Philip Reed, the consumer advice editor at Edmunds.com, the online car-buying service, was my guest on a recent online chat. He agreed to answer some of the following leftover questions.
QIs it generally a good deal to accept at face value what the dealer says is the invoice price?
AYou should ask to see the invoice, but keep in mind that if there are incentives or rebates on the vehicle, invoice price may not be the best baseline. Be sure to check if there is customer or dealer cash available. (You can do this on a regional and national basis at Edmunds.com.)
What is the best course of action in negotiating with an auto dealer who advertises a "no haggle" price on cars? Is negotiating still in the cards?
Salespeople aim to sell cars, so if you make an interesting offer, they will usually listen. If the no-haggle price is near the car's true market value, you should consider buying it as is, but be sure to read the contract carefully to make sure there is nothing else baked into the deal. And pay close attention to the offer for your trade-in, if you have one, as that will always be negotiable.
I will have to buy a new car in the next year or two and am thinking of either a Toyota or Honda hybrid. However, given the rising gas prices, are dealers charging a premium for them? Also, what do you do -- other than walk out the door -- if a dealer quotes you one price over the phone and then raises it when you get in the showroom?
It's always an issue of supply versus demand, although the manufacturers often do what they can to minimize gouging on hot new cars. Right now, the Toyota Prius is commanding a premium and has a long waiting list while the Honda Civic Hybrid and Honda Insight are selling below sticker price. And new hybrids are coming out soon, including the Ford Escape, Honda Accord, Lexus RX 400h and Toyota Highlander. Demand promises to be high for these vehicles, and we recommend waiting a bit after launch to buy them to give the prices a chance to settle. Your timing will likely be perfect, as you indicated you plan to buy in a year or two. In response to your second question, you should always get a price quote in writing. Have it e-mailed or faxed to you immediately following any conversation and ensure it includes everything you discussed. This helps you avoid the situation you described.
What do you think of car-buying services such as the ones offered by warehouse clubs and some credit unions? Do they get better deals than one could find by oneself, or does one pay a premium for the convenience?
You will pay for the convenience, but only about $300 more than the best deal you likely could have gotten on your own. This could be well worth it, depending on the type of buyer you are -- especially if you don't like to haggle.
I have a 1999 Ford Escort with about 88,000 miles on it. I love this car, and I will drive it until it drives no more (I'm hoping to get another year at least). I'll be honest, the condition is fair: some minor dents, and I'm not the cleanest person. I have full insurance on it now, but considering the age and condition, I was going to purchase only the insurance required by law, which would be cheaper. Is this a good idea?
Absolutely. As a vehicle ages, it becomes very cost-effective to drop the collision and theft insurance. Buy only what is required by state law. You can check what your state requires at www.edmunds.com/advice/insurance/articles/43773/article.
Why would a dealer let you see the invoice? If they say no, then what?
While the invoice used to be closely guarded, heavy competition among dealerships -- as well as Internet-savvy consumers -- has created an environment where dealers will now typically show a buyer the invoice for the vehicle in question. If a dealership refuses, walk out, indicating you'd rather have a more open transaction.
With the rising fuel costs, do you think car manufacturers are going to offer more rebates on SUVs?
Yes, we're seeing this already. In May, SUV incentives averaged $297 per vehicle higher than a year ago while the industry average incentive was $25 lower.
The last time I bought a car, after the test drive, the saleswoman told me her manager wouldn't quote me a price unless I was prepared to buy today. What is the correct answer to this?
Say, "You just lost my business."
Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online at www.npr.org. Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071 or send e-mail to email@example.com. Comments and questions are welcome, but please note that they may be used in a future column, with the writer's name, in the absence of a specific request not to do so.