Are you ready to dance a little? If you think of the negotiation process required to buy a car like a dance, you’ll find it much more tolerable and perhaps even enjoy it. It’s just two people who suggest and redirect. And remember – you have the advantage. There is a long tail of dealers who want to dance with you. If one of them is not a good dance partner and is not working with you to come up with a good price, feel free leave and find yourself an alternative dance partner.
Know your opponent / dance partner:
Dealerships try to average a specific amount of profit on each car they sell. There are People who pay too much and there are people who pay too little. With some preparation and education, you can belong to the second group.
The dealership pressure you to make all decisions in one day. They have been doing it for a long time. They have calculated all possibilities. So when they react, they act with experience. For you, it is probably unfamiliar territory so that when you react, could be acting with emotion. Dealers and salespeople know how to use this to their advantage. So delay the process, think things through from one day to another, and this could save you a lot of money.
Moreover, the more proactive you are and takes control, the better the results. Educate yourself. Understand how the car business works. Know the price the dealer paid for the car and arrange some alternative financing options.
Know all the options available in the car that interests you. Do you need or not? If you do not need it, do not let the seller sells it. Speak the technical language. Show that you are a person who knows what he is talking about and can avoid most of the stories invented to convince the buyers who do not know where they stand.
Knowledge is power. So go to the dealership full of knowledge and astonish the seller with how well prepared you are.
On the dance floor:
When you get to the dealership, know that you have options. First impressions are usually a very good indication of things to come. If you do not like the seller, why waste time? Feel free to leave at any time and enter another dealership. However, if there is a limited number of dealers in your area, you might want to wait until negotiations has reached a crossroads.
Keep a neutral outward attitude. Do not sell yourself. If you give the impression that gives you are willing to walk away anytime, the seller will work harder and be willing to give up more profit by selling the vehicle.
Avoid questions about financing. Even if you do not have the funds, tell them you’ll be paying in cash. This will force them to focus on the current price negotiation and not create a long-term strategy to increase profits.
Be prepared to discuss a little at first. The seller might try to tire you with an extended trading session. Do not give up. Stay strong and save money. Please note that an extra hour of persistence could save you several hundred dollars.
Watch for the strategy to play the good and the bad. The seller will tell you really want to give you the price you are asking but he will have to ask the manager. Perhaps you feel that the seller is on your side at that time. Just remember who is signing the check. You are against them.
Here’s another power strategy. Ask to see the invoice. If they are obstinate to not show the invoice, there is a reason. You are probably offering a bad deal.
Search for the car that interests you towards the end of the month. There are many programs, bonuses and rebates based on monthly sales quotas. If a seller or a dealer is not meeting the goals at the end of the month, you might find that they are more willing to sell at the lowest price to achieve their quota.
There are some dealerships that do not negotiate. If you oppose the dance of negotiation, go to those dealerships. The concessionaire is still getting the same average profit on each car, however there is no way for to take advantage.
Let’s talk price:
Before talking about the price, there are some terms you should recognize:
This is the amount the dealer paid the manufacturer before any rebates or incentives. Do some research regarding this issue. If you can determine what the dealer paid for the car, you know what profits for each vehicle are. Then you are ready to reach a compromise between letting the dealer make a living and make a good deal for yourself. Internet is an excellent source for this information. Use it to decide on a price you are willing to pay. Print the invoice price when you find it and take it to the dealership as a reference.
MSRP – Manufacturer’s Suggested Retail Price, or Manufacturer’s Suggested Retail Price.
Also it called “sticker price” and is the number on the car window. Do not pay this price! It is simply a starting point for negotiations. If the model you are interested is in great demand, you probably cannot get much lower than this price.
Manufacturers sometimes offer additional money to dealers, bonuses and rebates with excess inventory. Find out if the car you are interested in buying has incentives. Then subtract that amount from the price you are willing to pay.
Retention (Holdback, in English):
The manufacturer regularly gives money to the dealership in order to reduce fixed costs – the cost of operating a dealership. It is often 2% to 3% of the price. This information may not be very useful in negotiations, but if it comes up in conversation, be familiar with what it is.
The sales tax is the same tax that is charged on everything from candy to umbrellas. However, do not try to visit a different county to avoid a tax on higher sales. The charge is based on the county in which you live and not where you buy the car. This cost, of course, is not negotiable.
Now comes the big question. How much should you pay? Remember, this is a dance, not an exact science. So definitely there is no right or wrong answer. Offer something around $ 200 more than the invoice price minus any dealer incentives. You probably will not get the car for so little money, nevertheless this indicates that they know the playing field (or dance floor) and is willing to negotiate.
Attention to the added costs:
The dealer will probably offer all kinds of added cost after the price is negotiated. The dealer makes money in almost every one of them. You may find that the added costs are included as if you had no other choice. But if it does. Feel free to reject them all.
• Destination Charges – Some manufacturers charge separately for sending the vehicle to the dealer. There is no way you can avoid this cost. But check the sticker to make sure it has not already been included in the price.
• License and Registration Fees – These are necessary, but call the Department of Motor Vehicles in your state to ensure that the licensee has not increased this price.
• Extended Warranties – Also known as service contracts. Simply buy a car with a good service history and it should not be necessary to buy an extended warranty.
• Dealer Preparation – Part of a dealership responsibilities is to prepare the car for you. Do not pay twice for this.
• Credit Insurance – This insurance will pay the car loan if you pass away. As long as you have life insurance policy, this is also unnecessary.
There are also many other fees that could be added. Ask directly for explanation of each one. If it seems unnecessary, it probably is, and you should refuse to pay.
When it seems as if a compromise in price is inevitable, ask for more. Ask to include the carpets for example. Ask for any additional items you like in the car. They will not offer it if you do not ask. So what can you lose?
The final steps:
Now that the price has been negotiated. Don’t let your guard down.
Before you sign anything, make sure the amount you have agreed on matches what you decided you can afford. Be sure to include funding. In addition, calculate the number of miles you drive for a month, divide it by the estimates mpg car that you are about to buy. Then multiply this value to the price of a gallon of gasoline. Include that amount in your monthly payment.
The dealer will pressure you to take the car home that night. Do not do it. Give yourself a day to think things through. Call your insurance agent and get a quote for the car you are about to buy. Then add insurance to the monthly payment and the monthly cost of gasoline, to ensure that is still affordable within your budget. If you are close, you can make some changes to your budget and cut some expenses. But be realistic.
And if you cannot afford it. Do not make any exception. You will damage your financial future if you cannot afford the monthly obligation. Perhaps you’ve spent some time in the negotiation process, but do not feel bad. Think of it as an experience for the next round.