This last part of this series I will discuss some addtional savings and how to watch the traps of add ons and extended warranties.
Additional Savings: If you get to a point where the price is not going down any longer there is still more to negotiate. If you buy the car local ask for things like, free oil changes, inspection for life, etc. the sky is the limit. If you buy the car outside your local area you can ask for things like all weather floor mats, roof rack, cross bars, etc. This could add up to a couple hundred dollars.
Savings $200 at least
Add-ons and extended warranties:
Some of the typical add-ons that dealers will add go right to their pockets. Stay away from add-ons; just say no! All kinds of add-ons dealers will try to sell, including prep fee, advertising fee, paint/fabric protection, rust-proofing, window etching, and the list goes on and on. This will be an additional sticker either beside the window sticker or on the front windshield. All of these are the way to make more money, so do not accept any of them. If you shop online, this does not typically happen.
Salespeople will always try and put things in small amounts; they will say something like, this will only add a dollar a day or $30 month for this fantastic offer. $30 over 60 months is $1800. NO, thank you!
Extended warranties are a good idea if you don’t want to worry about large repair bills after the manufactures warranty has expired. These warranties include everything but normal wear and tear. Normal wear and tear are things like tires, brake pads, oil changes.
Prices of warranties differ based on the make of the car and how many miles are on the extension. They all have one thing in common; there are huge mark-ups on all of them. A 3 year/36,000-mile warranty might cost the dealership $600-800, but will try and sell it for $2000-$2500.
This is where you do your homework before you even start negotiating. There are two types of extended warranty providers, manufacture and after-market.
The manufacture’s extended warranty tends to be more expensive, but you don’t have to worry about them folding up shop. The after-market extended warranties are usually less costly but can be challenging at times. There have been after-market companies that have gone bankrupt, and customers lost both their money and the service they paid.
Watch for deductibles, manufacturers have little or no deductible, but after-market, they will always have a deductible. As an example, you settle on a warranty for $1000 with a dealer, $0 deductible, and $900 with an after-market company with a $100 deductible. If you have to use both twice, it costs you $100. However, if you need to use it more than twice, it cost you more money. Which one is better? I leave this up to you.
A real-life example is we bought a new 2014 Volvo; we decided to buy the extended warranty because the cost to repair is relatively high. I went out to the after-market and found a five year/60,000-mile warranty; however, they had three options just the power train $1000 and a $100 deductible, option two power train plus all significant components (except electrical) $1400 and $100 deductible and options three bumper to bumper $1700 and $100 deductible.
The dealer offered a five-year/64,000-mile extended warranty which took the mileage to 100,000 miles for $2300. After I was finished negotiating, the price was $1100. We have had three problems which would have cost us $3300 out of pocket. Because we had the for-sight, we saved $2200 on these repairs.
If I went with option 3 with the after-market, which compares with the dealer warranty, It would have cost me $2000 for the same work.
Savings of $900
When buying from the dealer, they usually just offer a bumper-to-bumper option; after-market, there are many options, which can be confusing as to what is covered and what is not covered. You have to read every page of the policy to have a good understanding of what is covered. Do your homework which would work best for you. Be aware that each company will have different plans; some have up to five other options; in my example, 2 of the four companies did not cover air conditioning and gaskets in the highest priced option. Some after-market companies have a good reputation, but I prefer to stick with the manufacture extended warranty even if they go through a third party but make sure the manufacture backs it.
Lastly is the hidden warranties or goodwill policy. This policy is never advertised, but if you have a significant problem at the end of your warranty period, the manufacturer will generally pay to have it repaired. If you’re are a loyal brand customer and have a documented maintenance record, it is a big plus. Contact your local dealership or contact the manufacture directly; refer to rule#3 for best results.