Focus On The Overall Cost Not Your Monthly Payment
Many people go to the dealer with only two numbers in mind: down payment and monthly payment. Here are two more you should know: total cost of the car and annual percentage rate . This means doing a little more legwork before you go car shopping, but it could save you a lot of money. Heres how:
If the salesperson tries to steer you back to monthly payment only, firmly ask for the cars total price and their best APR offer. A low monthly payment can still disguise a long loan term, add-ons and more.
Tips For Negotiating With Car Dealers
28 Tips for Negotiating With Car Dealers
Getting a new car is exciting. Buying one, on the other hand, is stressful, time-consuming, overwhelming and riddled with ways to lose money.
When youre considering getting into a new set of wheels but youre not sure what to expect or how to handle yourself, consider the following tips before you walk into your first dealership.
If A Car Salesman Complains Ignore It
Complaints from a car salesman should fall on deaf ears. Jason, over at VeriZongo, outlines several arguments that car salesman make that are completely ridiculous. For example, some may suggest that they can’t make any money with the price you’re asking for and it would be unfair to ask them to work for free. Here’s Jason’s suggested response:
No one would work for free. The dealership pays you minimum wage and although its usually a draw that you pay back, you NEVER work for free. What they omit is that no matter what they sell the car for, there is always a FLAT FEE that they will get either way. So no, I would not work for free, and neither do you. When they use this tactic offer to call the labor board on their behalf, because you think its terrible that they’re not getting paid! This almost always shuts them up.
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Negotiating With Private Sellers
Buying a used vehicle from a private seller may be an option if you plan to pay cash. But consider how much a private seller is likely to charge for a vehicle versus a dealership.
Depending on the seller, it’s possible that you may be able to negotiate them down on the price if they have a fairly urgent need to sell. On the other hand, if a seller claims there’s no pressing reason for the sale, other than wanting to get rid of the car, you may have a tougher time talking them down.
In terms of where to set your negotiation starting point, it may be helpful to choose a set dollar amount that represents the absolute maximum you’re willing to pay. Then you can set your starting price below that amount so you have room to work your way up.
For example, say you only have $5,000 to spend on a used car. You come across a great car that’s priced at $5,500, which is just out of your price range. If the seller gives you an opportunity to make an offer, you could start at $4,500. From there, you and the seller can continue bargaining until you reach the $5,000 mark that you’re comfortable paying.
How To Negotiate The Best Price On A Used Car
Knowledge is your best resource for getting the best deal. Knowing what other cars like the one you are bargaining over sell for is key to talking down a price. But what else? Here’s where your bargaining skills come into play. Simply accepting the dealers sticker price as the lowest price possible is a good way to give yourself a case of buyer’s remorse. Unlike a new car, which may have never been driven past the dealer’s lot, a used car has been on the road and as a result, it has already lost some of its value.
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Be Mindful Of Your Emotions
Good salespeople are skilled at reading customersâ emotions and examining their body language to determine if theyâre going to buy an item. But aggressive salespeople can use this skill to manipulate customers into buying something they donât really want.
Depending on the product theyâre trying to sell, salespeople for insurance plans or gym memberships may try to persuade you by capitalizing on your fears about death, money, health, or vanity. When youâre speaking with a salesperson, pay close attention to your emotions and listen to your gut. Watch out for salespeople who sound phony when they make small talk, reveal too much personal information , or make you feel guilty about not buying a product.
How Much Can You Reasonably Expect To Save
It is not unreasonable to save a few thousand dollars from good negotiations. Of course, you are very unlikely to get the dealer to go below the wholesale price. If you do your research, stay calm, and remain reasonable, youre likely to reach a figure that is respectable. With a little work and patience, you can be confident you can save some moneyand walk away with a great vehicle in the process.
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Price Shop With Multiple Dealers
Once youre ready to start negotiating the cars price, remember that new cars are a commodity. You may be able to find the same new car at your local dealership or at other dealerships within a few hours drive of your home.
Use this to your advantage by getting quotes from several dealers even those outside your immediate area. Then, use those quotes to get the dealerships to compete with each other with counteroffers to get the lowest price possible.
Dont Be Afraid To Ask For A Salesperson Swap
Buying a car can be a very personal and intimate experience, and if your salesperson makes you uneasy or if you feel like youre being pressured, its OK to ask for a pinch hitter. Edmunds calls it test driving your salesperson. Just ask to speak to a sales manager, politely ask for a different representative, and your request will almost certainly be granted with no hard feelings.
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Know The Value Of Extras
Coverage like a Vehicle Service Contract or GAP Waiver can protect your car and your pocketbook. Buy your protection products outside the dealership for the highest quality, maximum flexibility, and lowest pricing. And dont waste money on products like fabric protection or VIN etchinga can of stain repellent and a $30 DIY etching kit work just as well, and dont cost hundreds of dollars. Sonia Steinway, President, Outside Financial. By the way, here are some ways youre completely wasting money on your car.
What Did They Quote You
Answer: Id prefer to know the best you can do upfront. Im not going to share your quote with another dealership so they can beat you by ten dollars. Im sure you can appreciate that.
Never show your cards. Never tell the dealerships what prices you have been quoted until you have picked a car you want to make a deal on.
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What Color Do You Prefer
Answer: I dont have a preference.
This is definitely a what not to say to a car salesman No No sharing your color preference up front. Even if you know you must have pearl white, dont say that. If they know you want the exact vehicle they have in stock and they are the only dealership that has it they have the upper hand. Thats why before you ever enter a dealership you should know what vehicle you want to see. Try telling the salesperson it isnt the exact color you want but if the deal is right, youd consider it. Or when you get further into negotiations, XXX dealership has the exact color and vehicle I want but I wanted to see if you would beat the deal they quoted me.
Treat Every Customer Equally
A good car salesperson should never judge a book by its cover. This car sales tip may seem insignificant, but snap judgments can lose potential sales.
Never make assumptions about income, decision-making clout or willingness to invest based on appearances.
If someone comes to the dealership with their partner and you assume one makes more money and will have more say in the decision, youll treat them differently. Similarly, deciding up front that someone who comes in wearing a suit is more willing to invest in a new car than someone who comes in dressed more casually will impact your interaction.
When you dont treat people as respected, viable buyers, theyll likely take their business elsewhere. Instead, treat everyone as a top-priority customer. If partners are buying a car together, make them both feel like a valued part of the purchasing process by making eye contact, asking them the same questions and showing equal attention.
Create a positive car buying experience by treating every potential customer, regardless of appearance or dress, with the respect you owe a serious prospect.
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What To Do In Advance
Be aware
Since 1 October 2014 car tax is no longer transferable so you must tax your new car before you drive it.
- Make sure you know the cars list price. Look at the manufacturers website, or car websites such as Parkers or What Car? Or check the new car listings at the back of weekly motoring magazines such as Auto Express
- Know the car features that are most important to you. Dont get talked into a lower specification because its cheaper instead, aim to get the model you really want at a discount.
- Check online for rival dealers to see if any of them have better prices or extras on the same car. This can be a good bargaining tool.
- If youre part-exchanging your current car, make sure you know what its worth. The more you can get for it, the less hard youll have to haggle on the rest of your deal. You can get a free valuation quickly and easily on sites such as ParkersOpens in a new window or a more detailed valuation if you pay a fee.
- Always test drive the car. Remember to try it up hills, in traffic and out on the open road. If possible, compare it with lower and higher specifications of the same car.
- Are you looking to shop around for a car? You may want to consider Which?Opens in a new window or The Car ExpertOpens in a new window
The Cheapest Deal Isnt Always The Best Deal
If your usual dealership has a nice vibe when you walk in, and all the staff pass you by and say hello or acknowledge your presence, the chances are you are on to a winner. People only buy from people at the end of the day and in almost every circumstance, you only really get what you pay for.
Therefore, if you are happy with the way the deal is progressing, then does it matter if the dealer in the next town is £1,000 cheaper yet much more stressful to deal with? So long as you are pleased with things then your deal was the right deal, wasnt it?
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Be Friendly And Positive
When you meet a potential buyer, make eye contact and offer a firm handshake. Let people know youre happy to meet them and want to help.
Be sincere. If youre fake happy or phony, people know it. Be enthusiastic that you have a customer who wants to buy a car.
Never make negative comments about competitors. If a shopper says bad things about another dealership, dont pile on. Listen with care to see if you can resolve any of the issues.
Be friendly and positive with your coworkers, too. Everyone knows someone who buys cars. Befriend people in every department at the dealership. The sales staff, technicians, service writers, and office staff are all part of the same team.
A happy workplace atmosphere reflects well on the dealership.
Dont Negotiate Based On Msrp
According to CNN, salespeople are trained to negotiate down based on the cars MSRP, which is what theyd like to get for the vehicle. Instead, negotiate up based on the cars invoice price, which is what the dealer paid for the car. Generally, 2% above the invoice price is a fair deal for both parties.
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Extras You Dont Really Need
After you think youve done the deal, the salesman will walk you down the hall to meet with the F& I Manager. F& I stands for finance and insurance, and this is the person who helps you complete all the paperwork that goes along with buying a vehicle. Dont be fooled. The F& I Manager is one of the best salespeople in the building.
What they will also do is try to sell you a whole bunch of things you dont need. Glass protection, tire protection, rustproofing, and so on. They argue, Youve spent a bunch of money on this vehicle. Shouldnt you spend a little extra to protect it properly? Just say no. You can typically pick up anything theyre trying to sell you at a fraction of the cost elsewhere.
The Ben Franklin Close
This one is a classic. Heres how it works: The salesperson draws a line down the middle of a piece of paper, listing reasons to buy the car on one side and reasons not to buy on the other side. This is a very common sales gimmick in the auto industry and elsewhere.
The idea is that you will see that, on balance, you would be better off buying a new car, Burdge says. Of course, that actually depends on what they write down and how truthful it is in the first place.
You want to maintain your focus on the numbers you care about during this tactic including your monthly payment, your down payment, the length of your loan, your interest rate and the overall cost of your loan. Know what those numbers should be, according to your budget, before you go into the dealership, and make sure you stick to those numbers, Burdge says.
Your strategy: The best way to defuse this tactic is to name it. Say, Thats the Ben Franklin close. Doing so will likely create an awkward moment with the salesperson, but it will also prevent the tactic from continuing.
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I Like This Car But I Dont Love It
Car salespeople know that youre more likely to buy a car if you love it. Really, really love it. When you utter a phrase such as I like this car. But I dont love it, youre telling the salesman that they need to offer you more to make you commit to a vehicle that youre fine with but not crazy about. This phrase by you will likely be followed by phrases from the salesman such as What would make you love it? and How about I throw in a year-long subscription to satellite radio? or Let me see what I can do on the cost of an extended warranty. By seeming less interested in the car, you put pressure on the salesman to sweeten the offer and convince you to buy the car youre looking at. Never seem too enthusiastic about a particular vehicle. Play it cool and you will be rewarded with upgrades, additional options and a better price.
Dont Fall For Artificial Deadlines
To try to close a deal, aggressive salespeople often put time pressure on a customer. By giving customers made-up deadlines, salespeople exploit impulse buyers and appeal to customersâ fear of missing out on a good deal. To be sure, some stores run legitimate limited-time sales that put true deadlines on customers. Generally, though, if a salesperson tells you that you must buy an item now, and says that youâre not allowed to take time to think about it or do more research, consider that a red flag.
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Never Turn Over Your License Or Keys
Although its rarer now than in years past, according to CNN, some dealers still resort to tactics designed to keep prospective buyers in the showroom until a deal is done. One of them is to ask for your license and/or keys as security during a test drive. If you return and decide not to buy, however, you might find that your collateral is in a managers office, in a secure room or somewhere else that keeps you in the showroom while the dealer makes a final pitch. Thanks to the rise of online reviews, however, these tactics have mostly been weeded out.
Now You Can Talk Trade
Only after you agree on a price for the new car should you turn your attention to the trade-in. If you shopped it around to other dealerships, you also know what you can easily get for it. Armed with this information, theres no reason a dealership shouldnt give you at least its wholesale value as a trade-in allowance.
Tell the salesperson that you simply want what you know its worth. Provide the figures to back this up, along with printouts from several pricing sources. This defuses any attempt to pull out a used-car pricing book so the salesperson can prove that your figures are too high.
To lowball you on the trade-in, the salesperson may again try to stall the negotiations and wear you down with frequent visits to the sales manager. Minimize this by indicating up front that the new-car deal isnt final unless you get a good allowance on your trade-in.
Remember, if the trade-in discussions become too burdensome but youre not willing to pull out of the new-car deal, you can always sell the car elsewhere. But if youre dependent on the trade-in to make the down payment, youll have to sell your car before you can sign a contract for the new one.
Jon Linkov
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