Monday, April 04, 2022

Avoid Six Pitfalls When Ordering a New Car Instead of Buying from Dealer’s Inventory

We’re into our third year of one of the most significant changes in human society, caused by the worldwide covid pandemic. The auto manufacturing and retailing businesses are just two entities that have been greatly impacted. New vehicles are in a shorter supply than ever before. Auto demand and prices are at historic highs, and dealers have virtually no vehicles in their inventories. If you can wait to buy a car, you should wait until prices come down. If you must buy a new car today, you’ll probably have to order it. If you buy today from dealers’ practically nonexistent inventories, you’ll have to pay thousands of dollars above MSRP and accept a car that doesn’t fully meet your needs or desires.

The smartest thing to do for those that must buy a new car now, is to order it from the manufacturer. The car you want most likely hasn’t been built yet and hasn’t been assigned a VIN (vehicle identification number). The dealer will most likely just take a deposit from you and the only paperwork you’ll receive, if any, will be a “worksheet” showing the price which should include all factory and dealer installed options dealer fees, and government fees. This worksheet probably isn’t a legal document and it’ll state this in the fine print…something like “This is a worksheet and not a legal vehicle buyer’s order”. This means that neither you nor the dealer has a legal obligation to enforce the purchase. You need a legal document that obligates the dealer to sell you the car at the agreed upon price but does not obligate you to buy.

These are the reasons that you should insist on a signed legal document, obligating the dealer:

  • Your new car may be sold to someone else when it arrives at the dealership. The price you negotiated to pay 3 months ago when you ordered your new car may be a lot lower than a customer who happened to be there when your car arrived on the car carrier. This means a bigger commission for the salesman a bigger profit for the dealer. Because new cars are in such short supply, you may find out that your new car was sold by “mistake” to somebody else. You should closely monitor the progress of your ordered new car. Insist that you are regularly updated on it’s progress. If it arrives when you’re unaware, the odds increase greatly that it may be “accidentally sold” to someone else at a much higher price.
  • The manufacture of your new car might be delayed indefinitely. With the microchip shortage and the wire harness shortage, it’s possible that some cars simply may not have the critical parts to manufacture.
  • The dealer may decide to raise the price of your car. Without a legal document to force the dealer to honor your price, he would certainly be tempted to raise it, if he could sell it to other customers for a lot more money.
  • Prices of new cars may drop, so you don’t want to be obligated to buy it above the current market price; but you want the dealer to be obligated to sell it.
  • You may find a better price from another dealer while waiting for your car to arrive. It might take months for your car to arrive, and this gives you lots of time to shop your price.
  • You might just change your mind about buying a car. Think about it…lots of things can change in the 3 to 6 months your may wait for your new car to arrive, like health or economic issues.
Get it in writing from your dealer that you can cancel your order and get your deposit back at any time for any reason and that the dealer cannot cancel the order and must honor the original price with respect to MSRP. If you negotiate a price under, at, or (most likely) over MSRP, the dealer is legally obligated to sell it to you at that price OUT-THE-DOOR PLUS GOVERNMENT FEES ONLY. It’s possible that the MSRP is raised by the manufacturer over which the dealer has no control. His cost goes up and it’s only fair that the dealer passes this along, But you also have the right to cancel the order if you choose to.

You might be thinking, “will a car dealer really agree to put all this ‘stuff’ in writing?” Most will because an ordered car is plus business. If you’re buying a new car from his very small inventory, he won’t budge an inch on his price way over MSRP because somebody will come in right after you and pay his price.

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