The author who is an expert on game theory talks about a method of buying new cars that he says is really effective.
Basically, it consists of this (this is for a new car):
Look up as much info as you can until you know which car you want to buy and what features. Then find the lowest price you can get for the car online or in person. Then call up as many dealerships within a 50 mile radius and tell them ‘this is what features I want in a car and its model, and the lowest price I can get is X. If you can beat that price I will buy from you. I am going to buy a car at 5pm tomorrow, and I am going to buy from the dealership that offers me the best deal.’
He says doing that works fairly well to get dealerships to bring their prices down.
That doesn’t make any sense to me. Unless I’m missing something, the problem she has is that she’s borrowed a bunch of money and continues to buy new cars without actually paying for the depreciation she’s accumulated. She’s not paying a ridiculous payment on a 5-year old car, she’s paying it on all the money she borrowed on all the previous cars. How does buying another new car and owing even more money and paying it off even slower solve that problem?
My strategy is to buy used cars from individual owners. It’s a little extra hassle shopping, but I think I spend a good bit less on average. My average cost of ownership (depreciation + repairs) has been about $1300/yr over the past 5 years.
Using Edmunds find out what price you want to pay for the car. The “What other’s are paying” is a good starting point.
Tell the dealer straight up that you do not have a trade-in and that you have secured your own financing. All you want to negotiate is the price of the vehicle.
After the price is completely settled, in writing, and signed tell them what interest rate your bank/CU is getting you and give the dealer the opportunity to beat it. 9 times out of 10 they will beat it but don’t do this until after you have settled on the price of the car.
Don’t trade-in your old vehicle. Again using Edmunds find out what your vehicle is worth and what other people are selling theirs for on autotrader, craigslist, etc and sell it on your own via Craigslist. Guaranteed you will get more money for it this way than as a trade-in.
New cars: I find out what invoice is on the car, I find out what dealercash is on the car, I find out what rebates there are on the car, I split factor holdback and I call the five or six local dealerships and make my offer. Easy peasy. Easier for me than you, because I’ve been in the car business and can get most any vehicle I want netted out anyway.
Used cars: I determine what feature packages I want, on what models, then I call a buddy who’s got an Auction pass (and he visits a bunch of dealerships) and works as a wholesaler, and tell him to keep his eye out for any cheap cars fitting the bill, preferably 1-3 years old. He buys tons of cars anyway, and whenever he gets one that fits my description passing his eyes, he’ll snap it up (as long as he thinks he can resell it at break even or better) and let me drive it for a day to see how it feels. If I like I thank him and pay the man. If not, he drops it on the next dealer who’ll take it.
I bought a new G35 two years ago. I did all the shopping via Consumer Reports. I recommend subscribing to the Consumer Report web site. There you can research the car and it’s past history before looking at a dealer. Avoid all but their recommended choices. Once you know the car, CR will help you determine what the dealer paid, however, it’s not quite accurate as the dealer gets incentives back depending on how many cars he has sold by the end of the model year.
Do not trade in a car. Sell it yourself. You’ll get the same or more for it than they will give you.
Don’t shop payment. Most dealers try to trap you with the “how much do you want to pay each month” trap. Tell them you’ll do your own financing and you’re only interested in price. Then after you agree on the price, ask them what they can do for financing. Remember, they typically get a kickback on financing too.
I’m 50/50 on extended warranties but if I did, it would be through the manufacturer, not one of these after market companies you see advertised on tv.
I go to Edmunds and, using the info I find there, I print up a sheet of paper that details the exact cost of every option I want on the car. Then, when I go to the dealership, I have them explain to me why I should pay a dollar more than what my paper says.
However, I’ve had the most luck simply sending out shotgun emails to every dealership within about 150 miles, telling them exactly what I’m looking for. I also mention that they aren’t the only dealership I’ve sent the email to. A blind bidding war works out well for me. When I bought my Element a couple of years back, I had to drive 150 miles to go pick it up… but I saved over $3000, compared to the local dealerships.
Establish a price. Establish a rate. Establish the term. Get the price by finding out how much the dealership paid for the car, and make an offer based on that. You can find out on a used car, too. They will show you how much they paid if you ask. I asked last Thursday. The finance guy said I was the third person ever to ask how much the dealership purchased a used car for.
I’d never show a customer a price on a used car, I’d ask them, very simply; “If I payed 100,000 for the car, would that effect the price you’d be willing to pay for it?”
They’d look at me, stumped, and say, “buhh… no, of course not!”
“Then don’t worry about it – I’ll get the price and financing that work for you, I promise.”
And, the few salesman who did show prices, almost never showed the actual price of the car, they either used ACV or a fake one.
ETA: Don’t, definitely don’t, ever, ever, ever trust a dealer if they show you an invoice. In this day and age they’re so easy to fake it’s ridiculous. Any dealer worth his weight in salt will print up a Used Car ACV + 2000, it’s a piss easy way to pad the gross.
I don’t know how they wouldn’t know it was a fake considering the VIN and all that would be there. When I worked at a car dealership, no one ever asked to know what we paid, but if they had, I wouldn’t have lied and produced something bogus.
Are you kidding? Internal invoices can be printed up (with the correct VINs) from Reynolds & Reynolds in under a minute.
Hell, you can go in there and change the ACV and Trade-Value given within 20 seconds.
I could go into R&R, change the values on a(n old) deal from
ACV: 22,000
Trade Given: 20,000
to
ACV: 28,000
Trade Given: 24,000
in all of 20 seconds, print up the report, and then change it back before in the same amount of time. The printed report has VIN, mileage, etc. right on it.
I don’t have a strategy, having purchased only three cars in the last 28 years. My previous two cars were stolen/destroyed, so my purchases were made under duress. When I got my 96 Integra (my current car), my credit union had some deal where they negotiated “fleet prices,” and they literally brought the car to my credit union building when I bought it. I’m not sure they still have that deal, nor if they’ll still offer it to me this time, since I won’t be financing my next car. (Perhaps I should finance it if the rates are insanely low).
However, reading this thread, I think I’ll go check out edmunds dot com. I’ve been mildly obsessing about a 2010 Prius, so I might do this in the next six months or so.
Before you do, definitely get a friend, or someone in the car industry who you can trust (I’d gladly do you the favor) to give you a for-cash price on the car, that you can expect to walk in to the dealership and get them to take (after some “No, I’ve already told you very clearly…” of course).
If their ‘true cost’ on the car is 20,000 – most car dealers will take 20,100 or even 20,000.
Yeah; I have no game. I know the, “I’ll just pay in cash, Mr. Blofeld,” is a strong card to play, but have no idea where it would fit into the discussion. I’ve heard that there are sometimes weird pressures on salesmen or dealerships (e.g., end of the month sales stats or other incentives) that might cause them to make seemingly profitless deals, but would need to do some study before I went in.
I’m surprised nobody else has mentioned the fax machine (or email) negotiation approach.
I call the dealer and have them send me the list of their available inventory for the particular car I’m interestred in. I then negotiate all the numbers over the phone and commit to the deal contingent to a test drive when I show up at the dealership to sign the papers.
With this method, I’m in and out of the dealership in less than an hour.
I will never negotiate a car price at the dealer salesman’s desk. By working from home, I have the convenience of being armed with Google, MS Excel, and patience. If the conversation doesn’t progress in a direction I don’t like, we end the phone call and I try another dealer. The dealers’ sales pressure tactics just don’t have any impact since I have “home field advantage” by sitting at home.
I’ve haven’t convinced a lot of people to try this method but for those that don’t want to do it, I have to ask, WHY do you insist on haggling at the dealer lot? Do you just sadistically enjoy getting stressed out at the dealers’ home court?
You won’t get any argument from me. I suggested that she trade in the overly expensive Infiniti and lease a cheaper car for a few years. Then, she could start over fresh on whatever car she wanted (and I don’t need a lecture on the financial propriety of a lease; my point was that she didn’t need to be in this ridiculous payment, and she could get out of it by driving a newer car - she was the one who decided on getting the BMW with the balloon payment).
Where do you find such things? It sounds like you are (or were) in the business; where would a civilian such as myself go for this knowledge?
That’s what I did when I bought my current car. I had already spoken to one dealer (the one I test drove the car with), and was bouncing his offers off of the other dealer across town over the phone. By the time I came to the dealership, I just had to sign the paperwork and finish the deal, since we had already settled on the price.
What limited me somewhat was that there were very few models of the version I wanted (manual transmission), so they both ended up finding the same car. I ended up jumping on the deal because of the 0% financing, mentioned upthread.
From someone like me, other than that… frankly, I haven’t the least idea.
I think Consumer Reports publishes the invoice, but dealercash is dependent on volume, Customer Service Index and region, and probably some other things depending on the manufacturer.
When I have need, I call a GSM or GM of a local dealership.
Yes, but selling it yourself is a hassle. Then again, my “trade-in” is often like 10 years old, so it’s not worth much and saving the hassle is worth the small amount extra I’d get for it.
