Haggling With Car Salesmen Over Price

Factual Questions
21

Great advice here overall. Just a couple of points I didn’t see (or missed) in the other posts:
[ul]
[li]Don’t set foot on a car lot until you have the deal negotiated. As someone else said, they’re better at this than you are – they’re the pros and you’re an amateur. Why play the game on their home field as well? Car dealers have finely honed techniques for getting you to do what they want once you’re on their turf – don’t give them that chance.[/li]The last three times I’ve purchased a car, I’ve done my research online, and negotiated with the dealership’s “internet sales guy” entirely via e-mail until we had agreed on a drive-out price that was within a couple hundred dollars of the dealer’s cost plus destination charge. I made it clear that I knew to the penny what the car cost them and how much they’d make on the deal. I also explicitly and strongly told them that if the amount they asked me for when I showed up varied by even a penny from that, I would walk out their door for the last time ever. The negotiations didn’t even take more than a couple of messages, since I made it clear that I didn’t care how they divvied up the bucks between price, doc charges, etc. – I cared about one number only, and that was the final, total, drive-out price. I initially requested quotes from several dealerships on specific vehicles in the dealer’s inventory. The good ones understood that there was no money to be made, only time to be wasted, by playing games and came back with reasonable prices. The weasels tried to ask me all kinds of questions about financing, trade-in, etc. – I never responded to any further communications from those. In all, once I knew what vehicle I wanted to buy, I’m sure I spent less time total negotiating for those three cars than most people do for one if they start by walking into a showroom.

[li]Don’t talk about financing, trade-in, or anything else until you have a firm drive-out price. In each case above, we never discussed trade-in or financing until the drive-out price was established – I told the dealer up front we were negotiating a cash deal, to take all of that off the table. I don’t really have the patience, or sufficient motivation, to sell a car myself, so I’d rather just trade it in. And because I know that I’ve negotiated a fair deal on the new car purchase, I’m not expecting an extravagant trade-in offer. But I do know what my trade’s worth before I talk to the dealer, and if the deal doesn’t make sense, I’d walk away from it and sell the car elsewhere.[/li]
[li]**Credit unions are your friend if you need financing. ** Not that it helps me much, because I don’t have access to one, but you’ll generally get better financing deals from one than from other sources or from the dealer. [/li]
[li]**Having a check in hand is a powerful thing. ** The last three times I’ve purchased a car, I shopped loan deals on line, and found that I could get an acceptable (not perfect, but acceptable) rate from ELoan. So I did their “PowerCheck” deal where you apply for financing from them for a particular amount on a particular type of vehicle, and they send you a check you can use for up to that amount at any new car dealership. I’ve never actually used the ELoan checks, however – twice, I worked out a better deal with a relative (they got a higher rate than they’d get on a CD, and I got a lower rate than any bank or finance company would offer). Each time, the dealer asked for a chance to come up with a financing deal for me, but each time they failed to come up with anything better. The third time, I didn’t want to go with the relative route, so was actually planning to use the ELoan check, but the dealer came up with a financing deal that was better than ELoan’s or any of the other deals I’d seen online. The advantage to this, from my perspective, is that you’re walking around with a guaranteed loan, on known terms, for a certain amount – you’re not tempted to exceed what you’ve established, and you don’t have to get caught up in the games dealers like to play about financing. [/li][/ul]

22

I agree with this one. I tried to use a Capitol One Auto Loan check for my last purchase, and the dealer said it was a pain for them to use, so they offered me a better rate than the Cap One check.

23

Like Don Corleone said, the guy that makes the first move is showing weakness. You’re already at a disadvantage because you’re on a car lot - you came to the dealer not vice versa so you made the first move. You can’t give away anything else. So you can’t just show you’re not too interested in the sticker price - you have to completely ignore it. Like I’ve said all along - negotiate from the invoice not the MSRP.

24

I used People First (which was purchased by Capital One), and they tried to make a big deal about whether it was a “check” or a “bank draft.” (I think I asked about that distinction right here without a final answer). There’s no way they could beat the interest at the time, and they took the check.

What really bugs me is that their current new car, dealer rate is significantly higher than my rate was for used, so I’m disinclined to use them again unless Ford Credit is significantly worse, or I just bite the bullet and pay cash, or take out a home equity loan (seems like a market segment that could use propping up).

25

Part of your research should be checking with the company you work for any corporate deals. The company I work for has a deal with Chrysler where any employee (of a year or more) can get any auto at dealer invoice. The caveats are no trade-ins or dealer financing allowed. Also some of the more tricked out models they have on the lot are held back from the deal. The sales are processed through the corporate fleet sales department. I was skeptical of some kind of bait and switch but the sale was exactly as advertised and was the easiest car buying experience I’ve had. I’m glad I’d checked with my company first as the program isn’t heavily advertised. My father-in-law’s company has the same deal with GM. My credit union claims to have the same deal with GM for its members. So check with your company, or union, or credit union, or any other group that may have mass negotiating power on your behalf.

26

Yeah, forgot to mention that dealers will try to claim that it’s not a “real” check, or that it’s a pain for them to deal with, or whatever. Of course it’s a pain for them to deal with – the pain comes from not getting their commission from whichever finance company they place you with. Offer them a chance to beat the deal, sure. But if they can’t, ask them whether they’d rather have that check or the car.

And that’s the key – you have the money, and they don’t. They have a car. The car is less valuable to them than the money. They need your money worse than you need their car – always. You can get their car from someplace else. If they can get the equivalent of your money or more from someone else (and “equivalent” here includes getting it from someone else at the same time as they could get it from you – i.e., there’s someone else standing there in the showroom offering more for the same car), they should do so, but that’s almost never the case. Because of the way dealers finance their inventory, every day that car stays on their lot, their cost for it increases, while the car’s value to potential buyers stays more or less constant. As long as your offer allows them a modest profit, they’re better off selling you the car than today than selling it to someone else tomorrow.

27

This used to be good advice. Then the big car manufactors started giving out 0.0% and such hwaaaaaay lower than Prime rate financing. If they are offering this, and you do have excellent credit, it is a very good deal.

28

It’s hard to beat A plan. :smiley:

29

Yes, and so you have an even bigger problem- you don’t know what the “base” is. At least with a new car, you won’t pay more than the MSRP (unless you’re a moron). And, with the difference in finacning between new cars being as much as 7%, it can be cheaper to buy new.

The world of today is not what it was twenty years ago or even a decade ago. Convention Wisdom is often outdated.

robby give some excellent and updated advice: *"Also, you shouldn’t be discussing dealer financing, trade-in, or any other superfluous issue until you settle on a bottom-line price for the new vehicle. If you negotiate properly, they won’t offer you much for your trade-in when you do bring it up. This is a sign that you got a good price on your new vehicle. (Then sell your old vehicle yourself–you’ll get a much better price.) Arrange for your own financing before going to the dealer, and you don’t have to go with the dealer financing. If they offer you some great financing deal AFTER you settle on a good bottom-line price (possibly due to some incentive they’re getting), you can always choose to take it then–but don’t go into negotiations needing the dealer financing.

Also, don’t pay for any dealer add-ons, paperwork charges, etc. They will probably tell you that they charge “everyone” for these. Politely tell them that you will not be paying them. If they refuse to budge, walk out. For my Toyota, they tried to spring those on me twice. They told me that every customer pays them. If that was true, I was their first customer not to pay. (And it wasn’t true–every car buying advice site tells you to refuse to pay such charges.)"*

A few more things: Toyota dealers are- without a doubt- the biggest crooks in the business. Great cars, however.

OTOH, there is no haggling from Saturn, and they don’t do high pressure sales either. That means you get a good price from them, but not a great price, so buy when they have some special deal comminng from Saturn, like 0.0% financing.

30

Well, my car was a B plan car, which beat A plan at the time. Unfortunately that doesn’t exist any more, unless you’re an LL6 and tag your own car before turning it in (i.e., not me).

I’ve been looking for a diesel F-250 lately, and 2008 under A-Plan comes in less than the same dealers are asking for used 2006- and 2007-models with lots of miles!

I assume you get A-Plan for life, right? What happens if Volvo gets off on their own again?

31

Who knows, I think I get to keep it, because I retired from FMC. BTW if you have a spare 8 bill you can buy a car company.

32

Unless you absolutely can’t get a loan somewhere else, meaning you’ve personally checked all the local banks and legit loan companies, NEVER go to a buy here-pay here dealer. The ones around here sound like Toke Motors and J.P. Bikerider. They are nothing but a legalized swindle. The price of the car includes the cost of repossessing it and cleaning it up for resale. In the contract, you sign away your right to back out in a few days. The interest rates are outrageous, and they pile fee upon fee upon fee, rolling it all into the loan. For a dozen reasons, the dealer is guaranteed to make a pile of money on every sale.

If/when a salesman agrees to a deal, but says, “I have to get this authorized by my sales manager, because I’ve given you too good a deal,” gather up your stuff and prepare to leave. If he comes back shaking his head, get up and walk. He’ll get back to you, perhaps even before you reach the door.

If you aren’t sure whether to trade in your present car, don’t drive it in. Park down the block and walk in. Make your deal (or not) on the price before bringing the trade into the picture. If your car is more than 2 or 3 years old, you’re better off selling it on your own, because the dealer will shunt it off to auction.

33

One other thought occurred to me. If you are leasing, leasing from the car maker has some advantages (assuming that the payments are similar to bank leasing).
Car makers will often offer existing lease customers a super deal near the expiration of their lease to get them into another car. I have seen cases where someone had about six months left on their lease, and they could sign their name, drive away in a current model year car for $5 less then they had been paying.

It doesn’t always happen, but it is something to think about anyway.

34

The trick to any negotiation is having all the proper information. The car salesman has an advantage over you because a) he knows how much he paid for the car and b) he is looking at car prices day in and day out so he knows what he can reasonably expect for a particular car.

You, on the other hand, now have the advantage of the Internet and other sources to gather as much information as possible (I assume your car purchase is not an impulse buy). Also, the dealer has every incentive in making that transaction happen. He doesn’t make any money buy not selling to you.

There are, of course, sales tricks and negotiating tactics. Most of these should be pretty obvious. Emotional appeals, adding features (and cost) once you settle on a price, one time only offers.

The important thing is to not be afraid to walk away from the deal at any point and not feel that you are obligated to continue.
For negotiations in general, I recommend “Getting to Yes” by Roger Fisher.

35

True, but that’s hardly the whole story. The salesman makes money by not selling low to you, and selling high to the next shmuck who walks in the door.

In these car-buying threads, I always come back to the Honda Civic. The salesperson doesn’t have any incentive at all to sell to you; I would even suspect that with a car as popular and reliable as that, salespeople are probably under fairly strict orders not to cut any deals. There’s no need. Let 'em walk, we’ll get our price with the very next guy or the next, max, who walks in the door. Sure they’ll let you talk them down a bit, because it’s expected, but not much. As soon as they see someone really wants to bargain for a Civic, they just go to the next guy.

36

On the other hand, if someone walks up and knows exactly what they want, exactly how much they’re willing to pay, and will complete the deal right then with a minimum of fuss, why would a dealer not make the deal? So long as he’s not short on inventory, he can sell a vehicle to you and to the next guy. So he makes only a little money on you, he’s still one more sale up and can always hope for more money from the next guy who walks in.

I agree that this whole calculus changes if a model is in short supply and/or high demand.

Also, if you take a lot of a dealer’s time, don’t know what vehicle you want, don’t know what options you want, want to do a test drive, etc. he may well want a better deal for himself to justify his time.

37

Correct on both counts. In two of my three most recent purchases, I was buying a vehicle that, while not flying off the lots, was relatively newly introduced and was in high enough demand and short enough supply that dealers typically had only a few in inventory. Their odds of selling them soon to someone else, if not to me, were pretty good. Nevertheless, when presented with a fair offer that covered their true cost and afforded them a modest but reasonable profit with minimal effort, they took it. Could they have sold the vehicle to someone else in a few days for more? Probably. But they probably could also sell them a different one, from their own or another dealer’s inventory, just as easily. And when I took the car it was no longer costing them money in finance charges, as it would have for the interval between me and the next guy had they not taken my deal.

Because the cars were in demand, I also knew in advance that I wasn’t going to beat the dealer down to no profit at all. I figured out what was reasonable and we quickly negotiated to something very close to that (I did slightly better in one case, slightly worse in the other, than I’d expected, but was within a couple hundred dollars of my target both times).

38

Ah, the whole reason I have a Lincoln Continental instead of a Mercury Marauder. I was ready to bite the first day they came out, but the dealer wouldn’t play ball with my employer’s discount plan. They thought they’d be this big, super hit that would demand a premium over sticker. Ha! They weren’t, so the only got to sell me my current car at a pre-negotiated employer rate that wasn’t even out of their own inventory. Unfortunately that latter program no longer exists. :frowning:

39

I can’t agree more. When I buy a new car, I go to the lot with a printout detailing exactly how much the car should cost- usually obtained from Edmunds.com or something similar. I make sure they know that I know how much the car actually costs… and they get to explain to me exactly why I should pay more than the car’s worth.

The latest vehicle I bought, a 1996 Honda Element, I bought almost completely over the internet. I sent emails out to dozens of dealers, asking for their best price on the exact model I wanted. The lowest bidder got it- I ended up saving three thousand bucks over what I could get at the closest dealership (of course, I had to drive three hours to get that deal, but that was easily worth my time).

40

Agree in general, but not when a car’s as popular and as easy to sell as a Civic. I can’t believe the dealerships have absoutely unlimited inventory, and can take that attitude of small profit here, big profit on the next one, when they know that it can be big profit here and big profit on the next one. Rackensack’s good fortune notwithstanding, it seems to me there are some cars where dealers hold all the cards and don’t need to budge much.