chanye recently bought a new car. After reading through a lot of related information, he found there are a lot of details and pitfalls in the car-buying process, and it’s not any less deep than the world of credit cards and frequent-traveler programs. chanye has summarized what he learned during his car purchase below, and hopes it can help others.

Cast a wide net

If you have already decided on a brand and model, you can skip this step. If you haven’t narrowed it down yet and just want a car that fits you, I suggest casting a wide net and learning about the brands and models you’re interested in, and their corresponding prices. At least then you’ll have a baseline, and when you talk to a Dealer, your questions can be more targeted. Edmunds has lots of model, review, and pricing information. I think it’s worth browsing around to learn about different cars.

Define your requirements

The first step in buying a car is figuring out your requirements. Here are the items chanye listed before buying.

  • Transmission: chanye is buying a car for LD, and this car will mainly be driven by LD in the future. LD still can’t drive yet, so the new car needs to function as a learning car. So a manual transmission is a must. (chanye’s current 09 Scion TC is manual.)
  • Body type: Since this car will be a family multi-purpose vehicle in the future (grocery runs, moving furniture, road trips, etc.), interior space needs to be large, or expandability needs to be enough. So sedan is excluded. Since installing a car seat may be needed later and child seats are inconvenient in a two-door car, coupe is excluded. That leaves hatchback, crossover, and minivan.
  • Seating: At first, he thought bigger was better, so three rows seemed the ideal choice, but two-row 5-seat layouts were also acceptable. However, he didn’t like the minivan body style, and he doubted whether a minivan was really necessary. Personally, he feels a minivan is only needed when there are at least three kids, and there are currently 0 kids, so in the short term he probably won’t need a minivan. So minivan is excluded.
  • Features: Since this car is for LD, safety is top priority, so IIHS Top Safety Pick is required, and the more advanced safety features, the better. He listed blind spot monitoring (BSM) as a required feature because, on one rental, he got a car with BSM (a 15 Buick LaCrosse) and found BSM to be very useful. Also, automatic emergency braking (auto emergency braking) is ranked very high. Also, because chanye considers himself tech savvy, support for Android Auto/Apple CarPlay was included as a must-have, because compared with Google’s navigation and entertainment/user interface, automakers’ infotainment systems feel weak, and voice recognition is far behind Google.
  • Brand: chanye has no brand preference; he’s only weighing budget brands versus premium brands. Since this is for LD and there are no performance requirements, plus he wants the best bang for the buck, premium brands are excluded (in his city, each premium brand has only one dealer, so pricing is hard to compare). Also, because of Chrysler/Fiat’s terrible reliability, all of their brands are excluded.

Based on the above conditions, the premium brands (BBA, etc.), as well as Toyota, Nissan, Mazda, Subaru (except Impreza), and Dodge/Jeep/Chrysler/Fiat (reliability issue) were all ruled out. Most of the remaining Japanese brands were also knocked out for one reason: no Android Auto/Apple CarPlay support.

So the cars that made the cut were

  • SUV: Honda CR-V, Ford Escape, Hyundai Santa Fe, Hyundai Santa Fe Sport, Hyundai Tucson, VW Alltrack
  • Hatchback: Honda Civic, Subaru Impreza, Chevy Cruze, Ford Focus, VW Golf

From actually checking a range of hatchbacks, chanye found the trunk space to be significantly smaller than SUVs, and after using the online build price function, he found that after adding the required features, hatchback pricing was already close to compact SUV pricing. Plus, since this car is for LD, driving feel is not the primary consideration, so hatchback models were dropped and the shortlist narrowed mainly to SUVs.

Screening the models

At this stage, the work is to compare configuration and pricing across the candidate models and to dig deeper into your own needs.

First, Hyundai’s inclusion on chanye’s final shortlist is actually simple: the 10yr/100,000 mi powertrain warranty, plus generally speaking, at the same price Hyundai cars usually come with better equipment than other brands, while at the same configuration Hyundai is usually cheaper. Plus, the styling of this generation fits chanye’s taste quite well (I won’t even complain about KIA’s styling; although KIA has the same warranty as Hyundai, the looks just don’t do it). Santa Fe is also a factor, as it is the only three-row SUV among the candidates.

Ford Escape made the list primarily because of its 2.0T engine, which provides stronger power than the other options.

VW Alltrack made the shortlist somewhat unexpectedly. According to Consumer Reports, this car’s reliability is a big question mark. But interior space is truly large, and the exterior is pretty eye-catching.

Considering Honda CR-V was unsurprising. It has ranked near the top in sales in its U.S. class for years (if not number one), and the 2017 model is a redesign (with a caveat that first-year redesigns can have more issues). The design is very appealing (comparing it to the previous generation, chanye couldn’t stand that design, especially the rear).

Research sites/videos

For research-heavy buyers, the main online sources to lean on are naturally the famous Consumer Reports. Of course, Consumer Reports is paid (if you want to access all reports), but chanye feels this $35 digital subscription is absolutely worth it.

(CR report on compact SUVs)
Other than that, the main references are YouTube review videos. Here, chanye recommends a few channels:
Consumer Reports，Alex on Autos，Kelley Blue Book，Redline Reviews，TestDriveTV，MOTOR1。 Search within each channel for the models you’re interested in, and you can find the related reviews.

Here, chanye thinks Alex on Autos has the most detailed reviews and also includes comparisons with related models. They are long, but still highly recommended. The others each have their own character: Consumer Reports reviews are brief and often only touch the surface, so they are not very comprehensive; KBB has a livelier style and covers a relatively complete range; Redline Reviews and MOTOR1 are both good as well.

Test Drive

A test drive is a necessary step. Its main purpose is to validate things you can’t confirm during the initial online shortlisting. Here, chanye lists a few things to pay attention to when test-driving:

  • When you’re in the driver’s seat, adjust the seat so your feet can comfortably reach the pedals, then check visibility in all directions (especially important for shorter drivers). Adjust the steering wheel (up/down and in/out), then check whether it blocks your view of the instrument cluster.
  • Check interior space in all seating positions (headroom, knee room, hip room, etc.). In the rear seats, set the driver seat to your normal driving position and move the front passenger seat all the way back. Then compare knee room in the two rear outboard seats.
  • Comfort of the rear center seat (seat softness and floor flatness).
  • Wear polarized sunglasses and check all in-car LCD displays to see if any become dim or even go black. (Note: standard LCD screens emit linearly polarized light, and it needs special processing to convert that to non-linearly polarized light.)
  • When driving, pay attention to the noise level (wind noise, tire noise, etc.), body roll when cornering, steering heaviness, and how well the car absorbs bumps.
  • Small details that are harder to find in advance, such as whether there is an AUX input.

Getting a Fair Price

Once the test drive is done, you usually narrow it down to one car—or a short list—so your focus should shift to price. Remember: don’t start negotiating with the dealer during the selection stage. At this point, as the buyer, you do not yet have complete information on the car’s price, and the dealer will likely (in most cases) take advantage of this information gap to rip you off. So, don’t bring up price while you’re still deciding.

Invoice Price

Invoice Price means the price at which the dealer buys the car from the manufacturer. In that sense, it can be treated as a rough cost for the dealer, and this price is public (chanye will show you how to check it). But the dealer’s real cost is usually lower than this. For sales reasons, a manufacturer will pay the dealer a rebate based on that dealer’s sales performance for a given model (for example, a Honda Civic) over a given period (such as a quarter), usually around 3%-5% of invoice price. The size and terms of this rebate, however, are not public; only the dealer knows.

For invoice-price checks, chanye commonly uses:

Enter the model you want to check; here we use the 2017 Honda CR-V as an example.

Then click your build price.

Then choose to show all trims.

Select the trim you want to look up. At this point, you can already see the invoice price, but click in again, add optional packages, and then check the total.

In the Invoice column, the last value is the total price, which is the cost the dealer spent on that car (2017 Honda CR-V EX-L AWD). The True Market Value can then be used as a reference point for the next step: negotiation.

Incentives

Dealer actual cost = invoice price (including destination fee) - manufacturer rebate. But note that the price you pay can be lower than the dealer’s cost, because manufacturers often offer direct consumer incentives (rebates) for certain models (usually not bestsellers) at certain times, or discounts for certain buyer profiles. These discounts are paid directly to the dealer by the manufacturer when the buyer purchases the vehicle, and this incentive information is also public. chanye also explains how to check these incentives.

Here, chanye uses Hyundai Santa Fe as an example; other models are similar. First, search Google for “Hyundai Incentives.”

Open the official page.

Choose the model, enter your ZIP, then search.

You can see the official discount details for this vehicle. Click see details to view the specifics—after all, the devil is in the details.

Here, you can see that a $1,500 discount cannot be stacked with the manufacturer’s low-interest loan offer—they are mutually exclusive. There are other details, too, so review carefully and don’t fall into traps (for example, the low-interest loan usually requires qualification, and dealers may try to game that area). chanye will cover later how to avoid getting caught in a dealer financial trap.

Besides model-specific discounts, manufacturers also usually offer discounts for specific customer groups. Common ones include New Grad, Military, Loyalty, and Conquer. Here, we’ll look at the New Grad discount.

As with everything else, the devil is in the details, so don’t forget to read the full terms.

Here, Hyundai restricts who can use this discount. To qualify for it, you must lease or use Hyundai factory financing. (For example, Honda’s grad discount has a similar restriction.)

How to negotiate price

Now it’s time to negotiate price. What Chanye wants to emphasize is: don’t go straight to a dealer to negotiate. Once you step into a dealer, you’re already at a disadvantage, and the salesperson may use all kinds of tricks to pressure you while wasting your time. So Chanye recommends getting an online quote first; avoid visiting the dealership in person until the very end.

Internet Quote

To get a price online, you can go to each dealer’s website and find their internet department’s email to request a quote. But that can be tedious. Chanye recommends using third-party sites to request quotes from multiple dealers at once. Each dealer can return a different quote, so try each one and pick the lowest. These sites include:

As an example, here’s how the process works on Truecar.

First, select the brand and model, then enter your zip code.

Then start selecting trim, configuration, and options.

Then click this button and enter your personal information. Truecar sends your quote request to dealers participating in truecar near you, and then... you wait for the wave of dealer calls/emails.

Let dealers compete against each other

After you receive calls/emails with dealer quotes, you’ll have a rough idea of their pricing. At this point, pick the lowest quote and tell other dealers what your competitor’s price is, then ask whether they can beat it. If one dealer is willing to beat it, ask the previous lowest dealer whether they can beat the new lowest offer.

When requesting a quote, always ask specifically for the OTD (Out of the Door) price. OTD generally includes vehicle price, dealer charges like doc fees, and depending on the state, possibly taxes. In short, it is the total amount you pay to drive away with the car. Asking for the OTD price helps prevent dealers from adding fake document fees before signing.

Another thing to confirm is whether this quoted price already includes manufacturer incentives and whether it also includes any incentives for specific consumers. Ask this because a common dealer trick is to include all incentives in the quoted price so it appears lower—but some incentives require the buyer to qualify, such as military status. Then, when it’s time to sign, the dealer may raise the price. So it’s important to know which direct incentives you qualify for, and when requesting a quote, do not reveal your qualifying identity details (like recent graduation status).

Lastly, watch out for dealer-added options. Some dealers install anti-theft lug nuts, trunk liners, mud guards, and so on on all their new cars. These costs are sometimes not itemized in the quote and may be added at the final signing. So when you ask for a quote, confirm whether there are any dealer-added options and whether those options are included in the quoted price.

Get financing in advance

If you’re not buying with cash, Chanye recommends getting your loan quoted first, obtaining pre-approval, and confirming the interest rate you qualify for before going to the dealer.

For your own loan quote, you usually have several options: your local credit union (especially one connected to your school), a local small bank, or other independent auto lenders (such as Capital One).

Chanye recommends a local credit union, and if your school has a CU, that’s even better. In many cases, a local CU can offer better rates. Before buying, Chanye went to his school CU and got pre-approval.

With pre-approval in hand, when you discuss financing with the dealer, you can say: “I have my own finance, and it's x.xx% for xx months from xxx Credit Union.” Then tell them that if they can offer better terms than that, you’re willing to finance with them; otherwise, you won’t. If some incentive requires factory financing to qualify, you can calculate how much of a rate increase you can accept with factory financing plus incentive to still beat your own loan. Chanye recommends Google’s APR calculator. Just search for "Car APR Calculator" and you’re done.

Watch for pitfalls

There are plenty of traps when buying a car—many were already mentioned above, like doc fees, incentives, and dealer-added options. Here, Chanye finally covers the pitfall right at the end, when you and the salesman have already settled on a price and you are signing the contract in the finance manager’s office.

Finance Guy - Snake oil seller

The title says it all about Chanye’s attitude. Right, the finance guy at the dealership is basically the world’s biggest snake oil seller.

Usually, after finishing with the salesperson, you move to the finance manager to sign the final contract. A qualified finance guy will definitely try to sell you extra services, like dent protection and extended warranty. Chanye’s advice is simple: most dealer add-ons are overpriced compared with the market, so you should decline all of them. And when the dealer says these services can only be purchased at vehicle purchase time, that’s just bullshit—ignore it. Some dealers may also say if you want rate XXX, you must buy service XXX, otherwise you can only get rate XXX. Those are bullshit too. The way to avoid this is to have your own pre-approval so the dealer can’t use the rate as leverage to upsell these services.

If, unfortunately, you do buy these services from the dealer, many of them can be canceled and refunded, including things like extended warranty. Even if it’s only a pro-rated refund, it can still save you a significant amount of money.

Bring all required documents

To reduce unnecessary hassle and avoid giving the dealer room to maneuver, make sure you prepare every document you might need during the purchase process. Chanye lists the documents he thinks might be useful below.

  • Graduation certificate or a school-issued letter of completion (to qualify for the graduate discount), plus any other documents needed to qualify for other discounts.
  • Passport/visa/I-20, I-94 immigration documents/EAD/green card/Social Security Card.
  • Current auto insurance policy (if you don’t have one, the dealer may not let you drive the car off the lot).
  • Proof of income (pay stub/offer letter), which is needed when applying for a loan.
  • Pre-approval letter for your own car insurance quote.

For these documents, Chanye scanned everything first and uploaded them to Google Drive. Then, whenever the dealer needed any proof documents, he could simply pull out his phone and email the scans to the dealer’s email address. Since Chanye is in the habit of scanning important documents and saving them on Google Drive, during this car purchase he could basically just pull out his phone and send whatever the dealer requested.

Result of Chanye’s Car Purchase

In the end, Chanye ended up buying a 2017 Honda CR-V EX-L AWD for $28,860 (out-the-door price, including the $500 graduate discount; in Chanye’s state, OTD does not include tax), with financing at 2% for 60 months through Honda Financial Services. Earlier, Chanye had gotten a [email protected]% pre-approval from his school’s CU.

In the end, I hope this post helps everyone buy their ideal new car at a reasonable price.