Will You Be Buying Your Next Car Online?

(MoneyWatch) From clothes to books to music, shoppers can buy almost anything on the Internet. Now General Motors wants to make it easy for you to shop for cars online as well.

(MoneyWatch) From clothes to books to music, shoppers can buy almost anything on the Internet. Now General Motors wants to make it easy for you to shop for cars online as well.

With the GM program, to be offered by year's end to all its 4,300 Chevrolet, Buick, GMC and Cadillac dealers, you could check inventory through a dealer's web site, negotiate the price and have the car delivered without ever setting foot in the dealer's showroom. Easy as that sounds, you still should negotiate hard for the best price and be wary of buying extra warranties, insurance or other add-ons you don't need.

As the biggest U.S. automaker, GM could be setting a trend. "If GM can make this work, it will have a ripple effect on other automakers," says Karl Brauer, senior analyst for Kelley Blue Book.

Known as Shop-Click-Drive, the GM initiative has been running as a pilot program with 100 dealers in eight states. When the program is fully operative, shoppers can go to shopclickdrive.com and choose one or more participating dealers. In addition to buying a new car, you also can arrange financing and get an estimate on the value of your trade-in, says Ryndee Carney, GM manager of cross-brand communications. She adds that individual dealers control the details of how this system works with their web sites.

GM has to route any transactions through its dealers because of state franchise laws that protect those dealerships; electric car company Tesla is attempting to sell directly online, arguing that the laws do not apply to its transactions because it never had any franchised dealers.

Even if you don't like going into car dealerships, you can still work online and with e-mail to seek out the best price rather than accepting the first price you are offered. "Shoppers are better served when they research transaction prices, confirm what the relative pricing range is for a car, then work with multiple dealers until they find one willing to sell them the vehicle in the lower end of that range," says Kelley Blue Book analyst Karl Brauer.

Even if you do plan to shop online for a new car, you should follow the same rules as if you were visiting dealerships:

  • Know your target price. Check online sources to determine the average selling price in your area for the car you want. Let's say you want to buy a 2014 Chevrolet Cruze LS with automatic transmission. You then check not only Kelley Blue Book's kbb.com web site but also competitors Edmunds.com and TrueCar.com. You will see that the list price is $19,180 but that a typical selling price including a $1,000 rebate is about $18,200. Aim to be at or below that level and make sure you are getting the rebate.
  • Get financing approved in advance. If you have approved auto financing from a bank or credit union, you are not dependent on dealer financing. Once you have agreed on the price, ask about the dealership's best loan deal. If that interest rate is lower than the one you have already approved, you can still switch.
  • Resist most add-ons. Just as if you were at the dealership, the salesman is likely to suggest by e-mail that you may want an extended warranty or credit life insurance that would not leave your loved ones to pay off the loan if something happened to you. Your new-car warranty will cover almost all repairs for at least three years. With General Motors, and the so-called powertrain warranty covering expensive engine and transmission problems is for five years or 100,000 miles, whichever comes first. So unless you plan to keep the car longer than that, pass on the extended warranty. If you think you need life insurance to cover the loan, you can probably get it more cheaply from your regular insurance agent.

As the auto industry moves to enable shopping online, the process should become more convenient. Just make sure that convenience isn't costing you.

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