehicle and assigning a title, among others. As for the documentation fee, this pays for the cost of handling all paperwork related to the auto purchase. The doc fee in Oregon is limited to a maximum of $50.
In an attempt to pocket more profit, dealers add bogus fees. They give the fees official-sounding names to seem legitimate, but any informed buyer will know they are bogus and should not be paid. These include Dealer Prep (or dealer preparation), S&H and Market Adjustment.
You know you have a good deal if the dealer properly applies incentives or rebates that you are eligible for to the purchase price. If you qualify for customer cash rebates, these must be subtracted from the purchase price you and the dealer settled on. Rebates and incentives should be applied regardless if you get dealer financing or not, as financing must be a separate transaction.
Note: Incentives are not taxed in Oregon. You will pay only the tax on the purchase price after the manufacturer rebate has been subtracted.
If you will trade in your current car at the dealership, the dealer must offer you the right price for your current car in order for the deal to be considered ‘good.’ Unfortunately, in many cases, dealers offer a price that is much less than the vehicle’s estimated trade-in value. Often, the buyer is to blame—he/she is so focused on the purchase price that he/she accepts whatever the dealer offers.
Make sure you get a fair trade-in price by researching about trade-in values beforehand. The Kelley Blue Book is a good source of accurate trade-in and private sale prices.
A good deal allows you to get the lowest rate possible based on your credit, among many others. However, the best rate will not be offered to you—you have to urge them to give it to you. Dealers in particular wouldn’t hand over their best rate, unless until you have better offers from other lenders. This is reason enough for you to get preapproved financing even if you intend to proceed with dealer lending. If you have attractive offers from other lenders, the dealer will be compelled to bargain with you and beat the competitor’s rate.