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…
But yet…Keep in mind that there is always a way to “Drive a Luxury Car for FREE” That’s the real Secret to Success.