By Car Buying Tips
By Robert Hammer & Stefanie Kelly
For most Americans, buying a car is the second largest purchase - after buying a home - we will make in our lives.
Interestingly, in instances when the consumer is not paying cash outright (i.e., when a loan or lease is involved), buying a car is more difficult than buying a home in terms of credit requirements.
A home loan is secured by real estate - an immovable object - while a car can be driven across state and even international lines.
Thus, a car loan or lease involves far greater risk on the part of the bank. Additionally, real estate does not usually depreciate; the value of a car depreciates dramatically.
Yet while an army is lined up on the selling side, the vast majority of consumers - the very same consumers who do not think twice about engaging a real estate agent to represent and assist them in their search for and purchase of a home - choose to represent themselves in buying or leasing a new car.
As is the case with the purchase of a new home, acquiring a new car is a complex process. Even when the vehicle you are looking for is readily available on a dealer’s lot - meaning that there’s no need to search far and wide from the car or have to special order it - there is a behind-the-scenes financial maze through which your paperwork passes before the dealer presents it to you for your signature.
As we have stated in previous columns, car dealerships are in business to make money, not to give consumers the best deals. Short of hiring an attorney or an accountant to scrutinize the dealer’s figures, what is a consumer’s best defense against the profiteering tactics of car dealerships?
Similar to the real estate agent who assists you in purchasing a home, or the attorney who represents you in a legal case, or the accountant who prepares your taxes, there are professional auto brokers who offer car buying and leasing services.
A good, reputable broker can often save car buyers a substantial amount of money in most cases, plus a lot of time, energy and hassle.
In the case of a premium, high-demand vehicle like the newly redesigned 2003 Mercedes SL500, which is selling for tens of thousands over MSRP and for which dealers are compiling long waiting lists, a broker worth his salt can save you up to $15,000 if you want the vehicle immediately.
Of course, the longer you’re willing to wait, the more you’ll save.
The catch is that all auto brokers are not created equal.
Unfortunately the state of California makes it very easy to get an auto broker’s license, which means that just about anyone can open a storefront, throw up a sign, place a few ads and begin calling him or herself an auto broker.
Just as you would with an attorney, an accountant or a real estate agent, you should always check the reputation, background, credentials and track record of any auto broker you’re thinking of engaging.
How long has he been in business? How much experience (and what kind) does he have in the automotive industry? Does he have testimonials from satisfied customers? Has anyone you know - a family member, friend, neighbor, co-worker - used his services in the past?
Hiring a broker is a smart move if the broker is legitimate, knowledgeable, well-connected and well-respected. These traits are rare in the auto brokerage business, so do your research.
The trick is finding the needle in the haystack.
Hammer and Kelly are associated with Hammer Auto, a new car auto broker in Palo Alto. For more information, call 813-6100 or visit the Web site at www.hammerauto.com.
