Most people hate negotiating at car dealerships to get a good deal. I'd like to share my knowledge on how to save money next time you go in. AMA
When any of my friends go to buy a new car they bring me along. While most of this advice will work for any car, there are no guarantees when dealing with luxury brands or cars in high demand and low stock.
What you need to know to get a good price on a new car:
You need to do some things before going in to buy a new car from a dealership:
- What did the dealer pay for the car? (Know the invoice and MSRP costs). Print this out Kelly Blue Book is a good resource. The invoice cost is what the dealership paid for the car. MSRP is what the manufacturer (e.g. Toyota) tells them to try to sell it for.
- What options do you want on the car? (Again, know the invoice and MSRP) Print this out
- Is the dealership or manufacturer offering any rebates? This is one of the best times to buy as it can help reduce the price of the car even further with little effort. I highly recommend waiting for these deals before going in to buy.
- What type of car are you buying? Is there dealer holdback on it giving the dealer stealth profits? If the dealer makes money from holdback then you can get the car for an even lower price. Most dealerships will not even acknowledge holdback and won't negotiate on it, considering it to be their "profits" that you can't touch. But knowing it is there helps you be informed.
- If you plan to get a loan for the car, get pre-approved for a loan by your bank or credit union. Don't just show up and expect the dealership to give you a fair APR on your loan. They won't.
- Know exactly how much you are willing to pay for the car and don't pay a dime more (before any rebates, before any taxes). Understand that there are government taxes that are added on to the cost (more on this later). I typically aim for $300 above invoice when buying a car as it seems relatively easy to get a dealership to cave to this price. Next time I go to a dealership I plan to aim for invoice cost and see how that goes.
When at the dealership:
- Find the exact car you want. Don't buy a car that you can't afford or aren't sure about.
- Don't let them talk you into a different color because they don't have exactly what you wanted. You can always get what you want, they can bring it in from a different dealership or you can look elsewhere.
- Get them to show you the invoice for the car and see how that lines up with the invoice cost you have. Don't accept any BS charges they add on. The cost of brochures? No, you're not paying for that. Doc fees? No. (more on doc fees later). You will have to pay the destination charge.
- When you start talking price on the car, tell them how much you are going to pay for the car. Lay it out in clear terms. Tell them "This is how much you paid for the car. This is how much I am going to pay you for it. This is going to be a quick sale with no bullshit."
- When they ask you how you plan to pay for the car (before you have settled on a price for the car) tell them that is none of their business until you have agreed on a price.
- When they ask you how much you want to pay monthly do NOT tell them. This is a total scam to get information from you about how much they can screw you over on the price. Oh look! You want a $299/month payment, we can do that on a 6 year loan! (wait, how much does the car cost? notice they didn't say.) Tell them that you are only interested in talking about the price of the car, not any monthly fees.
- Many times in negotiations they will come back with a counter offer. They'll say something like "You've offered $15,000. There is about 10% taxes for car registration and what not, so the final price will be $16,500. Does this work?" This is a scam. Notice the word "about." Basically they just raised the price of the car on you in a sly way. Tell them no, you are dealing with the price of the car -- not the price of the car after any government fees.
- "Document Fees" or "Doc Fees" are bullshit. It's a charge for them to process your paperwork. Tell them you won't pay for it. They might argue with you about this saying "Everyone pays the doc fees." Simply reply "I don't." When they argue with you more on this, tell them fine, they can keep their "doc fee" but they have to reduce the price of the car by the amount of the doc fee. They won't? Start walking out.
- If you didn't walk out the door to leave you didn't get the best deal possible. Seriously. If they aren't chasing you down and just say "Yes" to your offer then they feel they got a good deal. This is not about getting the dealership a good deal. This is about getting you a good deal. The last car I helped a friend buy we we walked out of the dealership because they would not remove the doc fee (mentioned above). I told them to lower the price of the car by $60 to make up for it. They wouldn't. We walked out, they had 3 people run after us because they were $60 away from a deal. They pushed to split the cost 50/50. I told them to stop wasting our time and that we were leaving unless they made the deal right now. Guess what? They did it.
- When the final price of the car is calculated, it should be the price you agreed on MINUS any rebates they are offering. You are not negotiating for the price after rebates.
