We have all purchased a car at some point in our lives, and in most cases from a dealer local to us but did you get a good deal?
I am going to take you inside the mind of a car dealer and what the tricks are to getting the best deal on your next car. Keep in mind that figures portrayed will vary based on the dealer but the concept is the same no matter where you buy. There are 4 elements to cover here that you must understand in order to be able to win and we are going to cover them. They are: Acquisition, Research, Negotiations and Financing…
Lets get right into it then…
Acquisition: The way the dealer attained the car is most important as it gives a great idea as to the cost of the acquisition. There are three ways a dealer attains cars: auction, a trade-in or on consignment. The auction is the most popular place a dealer will get its cars from, which also means that they will come from just about anywhere in the US and will be acquired very cheap for the most part, as auction cars are usually cars that have not sold at other dealers nationwide and now are being auctioned to not take a loss, as in bottom dollars for the selling dealer. The second method are trade-ins which are also acquired fairly cheap, as dealers will try to buy cars from customers as cheap as possible and as close to auction prices as possible. We all know from our last attempt at trading in our cars that the dealer never gives you a price close to your expectations. The final method is the consignment which is when a seller asks the dealer to sell their car for them, and so the dealer will sell the car at a mid point between trade in and retail value. Most high end exotics or specialty cars are sold this way.
Research: Doing the research on your new car is key to buying it cheap. There are many resources you can use to check the pricing market and Kelly Blue Book is NOT one of them. KBB (Kelly Blue Book) has not been accurate for some time now and many dealers simply no longer use it. There are many ways to price the market for your car, be sure to check Autotrader.com, Cars.com and Ebaymotors.com. Be sure to look for similar cars within 100-200 miles of your zip code and see what dealers are asking for on similar cars. Be sure to check apples to apples by looking at color, mileage, options and of course the history of the car. Ebaymotors.com will show you what the cars sold for as well as the asking bid, others will not. Ebay prices are usually comparable to the lowest prices for cars, but if you have access to Manheim, Riverside or Adesa auction numbers; make sure to check them. You can join many car forums and ask in certain section for folks to look up the latest auction numbers for a certain make and model as well. Once you have researched your car, it is time to find it and research the dealer a bit. The selling dealer will make a difference as you must research their reputation and profit margins. Knowing who you are buying from is as important as what you are buying. Check the dealers reputation through Google and look at previous cars they’ve sold to understand how much room they have to play. Understanding what a dealer was asking for a previous car and what they let it go for is golden in your negotiation. DO your HOMEWORK.
Negotiation: Remember before going in that dealers will never tell you the truth and that their entire sales strategy is simply based on you believing you are getting the best possible deal. There are many DO’s and DONT’s with dealers before starting to negotiate. Lets cover the main ones:
- Always test drive the car you are interested in.
- Do look at the online prices before making offers.
- Be polite, courteous and do not appear too knowledgeable.
- Do not talk numbers during the drive.
- Do ask ALL the car related questions during the test drive.
- DO NOT give away your whole life and what you want to pay monthly during the drive.
- DO NOT negotiate payment, negotiate the price.
- DO NOT tell the dealer how you plan to pay.
- DO NOT Lowball the dealer by throwing random numbers out at them.
- DO NOT tell them you’ve seen it lower elsewhere yet.
You should have done your research and should know what the car sells for and what you can afford to pay. Once you have picked the exact car you want, let the dealer come to you and give you their first figure, do not throw lowball numbers as dealers know serious buyers and dreamers. You want to be considered serious so they will attempt to work you out a deal, and you want to make your intention of purchasing the car that day should the right deal come along clear. The dealer will come with an offer which is only a thousand or so off their main price, based on your research, you should know how much the dealer has to play or close to it. In most cases, its anywhere from 5-$10K, but more so as the cars get more expensive. So if the dealer comes at you with $45,000 and you know he has $7,000 to play with, then you also know that other similar cars have sold for $40,000, then you can bet that the car will be yours for $38,000 to $42,000. You must also keep in mind that the longer the car has been sitting there, the more likely the dealer will move towards the lower end of the scale.
Financing: Dealers don’t care how you pay for the car as long as you can but in most cases they will finance you but are going to make money there too so go to the dealer prepared. Get your financing first or get pre approved knowing the rate you can qualify for at various banks and credit unions. The dealer will most likely give you rates that are 1% higher than the normal as they will get that 1% back from the bank for originating the loan. You can save yourself the loss by going in prepared. If you didn’t and still don’t like what they are offering you, ask them to hold the car while you search for financing. With a deposit, they will hold it in most cases 10 days or more.
So next time you are in the market for a car, save yourself some cash by spending a few hours on a computer learning about your next toy. How to buy an exotic car cheap at your local dealer has never been easier…
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January 13th, 2010 at 4:04 pm
Some of what you have here is good information…for 30 years ago, hence the picture I guess. If you really want to get a good deal from a reputable car dealer you need to be as up front with them as they are with you. These days, with all the information available to the consumer (internet, invoice ect) it is a complete waste of everyone’s time for a person to go in to a showroom with a suit of armor on. You can simply find out what invoice is. How am I supposed to help you get the right car at the right price when you don’t tell me what you want and what you can spend? There are no new or used cars with 7 THOUSAND dollars mark up! If you really want to spend time playing games when it takes a good sales person 3-4 hours to finally get the truth out of you and then you find out you really can’t afford the car here or anywhere; who wins that one? We prefer an educated buyer that knows what they want with an idea what people are paying for the make/model of the car in that area. There is nothing wrong with the word “profit”. It is called doing business. Believe it or not people are willing to pay reasonable profit for a good sales experience and a trust worthy organization. As far as finance goes we usually have competitive rates and the customer can take it or leave it. However, not everyone has the luxury of picking and choosing who they want to finance with. There are a lot of people that need cars with low or damaged credit beacons and we do everything we can to get them in the car they need and want. I agree with a couple of points. Test driving the car and being courteous. Why not? Make sure you actually love the car, treat people the way you would want to be treated and be reasonable. Due diligence is great, it saves time and headache. Also, your information on how dealers acquire inventory is completely inaccurate. We are allotted cars from the actual factory. As far as trades go, we negotiate a fair price for the car based on condition, mileage and market value and again, consumers can take it or leave it. If you really want to know how to do it right look in a non biased report like consumer reports. I don’t know where this information comes from but it isn’t from a current and/or experienced dealer, sales person or expert. It is laughable when someone misleads people because they bought a few cars or sold a few. Keep in mind, a good sales person has sold and bought more cars in two days than a buyer will ever deal with in their entire life span. So who is really the expert? Almost the entire article is irrelevant when it comes to actually buying a new car. My advice as an experienced sales person for a large and reputable dealer is, find out what you want, what you can afford and go buy it from a good dealer. Very simple.
January 13th, 2010 at 6:22 pm
You are referring to new cars, I am referring to high line USED cars…The info is not misleading, as I am not referring to Honda, Toyota or bottom line high volume cars…
The basis for dealer trade in is black book, which is essentially is an average of auction prices in the past 30 days. I buy 4-5 cars a year, and am very close to many many high line used dealers, wholesalers and brokers.
January 13th, 2010 at 8:55 pm
I am 100% confident, as I ve actually dealt with your dealership on several instances (3 cars bought from there) that trade in values are aligned 100% on Manheim, Riverside and Adesa numbers. A wholesaler or used car manager usually does the inspections and the numbers has never been more than auction figures.
As for your point relating to NEW Acuras…It is very true…I should have made my post clear that I am discussing high line exotics like, AMG, M power, Lamborghini, Ferrari, Porsche and aston martin
January 14th, 2010 at 4:32 pm
I appreciate your feedback and clarification. I have sold pre-owned Ferrari and Lamborghini and it is a whole different animal. I didn’t mean to be abrasive. We work very hard at changing the image of dealers and sometimes I take it personally, as far as people thinking they are going to be lied to by me or my colleagues before we even meet. Something like that will black ball a sales person in no time. Word of mouth and referrals are priceless.
January 14th, 2010 at 6:46 pm
Didnt see it as abrasive at all, Pohanka has the best reputation in the country for service! Its not easy to be Number 1…I actually think that Pohanka lexus offers a higher level of service than my lambo dealer.