Understanding How New Car Buying Services Work

If you're interested in using a new car buying service, the information below will help you navigate the process.

First, do a bit of research on type of vehicle (sedan, wagon, cross-over, SUV, etc.), brand, features and price-range. Narrow your range as much as possible, this will make it easier for the service to help you find exactly what you need. Neither type of buying service is set up to help you decide between 20 vehicles; they can, however, offer you advice on certain models that may have features, positives or negatives.

Typically, the online services are really more referral than buying services, with some exceptions. They will place you with the Internet department of the dealerships with whom they contract, and do understand you are expecting a different type of buying experience. These services have also set up financing and warranty deals—but it is important that you focus on your objective—getting the car you want for the best price available. Other services act as your agent and for a fee, will provide you with a pre-negotiated price or lease option. Once they have facilitated your deal, they get your deposit and a signed buyer’s order from the dealer. This is why you must do your homework beforehand—you should already know if you like the way the particular vehicle handles, etc., since a great deal of work has already taken place in securing you the best price. A particular bonus is if you already have your own financing set up—then all you need to do is present your credentials to the dealer and drive away—everything else has already been completed between your financing company, the car buying service and appropriate dealership.

The second type of car buying service is local. These individuals usually charge either a finder’s fee of $400 to $500 or a percentage of what they are able to save you. You meet with them to give them an idea of what you want, and they do the rest. They call several dealerships, check rebates, prices, special manufacturer’s offers and typically have personal relationships with the Internet managers at most dealerships. Their goal is to negotiate the absolute best price for you, while still retaining a good relationship with their network of dealers.

Which is better? Well, it depends on the area. Sometimes, local car buying services have personal relationships with the dealer—but sometimes the volume of the online/corporate services allows dealerships to discount a bit more. Be a smart shopper—ask about fees upfront; ask for a written document that outlines what the buying service will provide for you, and in what time frame. If you’re the type who enjoys a good negotiation—by all means, work your best deal. But, if you’re like most of us, it is well worth a few hundred dollars to save a few thousand, and to take away the time and energy required to negotiate the best price for a vehicle.