This
section offers some exciting new negotiating tactics you
probably never dreamed of! Arm yourself with the power of
negotiation. We guarantee that you'll save money when you put
these tips into action!
The
absolute most important piece of information you can have in
order to GUARANTEE a fair car deal is knowing how much the
dealer paid for the car, by getting the dealer invoice. This
figure enables you to know how much profit the dealer is
actually making.
Decide
in advance the total amount you can afford to spend for the
vehicle, including tax, license and insurance. This will
prevent emotional buying (99% of buyers will buy on emotion,
the dealer counts on this fact). Once you decide which car you
want, begin your negotiation using the figures supplied from
above. (Remember the dealer must make a fair profit to stay in
business.)
Don't
be a monthly payment buyer, always negotiate the total price
of the car first, and be aware of what the monthly payments
should be by getting information from your bank or credit
union BEFORE you go to the dealer. If you feel the monthly
payments are too high, simply ask what interest rate is being
used, and if it is too high, ask for a better rate(remember,
interest rates are negotiable too!). All states allow the
dealers a markup in interest rates above your "BUY RATE"
(the amount which the lending institution "buys"
your financing) some states allow as much as 6% interest to be
added onto your loan! You must consider obtaining your own
financing or consider extending the length of the loan, but
remember the longer the term, the more interest you will pay.
Be aware of what interest rates are available from your bank
or credit union before you go to the dealership and if the
dealer is not competitive, obtain your own financing.
Know
what your trade in is worth before you begin negotiating. This
information can be obtained from your bank or credit union.
The dealer will usually go by wholesale "book"
value, since that is what they can buy the vehicles for on the
open market. If at all possible, sell your car yourself, since
you can usually get higher price than from the dealer.
Make
sure of the condition of the new car before you negotiate the
deal and if there is any thing that will be done after the
sale make sure you get it in writing. You should realize that
undercoatings, rust proofing, protection packages, paint
coatings, are profit bonanzas for the dealer.
As
prices have risen, more and more people are leasing their cars
and trucks since leasing enables you to maximize the amount of
vehicle you can afford, while minimizing the amount you must
pay. But these benefits require you to usually have better
credit than buying and have the disadvantage of being more
complicated and open to more pitfalls for the average buyer.
Prepare
yourself . . . Preparation is the key to Success
Once
you have a particular car in mind, it's time to do some
research. First, does the car have a "twin," a
similar model with a different name? For instance, if you're
interested in a Plymouth Voyager, the Dodge Caravan is very
similar. Having several comparable models in mind ensures more
opportunities for getting a great deal. Consult your insurance
agent about insurance costs for particular models and about
possible features that can reduce your insurance rates, such
as Anti-Lock Brakes and anti-theft systems. The difference
between insuring a sports car and a sedan may be large enough
to offset the loss of speed and glamour. If you are planning
on keeping the car for more than a few years, check its
reliability record.
Come
up with a budget of how much you can spend on your new car,
including monthly payments and a down payment. The more you
can put down at purchase, the lower your interest rates and
monthly payments will be. Many experts say that if you cannot
afford a down payment of 20% of the total price, the car is
too expensive for you. Whether you are buying or leasing,
knowing your spending limits will keep you from overspending
on a high-end model or extra luxury items.
Determine
the Dealer's Actual Cost
The
end of the month may be the best time to buy a car. Since all
salespeople have monthly quotas, they may be more willing to
accept a deal that results in a smaller profit. Make it clear
that you pricing several models at several dealerships, so you
will not be buying today.
Hate
to Negotiate?
If
you hate to negotiate and are willing to pay the MSRP. If you
have a trade-in, you may be able to save some money by
negotiatingover the price. But rest assured that you will
probably end up paying more than if you negotiate a deal at
another dealership.
Buying
direct from the factory is another way to avoid the dealership
experience and guarantee the exact vehicle you want. Few
foreign dealerships accept special orders, but most vehicles
made in the U.S. can be ordered directly from the factory. You
will have to wait several weeks for your car, but eliminating
finance charges to the dealer may save you money.
Negotiating
When
it comes time to negotiate, do not allow the dealer to
intimidate you. If you have a trade-in, negotiate after you've
agreed on the new car price or try selling it privately. If
you plan on financing your new car, wait until after you have
settled on a price. The plan here is to make sure you get the
best deal possible and allow the dealer a small profit,
somewhere in the neighborhood of 2.5% to 5% of the dealer
invoice. Keep in mind that supply and demand will affect just
how low the dealership will go. Negotiate your price up from
the actual dealer price already determined, not down from the
MSRP. If the salesperson disputes your numbers and shows you
their invoice cost for the car, ignore it. Remember, that does
not include the profit they will receive from factory
holdbacks and incentives, not to mention other sources of
profit, such as financing, and resale of your trade-in etc.
Your
strength is the information on the dealer's actual cost and
your ability to walk away at any time. Never give a deposit
before agreeing and signing on a price and ask that the keys
to your trade-in be returned to you before negotiations
resume. Stand firm and just walk away if necessary. Many
dealership tactics are designed to wear you down or keep you
from leaving, such as holding on to your keys, hiding your
trade or having salespeople continuously talk to you.
Negotiating
The Best Price
-
Always
negotiate the price before discussing financing, your
trade-in or your credit
report. The less they know, the better off you
are.
-
Let
the dealer make the first offer before you tell them that
you are aware of the dealer's invoice, the incentive or
rebate offered and the manufacturer holdback. The more you
know, the better negotiator you will be.
-
Make
an initial offer that is only $300- $400 over dealer's
invoice. Don't be pressured and wait for a counteroffer.
Negotiate until you have reached your price!
-
If
you feel your price will not be met, walk away. There are
plenty of dealerships and there is no reason to pay more
than a fair price, 2.5% to 5% over dealer invoice.
Hidden
Fees
Make
sure that you thoroughly read all contracts. These are their
costs of business. Check destination charges and documentation
fees, such as registration, tags, and title to make sure they
are not tacking additional money on the charges. Get a
detailed breakdown of each and every fee and compare that with
information you have gotten from your Department of Motor
Vehicles. Extended warranties may be a good idea if you plan
on owning the car for a long period, Never purchase
dealer-installed extras such as rust-proofing, detailing,
interior protection, vehicle maintenance packages etc. they
are overpriced, and can potentially void your warranty. In the
event that your dealer states that they have already performed
the work, simply explain to them to "unperform" the
work. Don't pay for anything that you haven't agreed to.
The
Finance Department
Careful!
All the savings you have accrued during the purchase of your
vehicle could disappear in the Business Office. Shop around
for interest rates at banks, credit unions, and relatives
before you make a decision. Almost always, the rates will be
lower than at the dealership- know them before you start
negotiating your new car. Some dealership finance companies
offer incentives which include a choice between a rebate and a
low interest rate deal. Low rate deals can save you money, but
the terms to qualify for these loans can be strict. Make sure
the dealer commits to your approval for the low rate before
you sign the papers. If you opt for the rebate, consider using
it directly against the price of the car.
How
to Handle Your Trade-In
Once
you've come to a mutually beneficial purchase price, negotiate
your trade-in (called "kick'n in the trade, dealers hate
this last minute suprise). Always treat your new car and
trade-in as two separate entities. Remeber to take your car to
several dealers with the thought of entertaining an outright
sale. Don't allow the dealership to attach conditions to your
trade-in. They don't affect the resale price of your trade-in
at the dealership, so why would it affect your selling price.
Take
Delivery
Make
a final inspection of the car. Remember, your new car will
someday be your used car. A successful purchase requires
successful preparation.
