I've previously detailed my process for saving a fortune on a new car (and for those of you wondering, here's why I buy new cars). I've used this system to purchase three cars (four now) in the past 10 years, but had never shared the specifics on FMF. Well, a recent new car purchase opportunity came up and I thought I'd detail the process for you.
Background
When we moved to Oklahoma last fall, our intention was to give my wife's car (2005 Toyota Corolla with 68,000 miles) to our son and buy my wife a new car. But we got down here and a few things happened:
1. We found out that car-damaging hail is not that uncommon here, making us think the last thing we wanted was a new car.
2. My son had to start the licensing process all over again here. And he went for several months while we moved without driving, so it's almost like starting over.
3. We got busy with moving in, getting the kids settled, church activities, school activities, work activities, etc. We're busy!
Hence we decided we'd just stick with her car and mine (2011 Toyota Highlander with 70,000 miles) and see how things went.
Accident
In the middle of April my wife was sitting at a red light waiting to turn left (my daughter was in the car too.) They were rear-ended by a teenage girl. I'm not sure how fast she was going, but it wasn't too fast (like 55 mph) or too slow (like 15 mph.) It was fast enough to give them a good "pop" but not so fast as to be devastating. It looked like a simple fender bender to me.
My wife called me at work to ask what to do. I told her to call the police and our insurance agent as well as get photos of the accident.
No one was hurt and the accident didn't look that bad. My wife drove the car home and put it in the garage. The back fender obviously needed replaced and part of the back quarter panels on each side were bent so they had to change as well. The girl's insurance company advised my wife not to drive the car because even though the airbags did not deploy, they were somehow impacted and the insurance company was concerned that they wouldn't work if my wife was in another accident.
By the way, when my wife called the girl's insurance company, whoever she talked to said there had been a claim on the insurance just a few days earlier, making us think this was her second accident in a short period of time.
The next week the insurance company came out to look at the car and pronounced it totaled. They said there was so much damage underneath the car that it was completely unusable (or, more likely, not worth the cost to repair).
I was at a conference in Colorado Springs when I got the news. I got on my phone to search what Kelly Blue Book (KBB) listed as the value of the car, sure we were going to be in a fight with the insurance company over it (after all, why wouldn't they go low?). KBB gave two numbers for our car once I plugged in specs, mileage, etc. It said the car was worth $6,800 if we used it as a dealer trade in or $8,000 if we sold it on our own. I sent this info to my wife. She said she was on the phone with the insurance company and they were going to give us $8,200. We were pleased/relieved, but now we had to find a new car. (BTW, they gave us a rental car for two weeks while we found a new car.)
Car Shopping
We decided that my wife would pick out the car and I'd negotiate the price. So she set to work looking at options.
We had previously considered the Nissan Altima, Honda Accord, and Toyota Camry, but my wife felt these cars were too big for her. She's 5' 4" and 105 pounds -- very small -- and even our Subaru Forester from past years felt big to her. So she looked at the Toyota Corolla, Honda Civic, and one of the Hyundai cars (Elantra or Accent.)
It didn't take long for her to decide on the Toyota Corolla. She had liked the car she had and we have had very good performance/reliability with our Toyotas. So she wanted to stick with the Corolla. After looking at the various options, here's exactly what she wanted:
- Trim: 2014 Corolla LE Plus
- Options: Driver Convenience Package (including moon roof)
- Colors: Exterior – Red; Interior: Ash fabric
- Accessories: Mudguards, carpet floor mats, and carpet trunk mat
Price Negotiation
While my wife was deciding on which car she wanted, I went online and found forms to nine dealers -- five in Oklahoma City, two in Tulsa, and two in north of Dallas. Once she knew the car she wanted for sure, I sent all the dealerships except the one my wife was dealing with (which claimed they would beat any price -- I love that!) the following email:
I'm in the market for a new car, know exactly what I want, and would like someone to email me so I can give details. Thanks!
When they responded, here's how I replied:
I would like to get a quote on the following vehicle:
- Trim: 2014 Corolla LE Plus
- Options: Driver Convenience Package (including moon roof)
- Colors: Exterior – Red; Interior: Ash fabric
- Accessories: Mudguards, carpet floor mats, and carpet trunk mat
Please also include any extras your dealership offers like free oil changes, tire rotation, etc.
I am aware of MSRP and invoice prices and would appreciate a competitive bid as I will be comparing quotes from other dealerships. The bid should include any and all costs associated with buying the car.
I do not have a trade-in and I will be paying in cash.
Thank you.
The feedback came back pretty quick (within a few hours) that there wasn't an LE Plus to be found with the combination we wanted, but there were LE Premiums (the next step up). This came from three dealers almost simultaneously, so I believe it was true, not just an attempt at an upsell. Since we were willing to go up a notch, I told them that bidding on the Premium was ok.
I then went to to get their True Market Value® Pricing. Here's :
Need a little confidence to go eyeball-to-eyeball with the salesman? Edmunds' True Market Value pricing will get you there. It's what other shoppers are paying in your area, including options, the car's color and any available incentives. Our TMV figures are based on the actual sales of other cars of its kind in your region and then adjusted for further accuracy using calculations designed by the mathematicians at Edmunds.com. There's no more need to guess at figures between the invoice price and sticker price; TMV narrows it down to a specific, realistic amount you can use when negotiating for a car.
Here are their results for the car we wanted:
Invoice Prices
- Base Price $17,963
- Driver Convenience Package $1,343
- Power Tilt/Slide Moonroof $757
- Carpet Floor/Trunk Mat Set $140
- Mudguards $80
- Destination Fee $810
- Total $21,093
MSRP
- Base Price $19,400
- Driver Convenience Package $1,510
- Power Tilt/Slide Moonroof $850
- Carpet Floor/Trunk Mat Set $225
- Mudguards $129
- Destination Fee $810
- Total $22,924
True Market Value®
- Base Price $18,252
- Driver Convenience Package $1,421
- Power Tilt/Slide Moonroof $800
- Carpet Floor/Trunk Mat Set $212
- Mudguards $121
- Destination Fee $810
- Total $21,689
The dealership responses came in quickly. Some were high (near MSRP around $23,000) while others were aggressive from the start (one offered $20,252 out of the gate).
An interesting one was from the dealership my wife had dealt with in person. Once we knew what we wanted, she told him to email me to work on the price.
Since he had told her they would beat any price offered, I expected him to be aggressive. Here is the initial email back and forth:
Him: Hey FMF! This is Jeff from ********* Toyota! Mrs. FMF gave me your email address and asked me to get into with you! How are you doing today??
Me: I'm doing well, how about you?
I had a question about the quote you sent Mrs. FMF. You gave the following prices:
Base price: $22,275
Options: $2,634
Total: $24,909
Plus Doc and transfer fees.
The biggest issue is your base price. Others are quoting $2,634 for the options, but I have $20,275 (FMF note: this covers (closely) what's listed as "base price" and "destination fee" above) as the base price from more than one other dealer (yes, for an LE Premium). Are you sure you didn't mis-type the base price amount?
FYI, from there, they discounted the total cost further, but we can deal with that later.
Thanks,
FMF
Him: I am doing great, thank you for asking but I'm very sorry, FMF. Yes I did mis-type that price and the following math with the wrong number. My apology. You are exactly correct on the price. What price are you wanting if you don't mind me asking?
Me: Currently the best price is just a couple hundred dollars above $20,000 (for everything.) This is only a "first round" price -- I am yet to ask people if they can do better. I have another that's near $20,500 as well.
If you can send me your offer, I'll add you to the list of ones to keep in touch with.
Thanks!
Him: Being the person and the dealership that Mrs. FMF and yourself have been hands on dealing with we want to earn your business. That being said what can we earn your business at right now tonight??
Me: Right now, you need to make an offer that gets you into the competition. Give me your best price and I'll let you know how you compare.
We will not be buying anything until everyone has the chance to offer their best price at which time we'll be ready to move quickly. We have cash and can make a purchase once we get the price set.
Him: Can we earn your business at $20,058 out the door?
While I was emailing him, most of the other bidders dropped out (when I told them they needed to be below $20,000 to be competitive.) So I emailed Jeff again, told him we were ready to proceed, and asked what the next steps were. This was a Friday evening.
I then went to watch a movie and when I checked email, I had an offer for $19,553 from the one other guy technically in the race (I hadn't heard from him in a day, so I assumed he was out.) I emailed Jeff again, said I hadn't heard from him, and noted that in the meantime we received a better offer. I asked him if he could beat $19,553.
Jeff responded quickly and said he'd talk to his manager. He then came back with an offer of $19,500. I emailed the other guy and asked if he could do better. He said he'd have to hold firm at $19,553. I told him thanks for the effort but we had a lower offer.
We accepted the $19,500 offer from Jeff (the dealer my wife had been working with and that said they'd beat any price) and made arrangements to drop off the deposit. The next day we stopped by, put down a $500 deposit (with our American Express Fidelity card) and were told we'd have the car in 3-4 days.
Purchasing
Here's how the financials shook out (from the dealer's financial sheet):
- Base price (MSRP): $20,275
- Options: $2,634
- Total MSRP: $22,909
- Discount: $3,218
- Rebate: $500
- Adjusted price: $19,191
- Doc fee: $299
- Balance $19,490
We saved $10 because we didn't need financing. :)
Our rental car expired that Tuesday (we made the deposit on Saturday) but the insurance company extended it to Wednesday because the car was supposed to be available then. But it wasn't, so we spent a day with one car (harder than it sounds), then went to pick up the new one on Thursday, May 15.
You would think that it would be easy from there. We have the money, they have the car. There's no paperwork. All the negotiation is over. Shouldn't I be able to hand them a check and get out of there in 10 minutes?
Nope. We sat around for half an hour waiting for "the paperwork" to be completed (not sure why it wasn't done prior to us getting there -- they knew exactly when we were showing up). At least some of the time was spent by the salesman showing my wife how to use her car, so it wasn't all wasted time.
The "funny" part was when we got into the office of the finance manager. After his salesperson had spent the last two weeks telling us how great/reliable Toyotas were, the office manager now spent five minutes telling us how they break down, how the repairs are often not covered, and so forth. He painted a nightmare picture that had even me doubting if we'd bought the right car. What was his purpose in doing this? He wanted to sell us an extended warranty.
We declined and told him we wanted to move on. He did, but I could tell he wasn't happy with us.
An hour after we arrived, my wife had her new car.
And that's our latest adventure. I was happy to get the car for so much below both the fair market value and the invoice numbers. It just goes to show that there are a lot of hidden rebates, incentives, and the like that are unseen by consumers. One tried and true way you can ferret them out is by getting competing dealerships to bid against each other. It's worked for me and if you apply the same process, it can work for you as well.
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