Last Updated on
DollarBreak goal is to empower readers to make better financial decisions. This post may contain affiliate links from our partners who share the same vision. Disclosure.
Buying a car is an experience that makes you excited and anxious. Most car buyers know what they want (especially after a couple of test drives) but worry that they will overpay.
According to Retail Dive, 76% of consumers believe that person-to-person negotiation will get you the best price.
What if you aren’t an ace negotiator? You could trust your luck and judgment on your own skills, and the mood of the salesman you are negotiating with, or you could put your faith in a car buying service.
Should you use a car buying service, or is there a better way to buy your next car at real value-for-money prices?
Why You Are Not the Negotiator You Think You Are
Most people like to think they are good negotiators. The truth is, you probably could be. Great negotiating skills rely on several factors.
You’ll need to understand that the person you are negotiating with needs to make some profit. You can’t screw them to the wall and expect a good deal or after-service.
Most importantly, you’ll need to be confident when negotiating. Confidence comes from knowing your stuff. If you know about motors and engines, brakes and wheels, corrosion and combustion, you will be halfway to striking a good deal on a car. If you also know what a car’s fair market price is, you’ll have all the technical knowledge to strike a great bargain.
If (like me and most people) you aren’t an expert at all things auto-related, you probably won’t be able to negotiate the price down as low as it could go – and this will mean you’ll always have that niggling thought in the back of your mind: “Could I have got a better price?”
What Is a Car Buying Service?
Car buying services offer you a way to avoid pushy car salespeople and the daunting prospect of negotiating a good deal. You won’t have to fear crumpling under the pressure of haggling on price and auto features.
Using a car buying service could save you a pocketful of dollars. It takes the pressure off you and offers a range of services. Before buying a car, you should consider what a car buying service might do for you.
Types of Car Buying Services
There are three main types of car buying services you could use:
- Car brokers
- Membership clubs
- Car concierge services
A car broker will uncover good deals and negotiate on price for you. Often, the fee you pay to a car broker is lower than what you would pay to other car buying services. You may have to pay no fee at all. This is because the car broker receives a commission from the dealership.
Yes, I know what you are thinking, and you are right – a car broker paid by a dealership might not always have your best interests uppermost in their mind. Therefore, if you are considering using a car broker, you should always do your research to learn which is the best for you.
Many discount clubs (such as the American Automobile Association) include car buying services, and the likelihood is you are already a member. The most common are supermarket clubs and credit unions. This type of car buying service is usually accessed online, and easy to use:
- You search for your preferred make and model
- You receive a pre-negotiated price
Because this service is included in your discount club membership, it is already paid for. You won’t pay another fee or commission. You might also be able to ask about what vehicle is better for you or offers the same features for a cheaper price.
You’ll need to visit the dealership and sign contracts with this type of car buying service, and you won’t get the car delivered to your door. Visiting the dealership could be a big disadvantage to you. If you don’t like saying no, the dealer could pressure you into signing up to expensive extras that you don’t really need – and that bargain price can easily be pushed up by a couple of thousand collars.
This is the personal shopper of the car buying world. A car concierge (such as Running Man Concierge in Atlanta) takes all the strain. You simply tell them what you want your vehicle to do for you, and the car concierge will find the best car for you and negotiate the best price. They will probably deliver to your door, too.
According to Deloitte’s Global Automotive Consumer Study in 2018:
- 64% of car buyers visit the dealer where they buy their car more than twice
- 67% of car buyers consider getting a good deal in their top three customer experiences – more than any other factor
- 53% think there is too much paperwork
- For 15% of car buyers, not having to negotiate is among the top three customer experiences
- 85% of car buyers expect to negotiate price at the dealership
Employing a car concierge can save you time and help you get a big discount on price, but the service is not cheap. You will likely pay a fee upfront and then again on purchase, and this could amount to as much as $1,000 or more.
Online Auto Sellers
As an alternative to saving time and money by using a car buying service, you might consider buying your car online. This is likely to be your cheapest option if you know what car you want.
Online auto dealers like Vroom buy cars from auctions, dealers and private owners. They will buy low-mileage, late-model vehicles with no previous accidents, and then have the autos serviced and tuned. They have detailers work on the body to make sure the vehicle sparkles.
This type of service also includes the option of financing, and when the deal is complete, you can have your new car delivered to your door for a payment of less than $500.
If you’re worried about not having a test drive when you purchase online, you don’t need to be. Some online car retailers offer you a return period of seven days or 250 miles.
What test drive do you know that would give you around five to eight hours of drive time to make sure you have made the right choice? Plus, you also get a CARFAX report, a limited warranty, and roadside assistance.
Financing Your Car
Buying a car is costly. After buying a house, a car is likely to be your most expensive purchase. You will probably look at the monthly cost of buying a car rather than the total cost – like 53% of car buyers (Cox Automotive – findthebestprice.com).
This is likely to be one of your major decisions when buying a car. The financing deal you get could be the difference that makes buying the car of your choice a reality. A longer payment period or lower interest rate will result in lower monthly payments.
Other factors that come into play when financing a car purchase should be your existing cash savings (or emergency fund) and investments:
- Financing your purchase with a loan will keep your emergency fund in intact
- If the interest rate on the loan is lower than the return on your existing investments, then it makes good financial sense to finance the purchase and maintain your investments
With many car buying services, the financing of your purchase will be left to you. An online retailer like Vroom can offer you financing options.
Your Car Buying Journey Is Your Choice
How you decide to buy your next car is your choice. A car buying service may be the best for you, but you will need to consider which to use. For the full service, a car concierge will take away all the hassle. You won’t even need to decide which make and model you should be driving. The concierge does it all for you – including all the negotiation on price.
You might choose to use a car buying service already available to you through an existing membership of a discount club. This is your cheapest car buying service option, but you’ll be left open to pressure sales when you visit the showroom.
A car broker might be the right choice, though don’t forget that it is the car dealer that pays them their commission – and this could mean the service is biased.
Could an Online Dealer Be Your Best Option?
For many car buyers, an online dealer is likely to be the best option. Certainly, there are many advantages of doing so. These include:
- The convenience of shopping for a great deal on your ideal auto from the comfort of your own home and at a time that suits you
- No high-pressure sales tactics
- You will save time as there is no travel needed
- You’ll have access to a huge selection of cars nationwide
Perhaps the biggest advantage is that you won’t need to test your negotiating skills. The price advertised is the price you will pay – the lowest at which the seller can deal.
To make sure you get the best deal, make sure you know the make and model you wish to buy. Think about what your car needs to do for you – the passengers it will carry, the miles you will drive, and the type of roads you will travel.
When you come to buying a car online, always use a reputable online auto dealer. One like Vroom, which never sells cars with an accident history, and provides warranties and extras like roadside assistance and financing options.
A car buying service can save you money – or you cut out the middleman, save their charges, and go to where the best cars are cheapest.