The Art of Buying & Selling A Car (In Australia) - Part 1

So I bought a car and sold one in the last few weeks. 

It would be an understatement if I call it a daunting exercise. Would I go through this all over again? Probably not. There's a bit of learning which I don't hope to forget. If anything I will come back to this post for a refresher - just in case. Looks like I will have to write this in parts as there's plenty to talk about.

The Art of Buying

It all begins with being clear of what you are after and what you can afford. Easier said than done of course. Thankfully the variables were not many for me. I was clearly after a comfortable 7 seater, preferably a SUV where the 3rd row was not comfortable enough for adults to travel. The budget of course was determined by the banks and you know how much you want to spend in a month. Thanks to all those automobile experts on websites such as www.caradvice.com.au , www.drive.com.au it made it easier to arrive at your choice of brand, make and model. I had almost finalized on Kluger but still wanted to try out a few other models. The first few visits to the car dealer were interesting experiences as well. It was as if I was prey with a label "Eat me - am all yours" when you walk in to a dealer "unprepared". 

The Finances

The first thing to be "prepared" is to get your finances in order. Unless of course you had enough cash reserves you are going to need a financial institution to help. In Australia there are a few options:

a) Direct Auto Loan from a bank

b) Auto Loan from a bank via a broker

c) Auto Loan from the dealer

d) Novated Leases

I very much remember the very first car I bought here and none of the above would suit me due to the visa situation I was in. Now that I am a citizen all options were open and was up to me to decide which one was suitable. Each entity tries to sell the benefits and try to down play the others. At some point I was almost convinced that Novated Leasing was the option for me to gain some pre-tax spending. However that is something like mutual funds - there's a lot of "unknown" costs you will end up with. The best thing that happened to me was me to find a broker who got a pretty good rate compared to the market and banks directly. The brokers do charge a "service fee", but in the long run it evens out with the reduced interest rate that they can get . Sometimes the auto dealer may get a good interest rate depending on the model you were buying. Once you have finalized the model of the car, get your financing option sorted out or decided and THEN go to the car dealer. It was a whole new experience when you walk in to a dealership when you know which model you are after and you have a pre-approved finance in your pocket. You pull the strings....boy that makes a huge difference in your negotiation potential. 

The Buying Process

Once I decided on the brand, make and model, I visited a few Toyota showrooms around where I live usually without any pre fixed appointment. The treatment when I went was typically cold. Unless they know that you have the money in your pocket (or your finances arranged) they wont even come to the table for any negotiation. After a few such visits, did some research online and found a dealer who seemed to be giving a slightly less than market price. Went to a dealer early in the morning (on a rainy day - as someone on the net had suggested) with a pre-fixed appointment. The dealer sales guy has this routine that he has to follow. It almost felt like playing a "Deal or No Deal" game when every time you turn down his offer he goes back to his manager to negotiate further. I had set myself a target of close to 10% discount to the published on road price and tried hard to get close to that. Depending on the model they may be more willing to bring down the price, but for hot selling cars like Kluger the bargaining capacity is rather restricted. Had to use some phrases like "you meet this number and I will put the down deposit right away...". This tells them that you are serious in buying the car and not just wasting their time. Eventually brought down the cost close to my expectation. 

The Closure

HOWEVER, it doesn't end there. We shake hands....agree upon the cost including a few extra accessories etc... and then comes the sucker deal. We get to meet a "Delivery Coordinator" a smartly presented lady has got nothing to do with delivering the car. She convinced us on some "extra protection" for the leather seating and paints. I wish I could've done a little more research on that before I left or asked for more time to decide. They literally tend to ride on the emotional high you are on when you are about to purchase a brand new car which does blind you a bit on some rational decision making. The result being we ended up increasing the spend by 2K. On hindsight when I researched later on about the "protection" options we purchased we got to know that such things could be done at 50% of the cost outside of the dealer. Oh well...yet another lesson. Eventually we came away signing a deal. All Happy!!

So long for just some experiences on buying a car. More to come on the selling experience. A few interesting anecdotes to share for sure.

Until then...

C