The Covid-19 pandemic appears to be nearing the end, while the automotive industry is slowly recovering as well. Many automotive dealerships had resorted to conduct the entire process of car buying online, in order to maintain Covid-19 protocols of social distancing. But even with daily cases declining, it looks like contactless car buying is here to stay, as customers have got used to it. So whether you wish to purchase a vehicle online due to safety concerns, or you simply don’t have time to go to a dealership, this process is likely to rule the roost from here on.
However, buying a car online isn’t as easy as it sounds. Remote car purchases involve a lot of research and apart from buying the actual vehicle, you need to register it and get car insurance as well. Though buying a car remotely might require a bit more legwork on your end, it can also be way more convenient than going to a car lot in person.
Traditional vs. contactless car buying
Want to buy a car online but not sure about how the experience compares to the traditional method? To be frank, the processes are similar in some ways, but skipping the dealership can actually give you a leg up as a buyer. For instance, you go to a dealership and approach a salesperson, there is some back-and-forth, and then they go to talk to their manager. At the end of the conversation, both parties end up disagreeing most of the time, and it yields nothing fruitful.
When it comes to contactless car buying, it is possible to finish every phase of the car buying experience, be it researching and finding the right car to negotiating, entirely online. You get to explore options for cars, financing and trade-ins, and then use your findings to negotiate for the best price possible. According to Matt DeLorenzo, managing editor of KelleyBlueBook.com, digitalization has really empowered the buyer, as there is lots of information to help them make a smart decision. Moreover, the Covid-19 pandemic has forced buyers to make “contactless purchases” for safety purposes. Even though the pandemic shows signs of decline now, experts warn that letting our guard down isn’t an option. That is why it looks the contactless way of buying cars is here to stay. The only downside is that it requires a bit more legwork on your part to bring all the pieces together.
Steps to facilitate contactless buying
1. Select the right car
One of the most important things is to choose a car that fits your requirements. For example, do you want a fuel-efficient car that is best suited for short commutes? Or do you need one to haul around large amounts of cargo? Do you have a large family or a small one? These questions can help to zero in on the type of body style you want for your car. Once you have decided on that, it is time to conduct research on what specific makes and models of cars, is best for you. Good research websites include Edmunds, Car and Driver and Kelley Blue Book.
If you are buying a new car, you might be offered several options and add-ons from the dealer. It could be VIN window etching or rust-proofing. However, before you go ahead and sign up for every option that is offered, find out if you actually need them. You can face big markups and easily get these add-ons yourself if you decide you need them down the road.
2. Decide on the price
As simple as it is to say – prepare a budget and stick to it, executing that is extremely difficult. The first step is to determine how much you can afford. Ideally you should opt for a 20/4/10 rule – take a look:
- Make a minimum down payment of 20%.
- Finance for no more than four years.
- Total expenses including transportation expenses, insurance, gas etc. shouldn’t exceed 10% of your monthly income.
If the above mentioned rule isn’t possible, then try your best to stick to the 10/5/20 rule – here goes:
- Make a minimum 10% down payment.
- Finance for no more than five years.
- Total expenses shouldn’t exceed 20% of your monthly income
While these aren’t hard and fast rules, they help to set a cap on your car shopping budget. For instance, if you have saved $ 4,000, it is a good idea not to buy a car for more than 20,000 ($20,000 x 0.20 down = $4,000). Afterwards, you can assess different financing offers to ensure you don’t spend more than 10% of your income on the car, and that your financing doesn’t stretch beyond the four-year mark.
3. Get approved for financing online
It is vital to get pre-approved for an auto loan before you actually go shopping for a vehicle. Getting pre-approved for a loan doesn’t mean you are obligated to take the financing offered. It just helps you stay within budget, and gives a bargaining chip in negotiations. There are several auto loan marketplace platforms, where you can fill out one online form, and potentially get offers from several auto lenders at once.
Of course, it depends on your creditworthiness as well. You generally need a high credit score to qualify for the best auto financing offers. If you don’t have a high credit score, you can still get pre-approved, but interest rates are likely to be higher. If you are outright denied for a pre-approved loan, you may need to consider shopping elsewhere or work towards increasing your credit score. Once you are qualified for pre-approval, the lender gives you a letter. Please make sure you have a copy of this letter when the time comes to negotiate price on the car you have chosen.
4. Choose the right source
Once you get to this point in the process, it is time to cast your net and see what cars are out there. Visit the dealership website for specific makes and models. If you are looking for one particular brand, your local dealership’s website should give you a clear idea. With more dealerships going virtual (some have become 100% virtual) you have access to a wide range of vehicles to pick and choose from. Check the vehicle make, model, year, specs, price, and other details properly. Just make sure you have chosen a reputable dealership.
5. Time to get quotes
Once you have narrowed down your search, the next step is to find out how much the vehicle will cost. Contact the dealership directly and ask for a quote for each vehicle you are interested in. It is necessary as the price might have changed from the time you looked at it. The vehicle may also have been sold, and the details not yet updated.
Email or call the dealership and ask for their online sales manager, as this is the person you work with through the negotiation process. Give them the VIN or stock number of the vehicle you are interested in and ask for a quote. Then, ask them to email it, so you have it in writing.
Even though this process seems straightforward, it can be tough to get a dealership to quote a price. However, if it is a reputed establishment, they won’t hesitate to give a price estimate for the make, model, and year. Do this for a few dealerships, so you can compare and contrast. If quote collecting isn’t your cup of tea, there are services that do this for a nominal fee. They give you a detailed description of what you are looking for, and provide multiple quotes. Collecting quotes give you the bargaining power, so you can negotiate prices.
6. Virtual test drives
If you aren’t happy with your choice, you may have wasted tens of thousands of dollars. Taking a car for a test drive is one of the crucial aspects of buying one. In fact, buying a car without first taking it for a spin seems like a really risky idea. But contactless buying lets you experience the same without ever stepping foot in the vehicle. As is evident from the name, a virtual test drive is when the car manufacturer or dealership gives a preview or virtual experience of what it is like to drive a particular vehicle, without actually driving it. Here are some kinds of test drives:
- Infomercials – The old standard for showing off a car, infomercials provide valuable information about cars. However, they aren’t really “test drives”.
- Virtual test drive apps – You get to download the app on your phone or laptop, and then take a virtual test drive.
- Virtual Reality (VR) headsets – VR is the most popular option. Audi has come up with VR headsets that let you experience a virtual test drive by letting you see the car inside and out. The “Enter Sandbox” campaign by Audi gives customers a real feel of the Q5 in a simulator and move virtually around a track they designed.
- Augmented reality (AR) – It can be achieved from any location. ŠKODA’s AR app, which uses AR tech, lets you place a car on the street and have a closer look with just phones and no specialist equipment. Moreover, it could be done from home, something which has become even more appealing in the wake of Covid-19.
VR can work outside a showroom, with particularly with cheaper and more easily obtainable headsets like Google Cardboard. However, the value of equipment needed for the full experience means you have to visit the dealership. Virtual experiences are bound to increase in the years to come. It lets customers experience more of the car, and interact less with a salesperson.
7. Go ahead and negotiate
There is no need to dread the negotiation process, if you know how to proceed systematically. Since you have already gone through all of the steps to be an informed consumer, negotiating your price will be a much smoother process. You have to negotiate the price of the vehicle, financing cost, and trade-in value.
8. Vehicle price
This is the most important part. You can (ideally you should) present offers received in the prior step. For instance, if someone has offered $15,000, show the emailed quote to another dealer and ask if they can lower it to $14,000. Remember to think carefully about add-ons and stick to the basic total numbers, not the monthly payment, and don’t get distracted.
Trade-in price
Chances are that you already have a car that you want to trade in to help defray your costs. Most dealerships accept trade-ins, but it comes with a warning. You probably get much less if you shop around for trade-in prices on your own. Websites like Kelley Blue Book help you find a fair trade-in price for your vehicle. It gives you an idea of how much your car is worth. Thus, you know that you will get at least that much in trade or in an outright purchase. You can leverage this factor while negotiating a new car deal.
Financing cost
The final piece of the puzzle is how you are going to pay for your new car. You have already taken the time to be pre-approved for an auto loan, so this step should be simple. Just show the dealer the pre-approval letter, and ask if they can beat it. If yes, then you are in luck. If not, then this is the best auto financing deal you are going to get.
Making the final purchase online
Once you have determined the lowest car price & financing price, and highest trade-in value, it is time to make a decision. Most dealerships still require you to physically come in and complete the final paperwork that involves signing on the dotted. But that is slowly changing. Savvy dealers have started digitizing as much of the paperwork as possible, so customers don’t have to step outside their homes, or perhaps, visit the dealership just once. It works better for them too – if they can get you in and out quicker, they can sell cars faster.
Getting the vehicle delivered
This option is available with several dealerships nowadays. After you make the payment, complete the paperwork, and finish all formalities, they will deliver the car right to your doorstep. It means you can easily avoid the hassle of visiting the dealership yet again, while the “contactless” aspect is still maintained. However, if the dealership you are making the purchase from, doesn’t have this option, you need to visit and pick up the vehicle by yourself.
How to buy car insurance remotely
Most states require you to have car insurance in order to drive legally. It means after you purchase the car remotely, you have to contact your insurance company to get your new car listed on the policy. There is usually a specific time frame, within which you have to get this done. If you don’t have a car insurance policy, you need to purchase one before you can pick up your car (or get it delivered). You can do this online, either through an insurance company or an independent broker.
Here are the steps to keep in mind, when buying car insurance remotely – take a look:
- Determine exactly how much car insurance coverage you require.
- Fill out an application for car insurance quotes.
- Get estimates, and compare quotes from different car insurance companies. This is important so you know that you are getting the best deal.
- Pick a credible car insurance company and get insured.
You can typically buy a car insurance policy in one day, so you can get your car insurance the same day you purchase a vehicle. In fact, you can get quotes and choose a policy, even before knowing the specific car you are buying. Once you decide, give the insurance company the rest of the vehicle information and get the policy started.
Can you register a car online?
There is no yes or no answer to this question. It really depends on where you live. Different countries and different states have different laws about how you can register your vehicle. However, registering all vehicles with your state’s Department of Motor Vehicles or an equivalent agency, is a must. You are legally required to do this, regardless of which country or state you live in. Some states also allow renewal of registration online, either bi-annually or annually. Other states let you to register your new car if you bought it in-state. Others might allow you to mail-in a registration form. It is important to check with your state DMV office or a similar agency before getting your new car.
The process of contactless buying hasn’t been perfected yet. As mentioned, you might have to visit the dealership to complete a portion of the paperwork. The virtual test drive technology is also not available everywhere – it could take some years for it run smoothly. However, some parts of the car buying process can be successfully conducted online, which is beneficial for both the dealership and customers.
