Today at the pool, a fellow mom was telling me that her 15-year-old car is on its last legs (last wheels?) and that she plans to lease a new car instead. I was horrified. How come? Well, this fellow mom is a financial planner! She should know that leasing is not a good deal for people like her who keep their cars for 15 years.
Here’s why. “Leasing” is another name for “renting” and that’s really what you’re doing. Renting a car for 24 to 36 months. Spending money that you will never get back and ending up with nothing at the end. Zero. Zilch. Nada. If I had to make payments on a new vehicle, they would be purchase payments, not lease payments, so I’d have something —namely a car— to show for my money at the end of the term.
Still unsure whether to lease or buy? Here’s a calculator to help you decide. I suspect the math will convince you better than I can that leasing is rarely the best financial choice. That said, I’m well aware that many of you will “disobey” me and go for a lease deal in a hot second! About a quarter of car deals are leases, according to automotive website edmunds.com. So it’s time for me to meet you where you are. At the leasing desk. Here’s what I have to say about that: Don’t lease, but if you do, negotiate!
That’s right. Few people know this. When you lease, you don’t have to accept the price offered in the commercial or at the dealership. You can haggle, just as if you were buying! In fact, I suggest you do just that. Haggle as if you plan to buy the car and then reveal —only at the end— that you want that price to apply to your lease.
Your monthly lease payment is then based on this negotiated price. It’s not some random number the dealer dreams up. Monthly lease payments are calculated lots of different ways, but here’s a simplified formula: You take the car’s purchase price, minus what it will be worth at the end of the lease and divide by the number of months. If you hate haggling, this may not be welcome news, but the hundreds or thousands you’ll save will be!
Man, I love working from home! And, man, do I love doing it in 2015! When I bother to venture out of my house, I bump into all sorts of other assorted business owners, freelancers, and make-it-up-as-you-go-alongers who are thriving as they do their own thing on their own terms. All hail the internet, which has made all this possible! Want to join us? Not sure what your DIY venture would be? I’m kicking off a 3-part series to give you websites that have worked for others, along with inspiration and motivation.
Sell your services. When I began working for myself, with clients such as the Dr. Oz show, at first I felt like a flake. I mean, shopping for birthday party favors for my daughter at 2pm on a weekday gave me guilt sweats! No longer! More and more people run their businesses in their jammies —and you can too. Here are two sites that match up service providers with service needers, with sometimes stunning results.
UpWork.com: Formerly ODesk and before that Elance. The name has changed, but the core concept hasn’t. My cousin has done some interesting projects through this site. She is a copyeditor extraordinaire (and would have a field day with all the made up words in this article) You simply post your availability and skills. Clients can then hire you. Things really start to pick up once site users give you good ratings for your professionalism.
Fiverr.com: You’ve probably heard of Fiverr. Catchy name, but who wants to make just 5 bucks a job? That’s what I thought too, but here’s the deal: every assignment on Fiverr starts at $5 in pay, but you’re allowed to sell upgrades, do-overs, and so on for more. The inexpensive-sounding name brings clients in and your stellar skills keep them coming back. Check out these real-life examples:
•Daniela sells research and web analysis on Fiverr, which makes up 60 percent of her income and she says last month alone she made more than $5,000.
•Suzi is a songwriter and musician who has written songs for a BBC reporter, a yoga studio and a famous German band through Fiverr.
•Tom, a graphic designer, says he’s made $100,000 since joining and even tells offline clients to purchase his gigs through Fiverr because it keeps him organized.
• Redd, a voiceover actress, has had more than 11,000 gigs on Fiverr, which she used to pay off her credit card debt.
Rent out Your Stuff. I know the sharing economy has been around since at least 2011, because that’s when I did a GMA story on it. We were able to rent a guy’s cooler, a woman’s car —even a dog and, finally, a friend. What sounded outlandish then has become routine today. Here are just a few websites that broker these deals. There are many more. Just search, check the site’s reputation, and go! And while renting out your stuff may not allow you to quit your day job, it just might seed your start up!
Airbnb.com: This service allows you to rent out a room —or your entire house— to people who come to visit from all over the world.
RelayRides.com: Here you can rent out your car on a daily or hourly basis. The site even has the whole insurance thing figured out.
RentyThing.com: More comfortable renting your belongings on a smaller, more random scale? Why not monetize things like skis, tents, um gorilla costumes, what else?
Make some stuff. My neighbor’s mom made me a quilt because my neighbor asked her to cease and desist after receiving quilted purses, quilted tissue boxes, quilted tote bags and quilted, well, quilts. Why not make money when you make stuff instead of burying your family with crafty expressions of your love? Here are two sites where you can put your visual talents to good use.
Etsy.com: I know you’ve already heard of Etsy and that’s the point. So have millions of buyers looking for knick knacks and bric-a-brack. The online crafting source has a huge audience, which means more eyeballs for your creations. As for the income, an Etsy poster named “Rhiannon” said “Currently my Etsy shop 'pays the rent', and since I was made redundant from my day job last week, it is now going to hopefully make a little more with the extra time I put in.”
iStockPhoto.com: You’ve probably purchased images from this site, but have you sold any? Why not? If you’re a good amateur photographer and you carry your camera with you, then start snapping artsy, generic shots —picture the stock images on half the websites in America— and see what happens. One medical student tried it and made 6 figures a year, according to USA Today.
I was startled to notice that the government’s Consumer Financial Protection Bureau is celebrating its four-year anniversary —the fifth if you count it’s unofficial start while Congress was still wrangling over it.
The CFPB was established in response to the financial crisis of 2008, on the premise that a single agency should be looking out for consumers in the financial marketplace. I conducted an exclusive interview with President Obama about the brand new agency in 2010. I sat for another exclusive with CFPB Director Richard Cordray when he was finally confirmed in 2013.
So I’ve always been hyper aware of the agency, but it turns out most Americans are not. At one point the U.S. Chamber of Commerce conducted a survey that found 68 percent of U.S. adults knew little or nothing about the CFPB. The poll was meant as a body slam, with the Chamber arguing that Americans were “wary of its broad powers, unaccountability to Congress, and direct funding outside the budget process.”
But there’s another way to look at it. Regardless of your politics, if a government agency exists, the bureaucrats there for work us and we should take advantage of their services. In my 20 career as a consumer reporter I’ve found that wronged consumers tend to contact the Better Business Bureau (which, contrary to popular belief, is not a government agency), expensive lawyers, and yes, TV reporters before they contact the government consumer protection agencies put in place to help them. Oh, and did I mention that government assistance is FREE?
So tap into what your tax dollars are paying for if you have a problem with a financial product or service. The CFPB has a page just for taking in your consumer complaints. According to that page, these are some of the problem spots the CFPB is prepared to tackle for you:
Loans:
•Mortgages
•Payday loans
•Student loans
•Vehicle Loans/leases
•Other consumer loans
Products:
•Bank accounts
•Credit cards
•Prepaid cards
•Virtual currency
Services:
•Bank services
•Credit reporting
•Debt collection
•Money transfers
•Other financial services
After you file a complaint, the CFPB demands a response from the company you’re complaining about and presses for a resolution within 60 days. Does it always work? No, but here are some of what the CFPB says are its best success stories. Hopefully your case can be added to the list. Let me know via my Facebook page if you've had a good or bad experience with the CFPB.
As you know from my book Save BIG, I love to save big chunks of money from time to time rather than pinching pennies day in and day out. Well, I just found a new way to do that: by rejuvenating your current computer instead of buying a new one. A top notch new machine could cost you hundreds —even thousands— of dollars, but if your current computer is less than five years old, you may be able to gussy it up and save a pile of dough in the process. Here’s where to start:
Delete Your Old Files
Problem: After years of use, your computer collects tons of unused, unwanted programs, apps, documents and downloads. So make the time to delete unnecessary items to make space and improve performance.
Solution: The biggies are what you’re really after and you can find them on a PC by searching “size:gigantic” in Windows to display all files larger than 128MB.
Clear Your Search History
Problem: When you visit a website, chances are it creates temporary internet files or “cookies” and stores them on your computer. These stored files are meant to help you access information faster, but can take up valuable computer disk space, which gradually slows your computer down.
Solution: Clear the computer’s Internet cache and browsing history to free up space and help it run faster.
Power Off at Night —Only
Problem: Never powering off your computer or powering it off to often. Personally, I need to turn my laptop off more often, so it has a chance to accept software updates and reset itself. But many people power down completely too frequently. When you turn your computer off then on, the internal hardware changes temperatures rapidly, ultimately shortening the life of the device.
Solution: Turn your computer off at night and only at night. At other times, put it in sleep mode.
Upgrade Your Computer’s Memory
Problem: Your computer runs slowly and has trouble opening lots of applications at once. Sound familiar? You may need more memory.
Solution: Add more memory or “DRAM.” Memory upgrades start at just $50 apiece and only take about five minutes to install. You may even be able to do it yourself. What type of memory do you need? Crucial.com offers a free online tool that quickly scans your computer and lets you know the exact type of memory you need.
Do you believe in coincidences? While I was gnashing my teeth about 2 contractors who failed to provide me with written warranties, I heard from the folks at ConsumerWorld.org that online retailers often fail to do this as well.
In my case, first I had an under-sink water filter installed. Then I got a new garage door opener system. Neither contractor provided me with a copy of the warranty for the equipment they sold me, even though these warranties certainly existed. (They should have put their installation warranty in writing too, but that’s another story.)
To add insult to injury, when I contacted the companies and asked for a written copy of the warranty on the equipment, they acted like I was the unreasonable one! This is not just my personal annoyance. It’s a common problem. Companies fail to furnish —and, frankly, consumers fail to demand— written copies of warranties.
Guess what? When a mechanic installs something like a new battery in your car, there’s a written warranty on that too. Have you ever received it? I doubt it. My message here is simple: get in the habit of asking for written warranties in non-traditional situations. We expect a warranty when we shop at a brick and mortar store. We may not remember when we’re “shopping” with a contractor who sells us something at our home or when we’re shopping online.
ConsumerWorld’s Edgar Dworsky spot checked 20 online retailers to see if they provided people with a way to read the warranty before purchasing a product. In his small test, he found that as a group they neglected to post the warranty four out of five times. Worse yet, two-third of sellers didn’t post any warranties at all!
Once again, this is not just a consumer advocate being picky. The Federal Trade Commission requires online retailers to post the actual warranty or give instructions for obtaining it. This information must be on or near the product description of all items over $15.
"One of the most basic protections shoppers have is the product warranty, so to not disclose it right there on the website or make it hard to obtain is inexcusable," commented Consumer World founder Edgar Dworsky.
If I can pile on, don’t forget, a good warranty is a reason to buy one product over another. If you’re making a small purchase maybe it doesn’t matter. But if you’re spending a substantial sum of money, checking for a solid warranty should be part of your comparison shopping process.
To see which E-tailers Dworsky looked at and how they fared, you can view the full ConsumerWorld online warranty report here.
Senators Claire McCaskill of Missouri and Susan Collins of Maine have just introduced the “Robocall and Call Spoofing Enforcement Improvements Act of 2015.” Among other things, the law would empower the FCC to empower phone companies to empower consumers to block unwanted calls. There are a lot of links in that chain, which worries me, but it’s certainly a noble effort.
McCaskill says no U.S. phone company currently offers a service that allows consumers to block robocalls. “I think right now if any carrier in this country came out with an ad campaign saying ‘we’re going to block robocalls’ I don’t think they could handle the business they’d get,” McCaskill said. Phone companies want to help, really they do, but their hands are somewhat tied by federal regulations that muddy their right to intervene.
Take Verizon, one of the biggest. On its website, Verizon says: “We monitor our networks to detect spikes in suspicious calls, and then work with law enforcement and with other telephone companies to shut down illegal robocallers. We are also working with other telephone companies…to develop new technologies to stop robocalls.” I envision all the big phone companies meeting —by conference call, of course— to discuss this. That’ll produce a solution in a few years. Meanwhile, Rachel from Cardholder Services plans to burn up a few million more of our minutes.
While the big guys tiptoe toward a solution, several high tech upstarts have jumped to provide partial solutions already. Some are free, some cost, but at least this is a workaround that you don’t have to hang around waiting for.
nomorobo.com. This service won a Federal Trade Commission contest seeking robocall-blocking solutions. It works by having your calls ring simultaneously on the company’s computers and once nomorobo determines the call is robotic, it hangs up for you —typically after one ring.
Call Control . This Android app helps reduce robocalls by maintaining a black list of phone numbers. The Call Control community adds numbers and you can make your own list as well.
Call Bliss. This iPhone app also allows you to create a black list of numbers. It also has an added location feature, that allows you to create different blacklists depending where you are. For example, block personal calls while you’re at work or vice versa.
Cell phone settings. You can change your iPhone or Android settings so that you only hear from numbers that are in your address book, but this is an imperfect solution because you could miss calls from new —but wanted— callers.
Landline call blockers. A quick internet search reveals all sorts of call blockers you can attach to your landline. Details vary, but they typically require friends and family to type in a code in order to reach you.
Did you know that timing your shopping can help you bag a bargain? I’ve preached this sermon before when it comes to the time of year to get certain products cheap. And now one of my savings- blogging brethren has done the same thing for days of the week.
For those who missed the memo on times of the year, you should know that entire categories of products typically go on special the same months of the year, every year. If you plan ahead, you can stock up at a deep discount. Did you know Quaker puts its products on sale in January? Or that Prego and Ragu have sauce wars in September? If that whet your appetite, here are the seasonal sales coming up this summer:
June:
Building materials
Cheese
Hardware
Ice Cream/Yogurt
Tools
July:
Condiments
Computers
Hamburgers/Hotdogs
Pickles
Sodas
August:
Cereal
Coldcuts
Fish
Fresh fruits and vegetables
Juice
School supplies
Waffles
Consumer Reports offers a similar monthly guide for when best to buy bigger ticket items. But I had never seen anybody time bargains down to the day of the week before. Author Kyle James of RatherBeShopping.com recently tracked which days are best to shop on the websites of 20 popular retailers. James tells me, “I tracked the day when coupons are most likely released, and when they add new items to their online clearance section.” Using those and other criteria, he came up with his recommendations. Here are the most popular retailers from his findings:
Sunday: Michaels
Monday: Barnes and Noble
Tuesday: The Gap
Wednesday: Home Depot
Thursday: Old Navy
Friday: Best Buy
Saturday: Target
Again, these recommendations are for the store’s websites. I’d love to see someone do the same for their brick and mortar stores, but I suspect it would be a lot more complicated, since there could be regional or even store-by-store variations. To see the rest of James’s when-to-shop recommendations, you can read his chart here. James says he plans to add to the grid as he makes new discoveries, so check back or write in with your own. Happy (timed) shopping!
Most unclaimed money is held by the states – about $32 billion at last count. That's because state law requires banks, brokerage firms and other companies that handle people's money to turn unclaimed funds over to the states for safekeeping if they can't locate the rightful owners. So the states are the place to begin your search.
But don't stop there!
The federal government has its own "buried treasure" that you can find, too. And some private entities also have helpful tools for you to try. All but one below are free. If you are asked to pay a large flat fee or a percentage of the unclaimed money you find, you are probably dealing with a professional "finder." It is never necessary to pay a fee or finder for information you can quickly look up on your own.
Below are a dozen different sources you can search to find your own forgotten money.
The first place you should search is your home state. Unclaimed money is usually -- though not always -- held by the state where the account was originally located. Things like abandoned safety deposit boxes, uncashed overtime checks, and forgotten apartment security deposits. The National Association of Unclaimed Property Administrators (NAUPA), a non-profit association that represents unclaimed money departments from all 50 states plus the District of Columbia, runs a free website that will link you to any state you want to search. You will find it HERE.
The best part is that you can search for yourself or others without even entering a Social Security or account number Rather, you search the system by name and then verify that it's really you by checking to see if you have ever lived at the corresponding address listed. (IMPORTANT: For those who want to go back to the site later on their own, please note that it is a .ORG site, NOT a .com site. www.unclaimed.ORG.)
Unclaimed money is usually held in the state where the account was originally located, so if you have lived in multiple states, you will want to search all of them. Additionally, in some instances, unclaimed money is held by the state where the business is headquartered. If you are fairly certain that you lost track of money, you could look up where the company is based and search that state. But in the last decade, so many banks and brokerage firms have bought each other or merged that it's often hard to trace.
So here's the solution: There's another free website where you can search 37 states and the District of Columbia all at once. (Not all states participate.) That free site is HERE. When you first search, you are prompted to enter your home state. After that, you have the opportunity to search again. This time choose "all states and provinces" on the drop-down menu. Be sure to look at the map of which states participate, located HERE. If you have lived in one that does not, go back to unclaimed.ORG and search it individually there. To cover your bases for company headquarters, you might choose to search all 13 states that don't participate individually.
Some states require local governments to turn unclaimed money over to them, but others do not. So another lucrative source of unclaimed funds is your city, county, town or village. I know of no centralized repository of information about these locally held funds, so you'll want to do some sleuthing on the Internet. Try different combinations of keywords, like, "Town of (your town name)" and "unclaimed property." Keep in mind that governments usually refer to unclaimed money as unclaimed property, but they don't typically mean real estate. They mean money. For more details about finding money held by local jurisdictions, click HERE.
The Treasury Department's Bureau of Public Debt is holding billions of dollars worth of what it calls "matured, unredeemed savings bonds." In other words, unclaimed savings bonds! You can see how they'd get lost, since they typically take 30 years to mature. Fortunately, the Treasury Department has embraced the Internet with a website, HERE, where you can search for forgotten bonds that belong to you and are no longer earning interest. You should search using your Social Security number or, if the savings bond was a gift, you should also check the Social of the person who gave it to you. Often, those who give savings bonds as presents don't know the Social Security number of the person they are giving it to, so they use their own. If you find a bond in your name, you can then begin the claims process right online. A federal worker will then contact you and complete the process over the phone and by mail. For additional advice about collecting unclaimed savings bonds, click HERE.
As you know, the Federal Deposit Insurance Corporation, or FDIC, insures banks. That means if the bank goes under, the FDIC makes sure all depositors get their money back. (There's currently a $250,000 limit.) This is a tremendously consumer-friendly system developed after the Great Depression in an effort to give people the confidence to deposit money in banks rather than stuffing it in their mattresses. If you didn't collect your money when your bank failed, you should contact the FDIC ASAP! If you are correct, the FDIC will be holding your money and will return it to you. The best part? You can check right this second, by using the FDIC's search website located HERE.
Similar to the FDIC, the National Credit Union Administration takes possession of credit union funds when credit unions fail. The NCUA is a federal agency, not to be confused with the Credit Union National Association, an industry group. Once again, the feds are on it, and have set up a website where credit union customers can search for their forgotten funds. Click HERE to track down your money.
We love to joke about how we hate the Internal Revenue Service, but you could learn to love the IRS if you were expecting a tax refund and never received it. To give you an idea, in 2012 the IRS announced that 111,893 citizens had not received their refund checks for a total of more than $16 million. Are you one of them? The IRS now provides a "Where's my Refund?" feature on its website. You can look up your missing check by entering the amount you are owed, plus your Social Security number. For advice on how to search for unclaimed child support money, click HERE.
If you purchased your home with an FHA-insured mortgage, you may be owed a refund and have no idea! It can happen if you paid a lump sum for your FHA insurance premium at closing, but were also charged for it monthly. Another scenario: Maybe you started with an FHA loan but then refinanced into a conventional loan. Beware: The refund money is not held indefinitely. According to the rules, HUD can keep your refund if you don't claim it within six years. So, you better get on this one! HERE is the link to the HUD/FHA page to search. You can search using your name or your FHA case number.
If you are due a pension, but have not received it, first you should contact the company where you were employed. If the company no longer exists, there is a little known federal agency, the Pension Benefit Guaranty Corporation (PBGC), that safeguards private pensions. You can try to track down your pension HERE on the PBGC website. 10. The Employee Benefits Security Administration The Employee Benefits Security Administration (EBSA), is the federal agency charged with making sure retirement money is reunited with its rightful owners. Unlike the PBGC, the EBSA typically gets involved in cases of wrongdoing where a company has misappropriated employees' pension accounts. The EBSA sometimes even sues to seize retirement money before it disappears. You can utilize the agency's services by clicking HERE.
The Employee Benefits Security Administration (EBSA), is the federal agency charged with making sure retirement money is reunited with its rightful owners. Unlike the PBGC, the EBSA typically gets involved in cases of wrongdoing where a company has misappropriated employees' pension accounts. The EBSA sometimes even sues to seize retirement money before it disappears. You can utilize the agency's services by clicking HERE.
For warnings about unclaimed money scams, click HERE.
In this day and age, pensions are increasingly rare, and 401(k) plans have taken over. You have the right to roll over your 401(k) to your new company or into another retirement investment like an IRA, but in the flurry of changing employers many people forget. So if you have left behind a 401(k), it's time to search for it. Fortunately, companies that administer 401(k) plans have teamed up to create a search engine you can use to track down your 401(k).
Typically unpaid life insurance policies are turned over to the states, so following step 1 or 2 outlined above should turn them up. But so often, the beneficiaries of life insurance policies don't even realize that their deceased loved one left them a policy. And, believe it or not, life insurance companies are not required to search out policy recipients. They typically wait for the claimants to come forward. Because this is a situation where you may have no idea where to start and where the benefit to you could be large, this is the one time I offer up a search service you have to pay a small fee for. You can hire a company called MIB Solutions to search for you. MIB is a private company that houses life insurance application information for much of the industry. It costs $75 to search. Go to www.policylocator.com for more information. For more articles about how to find unclaimed money, click HERE.
THis is officially the shortest blog I have ever written. Here is Tory’s excellent advice on work at home jobs.
Cars are the second biggest thing we buy after homes, and the process can be so intimidating. After all, unlike in other countries, we don’t negotiate for most of our purchases and most of us only buy a car once every few years. But good hagglers save themselves an average of 10 to 15 percent on this big purchase so it's worth it to learn. Good Morning America teamed up with auto website Edmunds.com and went undercover to show you, step by step, how to haggle.
Our expert was Philip Reed, Senior Consumer Advice Editor for Edmunds. Edmunds buys lots of cars for test driving purposes and Phil is the one who shops for them. He always does so on a “mystery shopper” basis, only revealing who he works for at the end. The idea is to get a feel for the process that consumers are experiencing out in the marketplace, so that he can then give solid, relevant advice. We were also excited to work with Phil because he has previous undercover experience. He once got a job as a car salesman and did the job for several months in order to get the inside story and share it with consumers.
On this shopping trip, our mission was to buy a certified 2007 Honda Odyssey EXL that Edmunds needed for its photography department. When Edmunds test drives new cars for its articles, staff photographers shoot pictures of them, and they wanted a minivan with a sunroof they could shoot out of.
"There was a certain amount of pressure,” Reed said. “We weren't just going in and playing games with people and wasting their time. This was a car that I needed to get for my company."
To add to the tension, Phil had a budget. He was allowed to spend no more than $25,000 and he had to get a vehicle in excellent condition with low miles. All this while wearing multiple hidden cameras to capture the transaction! Before visiting dealerships we settled on ten negotiating strategies we would employ during the process. Here they are and here’s how we did.
Obviously you don’t want to pay the sticker price, but where, then, to begin? There’s an old negotiating adage that goes like this: “whoever speaks first, loses.” Why? Because the opening number defines the entire negotiation. Once you throw out a dollar figure, you can’t go any lower than that. That’s why you want to try to get the salesman to name the first price. That way you will know you are not starting too high.
At our first dealership, I asked the question straight out: "What I was really wondering is what are you selling it for?" And the salesman obliged with an answer: "Here's our fleet price: $23,475." That was significantly lower than the sticker price of $26,998, so it was helpful information. We would now make our opening offer even lower than that.
Next: drop the name of a reputable pricing guide like Edmunds.com. Dealerships are used to this. The old timers who’ve been around since before the internet may miss the times when customers were clueless. But some customers still ARE clueless, so put them on notice that you are one of the ones who has done your homework. It will speed up the process. We did this and had some fun with it because most of the sales staff would then poo poo the accuracy of the Edmunds pricing guide right to Phil’s face and he works there! Here was one exchange:
Salesman: “Oh, you’re going from Edmunds? Oh, I see."
Phil: “Is that a problem?"
Salesman: “It's not a problem. It’s just that it doesn't reflect really what the market is."
There’s real value in bringing a wingman along. Ideally this person will be the “bad cop,” the naysayer who questions the car --and the price-- so the dealership doesn't get cocky. That was my job during our undercover experiment. I said things I hoped would sow doubt in the sales staff’s minds so they’d be unsure we were really going to buy the vehicle and work harder to get our business. Some samples:
"I don't know, Phil, because you were hoping to get a car with less miles than that, right?"
"I liked the other make and model better."
“I don’t want to see you bust your budget for this car, Phil. I think this price is too high.”
As you know, a staple of the in-person car buying experience is the shuttling back and forth, where the salesman leaves to go “talk to his manager,” the person with the authority to accept of reject offers. Phil says when that happens,YOU should leave too.
“They leave because they want to show that they’re in control,” Phil said. “ They make you sit there. You’re investing your time. The more time that you invest, the more likely you are to buy a car --they think.”
So each time the salesman left the cubicle we would too, wandering off to the restrooms or even to our rental car.
"We were sending them a signal that we were not going to be controlled,” Phil explained. “And also we might just completely disappear."
Never finalize a car deal without leaving the lot. You don’t have to turn on your heel and leave in a huff. Just tell the salesperson the price is not where you need it to be and that you are going to go see if you can do better elsewhere. BUT make sure they have your cell phone number so they can reach you back. The whole idea is that you want them to call you up and make you a better offer because they are afraid they are going to lose your business altogether. Sure enough, dealership number 1 called Phil three times while we were on the way to dealership number 2. The folks there wanted our business.
Which bring us to a closely correlating strategy: ALWAYS shop more than one dealership. And while you’re at it make sure they know about each other. Going to at least two dealers will start to give you a feel for real prices in the marketplace. It also helps keep you from swooning over a particular car and paying too much for it. You don’t want to fall in love! You want to “two-time” your used vehicle. If the price at one dealership isn’t good enough, have another waiting elsewhere.
At our second dealership, we found another certified 2007 Honda Odyssey EXL with almost identical mileage. Sticker price, $24,988. Internet price: $23,988. Now we needed to make an offer well below those figures.
When you're ready to make the all-important opening offer, give good reasons for the figure you are about to throw out. (For more information on how to choose your opening price, click here for our Web Extra.) [please link to separate web extra article Eli wrote.] Next give that figure, a firm number. And then shut up. You want that pregnant pause, that uncomfortable quiet. Do not fill it. Your goal is for the seller to be the one to squirm and shatter the silence by accepting your offer or making an attractive counter offer. Too many customers make their offer and then –worried they are being impolite—sort of dribble on and weaken their own words.
Here’s how Phil worded his offer at the second dealership: "Based on what we've seen on other car lots and our budget, and the fact that it's a little higher miles than we had hoped, we'd be prepared to offer you $20,500." Thoughtul reasons for why the offer isn’t higher, the offer itself and then silence. "If you say it and then you're absolutely still after that, it really puts a certain amount of pressure on them to respond" Phil explained. In our case, a manager came out a couple minutes later and made a counter offer of $22,865. “Which is really close to wholesale book” –he said. He, too, was giving reasons for the figure he named.
Never accept the dealership’s first counter offer, much as you might like to end the negotiation because you are outside your comfort zone. Instead, show you're tough by making your counter offer a smaller increment than theirs. The idea is to demonstrate that your resolve is firmer than theirs and you are sticking to your guns. In our case, the dealership came down more than a thousand dollars. So Phil went up by just $500, putting the price on the table at $21,000. Once again, reasons –and some encouragement: "We're just trying to work within a budget. So we'd be happy to come up to $21,000” Phil told the manager. “If you can do that, we can do it right away."
Very often dealerships claim that they will lose money on a vehicle at the price you are offering. Both dealerships we visited said things to this effect and sometimes it is true. Other times it’s more of a negotiating line. Keep in mind, when dealers talk about what they paid for a vehicle, they may be including other factors besides what they purchased the vehicle for. For example, the van we were buying was used but certified. That means the dealership spent some money sprucing it up to meet Honda’s certified vehicle requirements. Dealerships often assign a dollar value to those repairs, but they are performed by in-house mechanics who are on the clock anyway. I’m not saying the repairs don’t have value, just that there is probably some wiggle room in the accounting that you may be able to turn to your benefit.
That’s why it’s important for you to go into the dealership with a maximum price in mind that you can afford to pay for the vehicle in question. If the dealership says it is losing money at the price you have offered, but offering more would bust your own budget, then walk away.
Our undercover adventure took place on September 28th, just two days before the end of the month. Honestly, that is just when it worked out for us to go, but we were reminded that it can be a good strategy when the used car director at the second dealership said the following: “That's a unit for us right here at the end of the month.”
It’s also helpful to look for stale cars that have been sitting on the lot for a long time. The dealership likely views them as semi failures and wants them out the door. Many dealerships now provide a free Carfax vehicle history report for any used car you look at. Both dealerships we visited did, and I noticed that the Carfax report had a handy line showing when the vehicle had come into that dealership. At the second dealership, the Odyssey we wanted had been there 42 days.
So, hoping this gave us some leverage, I said to Phil and the manager: "Hey Phil, I notice here that they've had it for more than a month. More than a month! So I'm wondering, do you want to sell this vehicle and get it out of here?”
After some more back and forth, the offer on the table was now $21,500. This time, the manager's manager came over and we were sure he was going to haggle with us some more. But then, to our surprise and delight he said: "I think that's a fair deal for you…so with that said, could we make a deal right here?" Phil smiled and replied “absolutely" and that was that! We were thrilled with the price, impressed with the vehicle and pleased with our negotiating experience.
"People feel incredibly empowered when they negotiate on their own behalf” Phil reflected. “And they're always amazed and blown away with how much they can accomplish with a few simple things." The Odyssey's sticker price was $24,988. We got it for $21,500 --a savings of $3,500. And even when taxes and fees were added, the total “out the door” price was $23,924, well below the $25,000 limit Edmunds had given Phil.
Phil came in more than a thousand dollars under budget for his company, but was our purchase a good deal in general? Edmunds offers a unique tool called “True Market Value” or “TMV” that gave us some perspective. Edmunds’ TMV is the average price that consumers are currently paying for a certain type of vehicle. Sample car dealerships around the country report their selling prices to Edmunds, which then runs a formula that averages the raw data. That means TMV averages include people who paid too much and those that did very well in their negotiations plus those in the middle. Phil’s goal was to beat the TMV number and be “better than average.” The TMV for a Certified 2007 Honda EXL with 40,000 miles on it was $22,515. The price Phil had had in mind to pay was $21,500 and that is exactly what came to pass! He was better than average by $1,015! “We got a very good deal on this car,” he said. “I wouldn’t call it a screaming deal, but it’s a very good deal.”
If you are close to a price you think is fair, but just can't get the dealership to come down any more, here’s another strategy: instead of trying to get the car for less money, you can try to get the money to buy more car --by asking for extras like new floormats or tires, a souped up stereo or an upgraded warranty. Make sure the extras are things you truly want and need.
If, after reading all of this advice, you still can’t picture yourself marching into a car dealership and doing a bit of acting in order to pare down the price of a used car, then internet buying may be for you. You can still get the benefit of negotiating the price, but you will be doing so online or by phone, a less in-your-face approach that some people prefer. Here is an excellent Edmunds article on how to go about it. Need advice on how to buy a new car? Click here.