Shopping for Your Next Car Online: Rule Three

One of the best things to happen for bargain-driving car shoppers in the past decade is the plethora of expert advice, pricing and specification data now available online. However, the wealth of information available can easily overload diligent researchers.

Certainly that includes information about vehicle cost. But even data as straightforward as the dollars and cents of sticker prices can contain inaccuracies. The more reliable car research sites usually include last updated notations on pricing-information pages, which can help shoppers determine if the pricing is current or was in effect at the time a vehicle was first introduced.

Jack Nerad, executive editorial director and market analyst for Kelley Blue Book, notes that its online prices remain timely and accurate, because the company updates them weekly, based on information it receives instantaneously from retail and wholesale sales. Kelley also provides regionalized prices when website visitors enter their ZIP codes. The print edition of the book, which comes out quarterly, may reflect a time lag, he concedes.

Unsurprisingly, dealer critics charge that independent information sites are not always rock-bottom reliable. For example, nearly all research sites display both MSRP and invoice pricing. Dealers contend that the invoice price may not include additional fees they pay to the carmakers. These can include advertising fees, explained Justin McGaughey, Internet manager of Advantage BMW in Houston. The fees vary among manufacturers and can even change from region to region, according to the amount of advertising a carmaker places for its dealers. When McGaughey worked for a Houston-area Chevrolet dealer, Chevy levied a 1.5 percent advertising charge per vehicle, he said. Advantage pays BMW $350 per vehicle.

And while it is true that dealers have additional costs to shoulder beyond the vehicle’s invoice price, few will volunteer information about dealer holdback, which is essentially a manufacturer discount on the invoice. Because automakers typically hold a fraction of the invoice total, usually between 2 and 3 percent, for each car sold, invoice is not the true price dealers pay for a vehicle. These holdback funds are usually returned to the dealer on a quarterly basis.

Dealers everywhere have the same flexibility to negotiate prices, and that gives them the ability to compete against other dealers. But to haggle against a quote you obtain online, a dealer needs to see a printout, said Paul Simon, sales manager of BMW of Manhattan, in order to match all of its terms and conditions.

Unless you are looking for a limited-edition or otherwise rare car, in which case you usually need to pay the price asked or lose the vehicle to the highest bidder, getting multiple quotes will ensure that you receive a more competitive price on widely available models.

Robert Krughoff, president of Consumers' Checkbook, explains that the nonprofit organization’s car-shopping service contacts at least five dealers for a client. CarBargains insists that the dealers give it a firm, competitive price quote on vehicles they have in stock or can readily obtain. There is a $190 charge for the service, refundable if a customer finds a better deal on his or her own.

Unless a shopping service insists that dealers give competitive quotes, it lacks the ability to assure low prices, said Krughoff.

In all cases, when shopping around yourself, “walk out of any dealership that seems not to be adhering to the price as offered,” advises Krughoff.

Another problem area is the heightened expectations created by selection tools that help shoppers configure a vehicle that suits them perfectly. Problems can arise when a customer arrives at a dealership to close on a vehicle that doesn't match his or her expectations. “The customer realizes that not only does the car not include an automatic transmission, but it doesn't include power seats and options that 99 percent of all the cars we sell have,” said Simon.

“It gets kind of tricky when you have all these options to add into the price,” said Prestige Acura’s Jamie Harrison. “When you get a quote, you don't always know if it includes everything.”

She applies that warning not just to price quotes from Internet sales services but also to online quotes from franchised dealers. “A lot of dealers will give quotes, but they won't include the destination charge,” Harrison said.

If you're using a monthly payment calculator to compute lease or loan payments, make sure you understand all of the financial assumptions built into the calculator. “Some payment calculators assume there's going to be 10 percent down,” said Simon. “The consumer may not know that he's clicking in a $6,500 down payment."

Editor Mary S. Butler contributed to this article.