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12 Tips for Negotiating at a Car Dealership
By Eric C. Evarts | January Five, 2017
How to Get the Best Deal at the Car Dealership
Consumers hate little more than shopping at a car dealership – except maybe going to the dentist.
Car salespeople are well known for hiding numbers inwards the pockets of their plaid sport decorates, for not providing straight answers while stringing customers along for hours, and for permanently disappearing to visit a «higher authority» before returning with a higher price.
That`s all before you ultimately agree on a price and are shuffled off to the finance manager to see the dealership`s profits fatten as they add credit protection, disability protection, mark up the interest rate, and tack on window etching.
The problem is that dealers have the upper palm. They know how much the dealership paid for the car, and what they can afford to sell it for. You never will. The salesperson also sells cars day-in and day-out, often numerous times a day. If you buy a fresh car every five years, you cannot hope to keep up with the latest sales tactics.
It doesn`t have to be this way. Go after these twelve ordinary steps, and you can get the best possible deal on your fresh vehicle. It takes courage and persistence, so don`t give up, but you can drive home in the fresh car of your desires for a remarkably reasonable price.
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Time Your Purchase
Just like salespeople everywhere, car dealers work for incentives, whether it`s a golf outing, a Florida vacation, or a cash bonus check.
The last is where you can benefit. Like every other sales organization, bonuses are awarded based on sales at the end of every month, quarter, and year. So the closer you can time your purchase to the end of those time periods, the more likely the dealership is to cut you in on a chunk of the act to bump their sales total to the next level.
If a dealership is very near the threshold of the next stair-step of their incentive program in sales, they may even be willing to sell you a car at a loss, because that extra sales incentive will more than make up for the difference.
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Know What It`s Worth
Knowing what a car is worth won`t tell you exactly how much a dealer will sell it to you for, but it`s a helpful place to commence negotiations. Without it, you`re flying blind when the time comes to make an suggest.
The best way to find the real value of most cars today is to visit TrueCar.com, which aggregates the sales of thousands of dealers across the country and shows what local dealers near you have sold almost identical cars for recently.
TrueCar doesn`t have accurate values for a few models, including many Hondas and Acuras, as well as niche vehicles. Another good implement is the U.S. News & World Report Best Price Program. Shoppers typically save thousands by using the device for their fresh car purchase.
Reminisce to suggest a little less than others have paid for the car, or you won`t have room to negotiate later.
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Look for Unique Discounts
No matter who you are, you can most likely find a sales incentive tailored for you, from students, to military veterans, to AAA members. Some automakers suggest loyalty cash to faithful owners, and others conquest cash to owners of other brands. These should come off the bottom line of any deal you can negotiate otherwise.
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Talk to Your Banker
Car dealerships, big and puny, suggest their own financing, and it can be a good deal. Like everything in the car sales process, tho’, you can`t afford to take it at face value.
Dealerships also get a sales commission from their bank for every customer they send their way – usually a two to three percentage point increase in the interest rate. So, if the dealer offers you an interest rate of five percent (assuming you have good credit), the bank is likely only getting two to three percent interest.
When you bring your own financing to the table, a dealer may be more interested in selling you the car, because the deal is no longer dependent on financing. It also gives the dealer an incentive to find the best possible rate to strike your bank (tho’ truly, they already have every incentive). And if the dealer can`t hit your bank`s rate, it gives you something to fall back on.
One word of caution, however: Since dealers count on the profits from providing financing, they may be able to suggest a thicker discount on the car if you finance through them.
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Treating Your Trade-In
If you have an old car you`re substituting, it`s usually more beneficial to trade it in than to attempt to sell it yourself, because any extra price you get will be offset by the sales-tax advantages in trading your car in. In most states, you`ll only pay sales tax on the difference inbetween the cost of your fresh car and the trade in value of your old one. Advertising fees and the hassle of setting up appointments for people to look at the car will eat up anything that`s left, and more.
Albeit you can look up the value of your trade-in at almost any automotive site, the only way to find out what it`s worth to individual dealers in your area is to shop it around. Shine it up to look its best and visit a few used-car sales managers to ask what they`d buy it for. At the very least, this gives you a baseline to compare to your dealership`s final suggest. At best, it can inform where you shop for your fresh car.
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Let Your Fingers Do the Walking
We can`t stress this step enough. You have absolutely no way to tell how big a discount any dealer will give you on the fresh car you want, mainly because you don`t know how close they are to their next level of incentives. The only way to find out their bottom line is to play dealers off of each other by shopping around. Tell the dealer you have a lower suggest somewhere else. (Be truthful; have the lower suggest in palm before you ask.) If he says, «Take it,» take it. That dealer has reached his bottom line.
Instead of schlepping from dealership to dealership, the quickest way to find the lowest bid is by using the internet. Contact several dealers either directly through their own websites, or you can use our Best Price Program to find the lowest prices in your area. That can be your beginning point. Then contact the 2nd and third lowest bidders, by phone or in person, and ask them to strike the low suggest. If they won`t, you already have your price.
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Concentrate on the Long Term
It`s very tempting to let the dealer talk you into lower monthly payments, but this can be a trap. Dealers are adept at reducing payments by extending your loan term to six, seven, or even eight years, or by converting your loan to a lease. This can leave you owing more than your car is worth for years, even if your life switches or you get into an accident. Instead, concentrate on the price of the car, the price of your trade in, and the total cost of the loan.
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Take a Hike
If a dealer isn`t meeting your terms, don`t hesitate to walk out. Be polite but rock-hard in your bottom line and tell the dealer that if he can`t sell you the car for an out-the-door price you can afford, you`ll take your business elsewhere. But be ready to make good on that promise.
If the dealer can get any closer to your terms, rest assured, he`ll call you back. It also doesn`t hurt to leave after lodging on a price to go home and think about it. Get any dealer`s price in writing, and ask how long he`ll honor it. Then go home and make sure you`re convenient before going back.
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Just Say No
Once you lodge on the outline of a deal – the price of your fresh car, the finance terms, and the trade-in value, you`ll be shuffled off to the finance and insurance office in the back. Here, the manager will attempt to pad the dealership`s profits by selling you a host of add-on products – everything from top-to-bottom sealant, inwards and out, to financial products such as credit life insurance and disability insurance. The thickest one is an extended warranty (even on a fresh car). You don`t need any of them.
You very likely already have insurance to cover disability, and you don`t plan to default. The paint, fabric, window, and undercarriage sealant you can buy yourself for less, and fresh cars today include very good rust protection (and long corrosion warranties) from the factory. Just say no.
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Window Etching
The one exception to the «just say no» rule may be window etching, which is when dealers etch the car`s vehicle identification number (VIN) into every chunk of glass on the car, so it can be identified if the car is latter stolen and stripped. A lot of dealers add this to every car they receive on their lot before you even display up. They even pre-print the $200 cost (and sometimes more) onto every contract.
Since you didn`t ask for it, you can request the charge be dropped, and most dealers will serve. But if your car were to be stolen and stripped, it`s often hard to trace, and window etching may be the best defense – albeit a somewhat feeble one.
You could also do your own window etching with a elementary kit that costs about $25.
