There are some subtle tips most people are not aware of when buying a new car. James C. Thomas, Jr., an expert on negotiation and author of the best-selling book Negotiate to Win, How to Get the Best Deal Every Time! [Harper Collins, 2006] offers the following tips.
Plan Ahead
When buying a car there are four basic steps buyers should take:
- Decide on the car they want.
- Find out the dealer cost. (Dealers of most domestic cars pay two to three percent less than the dealer invoice.) Buyers should look for the dealer cost on Internet sites such as Consumerreport.com, Edmunds.com and Chiltons.com.
- Commit to paying no more than a few hundred dollars more than dealer cost.
- Avoid dealer gimmicks to pay more (such as financing, trade-ins, packs and fees).
Before Going to the Dealer
- If trading in a car, find out what it's worth. Local classified ads are helpful and can be found on the Internet.
- Visit banks or credit unions to find the best deal on financing. If possible buyers should get pre-approved for a loan, but shouldn't sign any binding documents at that point.
- Try to purchase a car as close to the last day of the month as possible. Dealers are under pressure at the end of the month to reduce their inventory.
- Select a car from the inventory on the lot rather than ordering one from the factory. Buyers have more leverage this way.
Bargaining and Haggling
Buyers should tell the salesperson they're prepared to purchase a car immediately from the dealer who gives them the best price, that they need his best price now, and that they're comparison shopping with other dealerships. When showing the salesperson the calculation and what they're ready to pay (only a few hundred more than the dealer cost), they should prepare themselves for an indignant response from the salesperson.
When asked if they will be financing or trading in a car, buyers should say "Perhaps," but that they don't want to talk about these things until they've settled on a price. They shouldn't let the salesperson know they've already been shopping for a loan. If the salesperson refuses to give a firm offer, the buyer should tell him that he'll be out of the running. This same approach should be used with each dealer visited. Once the lowest price is revealed, the salesperson should be told that he's close but that there's a better quote elsewhere. (He shouldn't be told how much this is.) If the offer is acceptable, the buyer should say the deal will be closed if he gets free floor mats, oil changes or a full-sized spare tire. It's important to try to get a little something extra. Thomas calls this a "nibble."
Once the price is agreed upon, the salesperson will now try to sell undercoating, rust-proofing and fabric protection. Buyers should pass on all of these things. The factory has already applied them. If they want an alarm system, upgraded radio, tinted windows, (items that are not already included in the price) they can be purchased later from a specialist at a lower cost. The buyer will now be sent to the finance manager who will try to sell them a loan, extended warranty or an option to lease. A warranty or option to lease should not be considered. The buyer can take the loan if it's better than one they've already found.
The successful negotiator can now drive away happy, knowing that he's gotten the best deal on a car!
For more information on how to buy a car, visit: "The Halls of Haggling" at: Common Ground, Inc.
 |
