How to Buy a Car from a Dealership

How to Buy a Car from a Dealership

You may have heard (and rightly so) that there are a trillion good reasons to stay away from buying a new vehicle at a dealership.

“Markups!” some will shout. “Lemons!” another will cry. “Pushy salespeople, depreciation, and general crookery!” yet another will insist.

But what the infamous “they” may not tell you is that there are some definite advantages to buying a new car, truck, or SUV from a reputable and well-established dealership.

What are these elusive advantages? So glad you asked. As it turns out, there are quite a few pros to counter the cons of shopping with a dealership.  Let’s get started!

Benefits of Buying through an Established Dealership

One of the best things about buying from a reputable dealership is that with name recognition often comes quality assurance. Why is that? Well, we’d venture to guess that it has something to do with the fact that if a company has survived long enough and become large enough over the years, it may mean that it’s because the company’s doing something right: offering friendly customer service, impressing customers with quality products, and offering a good return for customer dollars. After all, if a car dealership were that crooked or their products that defective, how could they survive the perilous waves of the business high seas?

As a rule, household name dealerships like Ford, Nissan, Toyota, GMC, etc., got their status because of their excellent reputation with consumers. Thus, a big brand name often comes with a better chance that you’ll get your money’s worth because it often means that the company has a history of offering truly quality products that many others have found desirable.

Getting a Car Repaired at A Dealership

Another tempting reason to buy from the dealership is that they often specialize in servicing the vehicles they sell. Not only will they normally offer warranties that smaller or private companies can’t afford to offer, but they also usually have in-house mechanics and technicians that have expertise in servicing the car you bought at the dealership. Dealerships may also boast discounts to their own customers, have access to rare or custom parts, and employ knowledgeable laborers that other car lots don’t.

In House Financing Dealership

Some dealerships finance in house!

Believe it or not, banks often see private vehicle sellers as less reliable than dealerships. They trust dealerships to know and sell cars at fair market value, so banks will often provide loans for cars bought at a dealership but not for cars purchased from private parties. Also, dealerships often offer their own financing options. Naturally, very few (if any) private sellers have the luxury of being able to accept financing options. Most dealerships are willing to work with you to find the best financing option for you, and even if it does end up being a tad more expensive in the long run (and don’t get us wrong, we know it often does), dealerships are still generally able to get you into a car faster and with less money down than other car sellers.

Dealership Bonus

Bonus features are not just accessories added by dealers, though the beefy sound system and aftermarket rims or grills are nice. You may want to add an extended warranty. There are usually dozens of different warranty options offered by dealerships, whereas private parties are often selling vehicles out of warranty and quite obviously can’t offer their own warranties or extend warranties (at least not themselves). Or, you may want to upgrade your truck to the Texas Edition. Or, it may be that your dealership offers incentives for you to buy at their place, such as free roadside assistance, tire rotations, or oil changes.

Incentives to Buy at a Dealership

Speaking of dealership incentives, there are a TON of ways that dealerships try to move out their inventory and attract new customers, and ALL of them will inevitably lower the price of a new car. Dealerships incentives include (but probably aren’t limited to):

  • Customer incentives, which manufacturers offer directly to customers and vary from region to region and dealership to dealership. They include:
    • Cash-back rebates
    • Lower payments on leased vehicles
    • Low-interest financing
  • Factory-to-dealer incentives, which manufacturers offer to dealerships to boost sales on specific models and to sell old inventory to make room for newer models and help employees meet sales quotas. Dealerships sometimes pass these savings on to customers, but not often… unless you know what they are and use them to negotiate!
  • Sales incentives, which manufacturers offer dealerships that have reached their high sales quotas. If you know when dealerships are close to meeting their sales quotas, you can sometimes negotiate a lower price on the car you want. There’s not a good way to know when a dealership is close to its quota, unfortunately, but you can get multiple quotes from dealerships, and a significantly lower quote can indicate that one dealership is closer to their goals (and more likely to negotiate).
  • New dealership incentives, which manufacturers give to new dealerships to help them establish a customer base. Visiting a new dealership in your area in person is sometimes a great way to get a great deal.
  • Dealership holdbacks, which refer to the amount of money that manufacturers give back to the dealership after they have paid for their inventory. This is often a predetermined amount between 2-3% of the MSRP. Since many dealerships don’t reflect their holdback amount on the sticker, you can sometimes use this bargaining chip to get some money off the sticker price.

As if that weren’t enough, there are even more types of dealership incentives that, needless to say, aren’t offered by the private seller. Don’t be shy about asking for information about other incentives, such as:

  • Special incentive programs, in which money is sometimes offered to dealerships to sell slow-selling vehicles. Ask for overstocked models that may fall into this category.
  • Special plans, which may or may not be advertised, and which offer a certain portion of customers low interest or cash-back rebates. Ask if there are programs for you, especially if you are a:
    • Teacher
    • Veteran
    • Military member
    • First-time buyer
    • Repeat customer
    • Recent college grad
  • Specialized car incentive programs, such as
    • Vehicle exchange programs, which allow you to sell back your car to the dealership and get a newer vehicle at a discounted rate
    • Cash-back rebates for hybrid or electric cars
    • Discounts for returning your leased vehicle
  • Holdback percentages. Again, this is a way the dealership makes money, but it never hurts to ask the manager if you can please subtract a portion of the holdback percentage amount. They may be in a good mood!

Convenience of a Car Dealership

We’re not saying convenience is everything, but we also won’t stoop so low as to say that a convenient shopping experience doesn’t have its perks. A large, well-established dealership offers maximum convenience as you can shop hundreds of vehicles all in one location. You also have customer service representatives that specialize in the cars they sell, so you shouldn’t have many questions that the staff can’t answer. Also, going to a dealership saves a massive amount of time in trying to research, contact, and set up times to see and test drive individual vehicles. When you’re at the dealership, you can test drive any number of cars all day long to instantly compare how vehicles look and feel.

Stimulating the Economy

Although you may not consider this first, the simple fact is that established dealerships are often an integral part of the local (and even state and national) economy. That means that sometimes, buying from the dealership helps stimulate the economy in a way that buying from an individual doesn’t. We’re not saying that all world-class philanthropists shop exclusively at car dealerships. We are saying that dealerships do often contribute to jobs and money flow, especially locally.

Have we convinced you to give dealerships a second thought? Don’t take it from us. Do your own research, then head down to your local dealership and check out what they’re willing to offer!

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