Recently my wife and I have been working on buying a new car (used car, but new for us.) We would prefer to be in a position where we could pay for the whole thing upfront, but we aren’t quite there yet. However, with our schedules, the bus will no longer wok, so we are buying another car.

For our new car, we decided to go to Saturn because they have the “no haggle” pricing and my wife really likes Saturns. I didn’t really care what we got as long as it had a/c and was comfortable and dependable. The no haggling appealed to me because I’m not the most savvy negotiator and I find the bartering exhausting. Also, I somewhat (emphasis on “somewhat) believe in an efficient market. That means that they would then set the price at what the market is willing to bear. This likely means that I’m not scoring a great deal, but I choose to apply my time towards other things.

Overall the dealership was pretty good. We found a car that fit (one of the cheapest on the lot) and so we began the process of “shopping around” for the best rate on the lone. We were even able to take the car home while we thought about it under the assumption that we would get a rate that was between 6.5-7.5 percent. Unfortunately, when I called the dealership the next day I found that the rate offered to up was 8.5 percent. I’ve seen worse, and I realize that this isn’t a billion dollar car, but I wanted something around 6.5. And I’m the customer! After asking a few more questions, I found that their “shopping around” for the best rate simply included approaching two credit unions and taking the first one that approved the deal. That lost my faith that they would try to get me what was in my best interest from these third parties. So, I did a little work on my own and within 12 hours I was able to find a loan at 6.5.

This experience reminded me of the importance of competition. Initially I was in a weak position with the 8.5 percent being my only option. However, by gaining a few more options, I was able to greatly reduce the rate. Of course, this would stink if I was the lender competing for my business. I have adapted a rule of thumb, you could say. I always try to have three options. If you have fewer, you could get stiffed. if you have more, then your waisting your time looking.

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