My Car Buying Advice

A friend of mine just bought a car, and was bragging to everyone how great the deal was. He talked about the dealer's sticker price vs what he actually paid. Knowing what I know today, I didn't have the heart to tell him he could have done better or at least smarter, especially around the holidays.
Since I know he doesn't read this blog, I can tell you what I would have told him, without hurting his feelings or stealing his thunder.

My three steps to car buying:

1) Buy used. If you are reading a financial blog, you probably already know this and already own a used car, but the point still needs to be made. I have yet to hear a compelling argument for why buying a new car is better than buying a new car. Its simply a consumption decision. Save yourself the 10% minimum and let somebody else drive the car off the lot.

2)Know what you want to buy. Doing your research before hand can save you down the road. A car is not something you want to buy on impulse. Check Consumerreports.org and Lemonaidcars.com and anywhere else you can fine an unbiased review of the car you are considering. Buying a car because you liked what the sales person said, or how it looked is likely to lead to a case of buyer's remorse in the long run.

3) DON'T BUY RETAIL! This is far an away the most important point (hence the all caps and the exclamation point). When you go to a car dealership and see a used car, its likely that your dealer went to a used car auction to acquire many of the cars you see there. The dealer auctions typically have returned fleet cars and cars that have just come off lease. The dealers buy cars at this auction, mark them up, and sell them at their dealership. This is a situation where getting "insider" prices is rather easy. Most autobody shops will sell cars on the side. While they may not have a fancy showroom, or the newest of cars, the owners of these shops likely have a dealers license and have access to the auctions and access to auction histories. Getting insider prices now, is simply a matter of getting your mechanic to buy a car on your behalf.

In my case, a family friend of my fiance owns a autobody shop and sells cars on the side. He goes to the deal auction once a week as part of his business and was more than willing to do this for us (he did charge us a fee for this service). Once we had selected a car make and model, he told us what the car typically sold for at auction (part of the report he receives). We compared this to dealerships and autotrader.ca and knew we were getting a good deal. In our case, we bought a current model year car (2006 at the time) with 20K kms.
Buying buying used, through the auction, we saved 30% over buying brand new and at least 15% off retail.