Negotiate the best deal on a new car.
This is the point in time when your stress level will rise.
Emotion… Your biggest Car Buying Weakness!
You had a lot of fun test driving cars and looking at different models and you are on an emotional high because you found the car you want. It is this emotional high that the car salesperson preys on.
You really want the car and he says he wants to get you a great deal.
Even the best negotiators will be taken if they allow their emotions to get the best of them.
Stick to the Car Buying Blueprint
Relax, keep a straight poker face and let the salesperson know that you like the car but it must be a deal that is acceptable to you. If you followed the blueprint you should already have all the information you need to negotiate a good deal.
If you switched to a different vehicle while at the dealership, stop the process, go online and start over with the research. Car Dealers love to switch cars knowing you are not armed with the info you need to negotiate from strength.
Car Salespeople are Professional Negotiators.
Keep in mind that car dealers are professional negotiators.
They do it hundreds of times a day and you will never beat them at their game.
The entire time they have been with you, they are sizing you up. Are you strictly a payment buyer? Are you big on getting top dollar for your trade in? Is the sales price the most important part of the deal? Do you want a very low or no down payment?
Once he knows your weakness he will zero in on that and keep you off the other aspects of the deal.
Don’t be a monthly payment buyer.
The car dealers love these people. They will do everything in their power to get you the payment you want and will screw you every place else.
One of the first questions a salesperson will ask is what payment are you trying to stay around. People automatically answer with a payment.
Your answer should be: ” The payment is not really a factor, I am more interested in the best price on this car.”
Focus on the price of the car only! Once you get the price right the monthly payment will fall into place. If you cannot get the payment low enough at that point, you are buying too much car and need to scale down.
Here are the 4 areas the Car Dealer will focus on during the negotiating process:
- Monthly Payment (interest rate and length of loan)
- Trade In
- Down Payment
- Price of car
A seasoned car salesperson will focus on one or two of the above items and ignore the others.
Confuse and Conquer!
Car buyers that do not do their research will often play victim to the shell game dealers will play when negotiating.
Although getting the lowest price on a new car is your ultimate goal, there are too many moving pieces in the deal to confuse you and make you let down your guard.
Getting the lowest price on the car is meaningless if they steal your trade, or jack up the interest and extend your loan.
Focusing on one part of the deal is how they get you to let down your guard and also ignore the other important items. You must focus on all four of the items listed above and make sure each one is where you need it to be.
“If I can get you this monthly payment will you buy this car today?”
Your answer, “If you can sell me the car at the lowest price, at the lowest interest rate, for the least amount of months, and give me a reasonable price for my trade in, yes!”
Many car shoppers think they are getting the payment they want, and after they sign and drive home they realize they just signed a 6 year loan, at sticker price, and got screwed on their trade in. But they got the payment they wanted. It happens everyday.
They will try to wear you down. At some point in the negotiation process they will bring in another person to work on you. This may be a manager, a closer, or just another salesperson.
Stick to your guns and if you are feeling worn out and getting nowhere, simply get up, and tell them this is taking too long, I’m tired and I’m going home.
Call me when you are ready to do this deal. Start walking and if they don’t change their attitude leave.
Call another dealer and tell him on the phone what you want and you already have the numbers for a fast and easy deal. Very few dealers will ever let you just leave, but if you don’t change their attitude, they will keep hammering you.
Start with your Trade In Value.
Tell them that before you start negotiating you want a firm price for your trade in. Get it signed in writing.
Some car buying experts will tell you to not mention your trade until after you negotiate a price on your new car. But the salesperson will ask you if you have a trade in.
We always complain about salespeople that lie. Don’t lie about anything, tell them yes I have a trade in and I would like to get a offer on it before we move forward.
Be realistic, you are not going to get retail for your trade, so get what you consider a fair price based on the print outs you have with you.
Once you have agreed on a fair price for your trade you will now be ready to negotiate the sales price of the car.
They will try to move you to a payment right away and ignore the sale price. Stay focused and tell him you want a firm price on the car before we talk payment.
You will work from invoice down not up (don’t fall for that $500 over invoice line), add any rebates available, and ask if the dealer has any rebates. You should already have the invoice prices in your notes and should present them to the salesperson to let him know where you stand.
Tell him you would like to be no higher than invoice and lower if possible. If you have a rebate this should be deducted from the invoice price also.
Do not start moving up from invoice and be prepared to get up and walk if he won’t work with you.
Invoice price is not the price the dealer paid for the car!
Don’t believe any salesperson that tells you that. Some will try to sell it at $500 over invoice and tell you they’re only making $500 on the car. That is a lie.
They may also add a lot of fees to the invoice to pad it. If you are a hard core negotiator you can work them down from invoice by removing all the extra fees tacked on.
Look for special sales promotion fund, advertising fees, dealer prep fees. If it doesn’t look real it probably isn’t.
One trick we found in Arizona is called a “Desert protection package” for $700. What the heck is a “desert protection package“?
Tell them to take it off. The destination charge is real, and you will have to pay for that.
Do not work numbers from the MSRP (window sticker)
Any rebates should be subtracted from the invoice price not the sticker price. If you have a invoice of $20,000 and a $2500 rebate you should at $17,500. Be careful here it can get confusing.
Do not let a salesperson tell you the rebate is subtracted from the sticker, another lie.
If you are buying car near the end of a model year, many factories give the dealer, “Factory to Dealer Incentives” to allow the dealer to lower the price to sell it faster. Many dealers do not pass these discounts on to you.
The down payment may be your trade in or any cash you are comfortable putting down. The best deal you can make is about 20% of the sales price. Make sure all the down payment money is in the contract and subtracted from the sales price.
The monthly payment is where you can really get screwed.
If you have read the material in this site you should already know what your credit score is and if you have not already secured a loan from an online lender or at least you should know what the current interest rates are.
That is why payment is the last part of your negotiating process. At this point you will let them know you already have your credit report, FICO score, and outside financing, but I will give your finance people one opportunity to get me a better rate for the same amount of months.
If you don’t have outside financing then let them know what the going rates are based on your credit score and you won’t accept anything higher.
DO NOT sign a buyers agreement with “Subject To Financing” in it or you will get a call several days later that the lender fell through but we have another lender at a higher rate or a longer loan term.
The bottom line about negotiating a fair deal on a car.
The process of buying a car used to be a long, all day, drawn out process designed to wear you down and get you to settle for what you felt was a good deal.
If you are prepared with your paperwork in hand and already know all of the information you need to know, the process should only take a few hours and if they won’t accept your information, leave.
Don’t play games, you have the right to get up and leave anytime you are not comfortable with the process.
Do not ever get emotional about a car or you will lose your focus and they will get you.
Car Dealers deserve to earn a profit but you should not give away your hard earned money in excess profit. No car dealer in the world is going to lose money on a deal, if they are losing money they will simply not sell you the car.