Buying A Car

I've only bought three cars in my life. Before yesterday, the last one was in 2001. Some observations...

1) I used Costco Auto club and Truecar to get initial quotes. This was a smart way to get close to the true price. In fact, the initial Costco price ended up being about $900 more than what I finally paid.

2) The way it works: you enter the car you want on Costco and Truecar websites and local dealers contact you with their prices.

3) I settled on wanting a Subaru Outback rather quick because of space limitations in my driveway/garage and having two young kids. A lot of my time was spent weighing the different options on the Subaru and our family preferences, but this also provided leverage in dealing with the various dealers.

4) I also contacted several auto brokers. One guy was able to beat the Costco price (working in conjunction with the Costco program), which gave me the idea that it was possible. But this guy and others tried to push leasing as a better value.

5) A lot of friends, etc promoted leasing because you can "write it off" as a business expense. I remain unclear about this idea. Even if you bought the car, you could still write off the business driving expense, so it's unclear to me why leasing is better. Also, you are not supposed to "write off" personal use of the car -- OR -- if the car is owned by your "business" and you drive for personal use, that is considered income and thus taxable anyway. So...I'm not clear what is going on here, either people are a) misreporting the amount of car usage for personal use or b) allowed themselves to get talked into leasing by autobroker/financiers who make money by maximizing lease transactions or c) know something I do not.

6) I ended up phoning around to just about every dealer in the area to compare availability and price. One place quoted me an option package $1200 cheaper than anyone else, but in a color scheme I didn't love. I tried to leverage this into the color scheme I wanted, but no one else would match and seemed genuinely surprised by how low they would go. It did get one guy to give his "bottom" price on that package which was still $900 more than the lowest price.

7) So I set out to buy that option package, but could not get the dealer to confirm the price via email because the woman who quoted it to me wasn't there. I figured she was lying to get me down there or made a mistake because she was in their internet sales. Still, that "mistake" helped me see that I was getting near bottom.

8) I found the car I wanted from a kinda far away dealer and thankfully they had another car with the better option package I would've also been happy with. I called them and refused to get off the phone until the manager matched the lowest price I had in writing on the big option package. He suggested I go buy at the other place and the only way he could give me that price was if I paid cash (which was $900 lower than Costco). I got him to agree to give that $900 lower on a different car as well, which is the car I ended up buying. He would not email me the offer either for fear I would leverage with another dealer. This low price matched the lowest price an autobroker offered me and seemed close enough to the bottom for my meager negotiating skills.

9) They still put me through the finance folks to try and sell extended warranties, etc, which I turned down. But I did ask the guy about the 0% financing over 48 months which seemed too good to be true. He said, I could do it, but would have to pay the $1500 more sticker price. A ha! That's how they get you.

10) I spoke to a few people who regretted leasing their cars because if anything goes wrong, ie a little extra damage, a little extra mileage, etc, you end up paying for it. I also think you pay a higher sticker price.

11) Costco does a deal if you want accessories that is incredible - 50% off after your purchase.

12) Conclusion: Use Costco or a similar service to get down near the true price. Get an additional discount for paying cash -- you can always get a better deal paying cash, so do it if you can. Leverage dealerships against each other. Don't settle, but be flexible. Find the car you want and pay a fair price. Have a backup you'd be perfectly happy with.