If you were expecting an article about General Motors' recent sales surge, or their baloney loan "repayment", or new management's attempts to overcome the company's entrenched culture, I'm afraid this isn't it.
This, instead, is an article about buying a car. I've been car shopping, and wow has it given me a headache -- thanks, in no small part, to GM's dealers.
The basics of car buying
Buying a car in our household can get complicated. My wife and I are both pretty conservative financially. But I'm also a car geek, and I dearly love the kind of high-powered gas-guzzling beasts that don't make sense for most families.
It makes for some interesting negotiations, as you can imagine.
But we always agree on some basic car-buying principles:
- Buy (gently) used if possible. Buying a lightly used car -- say two or three years old, with 40,000 miles or fewer -- gives you much of the reliability and longevity of a new car, without the new-car depreciation hit. And personally, I think that "certified" used-car programs that provide an extended warranty are worth paying extra for, if only for peace of mind.
- Pay cash if you can. Debt is a tool, one that can greatly improve one's life if used responsibly -- like, when buying something you can comfortably afford. The problem is, the temptation to spend more is hard to resist. I'd enjoy owning a new $60,000 BMW, and we could "afford" it in the sense that we could get the financing and make the payments, but that's how people get into big trouble instead of getting rich. (Besides, my neighbors are more likely to be impressed by my barbecue skills than by the contents of my garage.)
- Buy, don't lease. It's that cash-flow thing again -- even if you need to finance a car purchase, don't you want to get to the point where you don't have car payments anymore? Leasing is just a long-term rental-car arrangement. Sure, it lets you drive a more expensive car than you might otherwise, but it's not yours.
- Keep it a long time. We plan on keeping cars until the end of what we call their "nice-car life" -- the point where the car starts to require serious and frequent repairs, usually between 130,000 and 160,000 miles.
So with all that in mind, when my wife turned to me last week and asked what I wanted to buy to replace our elderly BMW, I said "Let's buy a Mustang GT." I own Ford (NYSE: F) preferred shares and I've written at length about the company's renaissance, but I've never actually owned a Ford product. The current Mustang is impressive, and it's even on Consumer Reports' "recommended" list.
But she had some concerns, and we hit on a compromise: Could I find something that would satisfy my inner speed demon -- but with four doors and a real back seat?
So I went shopping. And that's when the headache started.
Finding the car, making the deal
Car shopping is one of those experiences that lots of people seem to hate, and for good reason. The Detroit automakers have taken a lot of heat for wanting to close some of their dealerships, but the number of dealers is part of the problem with the car-buying experience. When there are too many (for instance) Chevrolet dealers, there are fewer new-Chevy buyers per dealership, which means that the dealer needs to maximize the profit on every transaction, which leads to the eye-rolling sales tactics we all know and hate.
To some extent, Toyota (NYSE: TM) and Honda (NYSE: HMC) have been able to avoid this problem simply by having fewer dealers, and that's probably one of the secrets to their success in the U.S. And that's one reason why the Detroit automakers want to reduce their dealer count.
I'll spare you the story of our headache-inducing shopping misadventures, except to say that if advertising cars they've already sold is General Motors' new tactic for building showroom traffic, they need to come up with another one. (This happened to us twice, at two different GM dealers, and both times we'd called beforehand and been told the car was still there -- and yet it wasn't. GM, you owe me a bottle of Advil.)
But we did eventually find a car we liked, at -- yes -- yet another GM dealership. Now comes the negotiation over price, the part of the transaction that gives many folks another headache. But negotiation doesn't have to be dreadful. In the new issue of the Fool's Rule Your Retirement, advisor Robert Brokamp offers a great primer on negotiating all sorts of things, from a new-car purchase to your monthly cable bill.
We tend to think of prices and expenses as fixed, but it's amazing how often you can save big bucks just by asking ... provided you know how to ask. Robert's article provides a roadmap to successful negotiation, complete with tips on working with certain kinds of companies. I found it very useful in preparing to argue with this car dealer, but it covers all sorts of situations -- bank fees, insurance purchases, even seaplane repair. (Really!)
Want to check it out? Rule Your Retirement is a paid service, but you can get full access for 30 days absolutely free, with no obligation. Just click here to get started.
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