How I Saved Money Buying a Car

My daughter-in-law had an old 1960's Ford Mustang that was cool, but not practical as a primary car for someone who needs to commute to work and school on the Los Angeles Freeways.

She knows I'm a car guy and came to me for guidance (and money). I was happy to help out, we decided a 2008 Honda Civic DX Coupe was the best option for many reasons, including gas economy, style, comfort, safety and resale value. The cars go for about $12,000, so I told her if she saved $5,000., we would match it and cover the rest. She did, and we were ready to buy, and this is how we saved just under 20% off the price for a Certified Used Honda.

Financing
First, we arranged all the financing in advance. We were like cash buyers and there was no heavy negotiation necessary in the dealership. We went with our credit union, who had the best rate. We went in ahead of time, and went over the transaction. Because she was putting 50% down, she did not need a co-signer on the car loan and it will help build her credit.

Research
Second, we did our research, so we knew what we were willing to pay and not one penny more. In this tough economy, dealers need to move inventory. With all the Honda dealers across Los Angeles, I knew someone would take our all cash, low-ball offer, just to move a car, even if there made no profit, at least they make a sale on their books.

I love cars, but I think Honda's and similar economy box cars are, like washing machines, generic, interchangeable appliances. My daughter feels the same way, we didn't care what color it was, what trim package it had, it was all about the money, and I think she learned some good lessons about being a tough negotiator. There was no loving this model or this color, if the price was right, we were writing a check. If not, we were moving on to the next dealer.

Some dealerships appreciated our frankness, some did not. Keyes Toyota in Van Nuys was horrible, they had us wait in a room for a manager, like we were hostages. We got up and walked out, with the salesman and the manager chasing us, after a long test drive as well. They could have offered the car to us for free, I would have refused and vowed never to buy a car from Keyes and to let everyone know of their unfriendly tactics. I am doing them a favor by giving them my business, they are not doing me a favor by selling me a car.

We checked Kelly Blue Book for the current wholesale and retail values of the car, they also offer the suggested CPO (certified pre-owned) price. Be sure to check the both the retail and wholesale prices. A wholesale price is a raw car, like a private party might sell, unreconditioned. A retail price or CPO price is for a car that has been tuned, inspected and gone over top to bottom, mechanically as well as cosmetically.

Also, we checked the completed listings on eBay to see what Civics were selling for online, which is a great price guide as well.

The entire Honda Used inventory is available online, so we could find the car we were looking for, whether it was at a dealer down the street or across the country. Each vehicle comes with a free CARFAX report, so check that out as well before making a decision.

Never Buy A New Car
Unless you can write a check for the full price of a car, you really can't afford it, so check into a used car. Instead of a brand new model, we went with a certified pre-owned car. We saved the depreciation that happens the minute you drive a new car off the lot, you lose about 25% of the value instantly as it goes from a new car to a used car, just like that.

With a Honda Certified Used Car, we got a car about 18 months old, with 12,000 miles and a full, bumper to bumper warranty. The powertrain warranty is 7 years or 100,000 miles from new, and everything else is covered within the normal bumper-to-bumper warranty of 3 years or 36,000 miles, which they increase to 4 years and 48,000.

The suggested Blue Book pricing on the 2008 Honda DX Coupe was $12,385. Before leaving home, we wrote a check out for $10,000 without filling in the dealer name. When we sat down to negotiate, we simply pushed the check across the table.

Every Honda dealer we visited had numerous Certified Used Civics for sale like we were seeking, all priced from $12,000-$13,000. The fourth dealer we visited accepted our check as the out the door price for a car marked $12,500. on the windshield, including tax and tags, saving us about 20% on the purchase of the car.

More from this contributor:

"How To Really Get A Free Credit Report"

"Tips For Business Travelers"

"How To Prepare Your Home For Quick Sale"