A recent post from Michael James reminded me of the car I just bought in August. The way we bought the car eliminated the problem he mentions and many others. I heartily recommend it.
Back in 2007, we decided we wanted a Honda Fit. We have no intention of ever buying a new car, but we went into a dealership anyway to test drive one, and the salesman worked out the numbers for us. The quote came out to $23k.
Instead of signing on the dotted line, we started pretending we had car payments, and setting aside the amount. (Yes, this early blog post of mine was nonfiction.)
I figured if I waited three years, we'd save about $6k in depreciation, and because we wouldn't be paying interest on a car loan, we'd save another $3k in interest, so we'd be spending $14k. So once we had saved up $14k, we just waited until the car we wanted reached that price.
That happened this past August: we saw a listing online for a 2007 Fit with low mileage for $14k. That week I went to the dealership and told the salesman that I wanted that car, and if he could make it work for $14k all-in, he had a deal.
Well, he made it work, so I bought the car.
The process was pretty much stress free for me. I got the car I wanted at the price I wanted, without any negotiation. Ok, it's true that the salesman might have shaved off a couple hundred bucks if I had negotiated harder, but in the big scheme of things, I saved $9k by waiting a few years, so I'm not going to try to stiff this guy for a couple hundred more bucks. In the end, we were both happy with the deal, so as far as I'm concerned, that makes it a good deal.
The most striking part for me was when it came time to sign the contract. He was explaining all the extra charges like taxes and whatever else. I can't even remember what the charges were because, well, I just didn't care. I had negotiated the bottom-line price, so in effect he was paying all these other charges, including the taxes.
And to top it all off, I didn't have to worry about financing rates, and I didn't even have to give the dealer my car insurance info. He didn't care because he had cash in his hands.
The only painful part was writing that bank draft for $14k. Man, that's a lot of zeros for a cheapskate.
Update: My wife would like me to point out that, while I may not be a world-class negotiator, I didn't just walk in and pay the sticker price on the car. They were asking $13,999 plus taxes, plus plus plus... We paid $14k all-in, which works out to almost 20% off the sticker price.