From the comments:
I’ve been shopping for a car for a few months now and have been having horrible luck with salesmen. As a young-ish, single girl, they see me as an easy target. Can you offer any bargaining advice? I always feel like they back me into a corner and I’m never sure how to get out of it. Thanks! -Kristen
Kristen, I’m happy to help!
Disclaimer in the First: I am not an expert. I know, I know. You are shocked. To that end, I could be *gasp* wrong on some of the following, but it worked for me so now it is law. And anyway, a lot of this was garnered from conversations I had with my brother who is very practical and also tall. You know what they say about tall people.
Disclaimer in the Second: Technically, I am not single. Also technically, I did not go to the dealership by myself. However. The Dork Lord, god love him, deferred to me at all times, sat in the ‘guest’ chair and did not interject except to say, “Those don’t look anything like the numbers she was looking at. Do they?” To which I replied “Not even close!” Scramble went the salesman. Home for first pitch went the Boy. Mostly, he just sat next to me and played with his iPhone. I love this about him, by the way. When it’s my show, he’s very good at taking the supporting actor role. When the salesman erroneously addressed him first (as they will do), he simply nodded in my direction. “She’s in charge.”
1. Decide before you ever set foot in the dealership what you are going to pay. Write it down.
How do you know what to pay? I’m glad you asked. What you can pay will be dictated by your budget (for accurate planning, use an amortization calculator. I found this one useful). But to know what you should pay, go to a neutral source like Kelly Blue Book (kbb.com) or Edmunds (edmunds.com). Enter the year, make, model and trim of the car you’re looking to buy. Add the bells and whistles you expect – if you’re just gaga for a sunroof, add it to the package – we’re looking for a maximum range here. Now, check out the price. Notice there are three dollar numbers. In the example below, I priced out a 2010 Hyundai Santa Fe (they are rather nice to drive, in case you were wondering).
MSRP: Manufacturer’s Suggested Retail Price. Please make note of the word suggested. In reality, this number doesn’t mean jack squat.
Invoice: The price paid by the car dealership to have that shiny baby on their lot. But only *sort* of. The dealership didn’t actually pay the listed invoice price. There car manufacturer offers incentives and discounts that aren’t factored into that number. Do not be fooled by this number. Above all do not feel sorry for the car salesperson if they make any overtures about not making any money off the car.
Fair Purchase Price: The average price car buyers are paying for this car. On new models, like my 2011, the Fair Purchase Price will read the same as the MSRP due to the lack of data available. Do not be fooled by this number, either. If you’re tenacious and well informed, you can get a better deal.
Your price. The dealer is probably aiming to make a minimum of a thousand dollars (Your Price – Invoice Price = $1,000). Remember what you know about Invoice Price. It ain’t as advertised. But since you don’t know the actual dealer cost, the Invoice Price is a good place to start. The price you negotiate should be “up” from the invoice price of the car and not “down” from the MSRP. For instance, our Santa Fe has an MSRP of $28,690 and a Invoice price of $27,267. In my case, I set my sights on paying no more than $100 over invoice (in Santa Fe terms, that’s $27,367) and got what I wanted.
(You may end up writing two numbers down – one for the ideal car and one for the scaled down version, if you can live without some of those bells and whistles.)
2. Negotiate to get that price you wrote down; do not budge until you’re comfortable.
If you make the first move, put your number on the table and then sit quietly. If the salesperson makes the first move, as he did in my case, look over the initial offer and never, ever be afraid to say, “This is not what I had in mind.” When asked what you do have in mind, SAY IT. You may not be used to haggling, but you can bet the person on the other side of the desk is. Do not worry about sounding cheap, aggressive or even delusional. They have heard it all. The worst they can say is no, but even that answer shouldn’t be taken too seriously.
During all this, your demeanor should be relaxed (so, so important) and friendly but never, ever forget that the salesperson is just that. A salesperson. This is business.
3. Be prepared to walk away.
You’re not desperate for a car. You don’t care what special deals are going on right now, nor that they expire in exactly six minutes. There will be other deals. Other cars. Other dealerships. If you’re truly getting no traction (and right now, that’s pretty unlikely what with the economy being as it is) ask the salesperson to call you when they’re better prepared to negotiate. They aren’t likely to let that happen. See, no matter how it pains them (uh huh) to give you your way, the bottom line is this: the sales manager wants to make money (and his monthly bonus) by selling you a car. They know that’s not going to happen if you leave the showroom.
4. Don’t talk trade-in until you’ve settled on a price for the new car. Period.
Your trade in should not be a factor in the negotiated price of the new car. The dealer will do a bunch of fuzzy math to show you a super swell, lower monthly payment. Ignore him. Negotiate a car price, not a monthly payment. It’s okay to say, “If you don’t mind, I’d like to discuss the trade in after we’ve settled on a price.” You pay less sales tax ({negotiated price – trade in vale} x .0825 = total tax) when you have a trade-in, and the lower, super swell monthly payment will most likely be a result of that, more than anything.
5. Know what your trade in is worth. Write it down.
Again, Kelly Blue Book and Edmunds are great resources. Fill in the year, make, mileage and select the condition your car is in. And once again, you’ll be presented with a few dollar values. I’ve used a 2007 Santa Fe in the following example (and added side-by-side comparison of values).
Trade In Value. What you can expect the dealership to pay, based on the car’s condition. This will be the lowball offer.
Private Party Value. What you can expect to get going the For Sale By Owner route. Or even CarMax. We’ve found them to be quite competitive.
Suggested Retail Value: What the dealership is going to sell your washed, waxed, reconditioned and warrantied baby for.
Drop by a CarMax to get their offer, too. Fix that number in your head. Write it down. And don’t agree to anything that doesn’t match up. If anything, you can always take your car to CarMax, complete that transaction and then come back to the dealership with the cash. Again, though, they won’t want you to walk away – you might not come back.
Keep in mind that you’ll have to be realistic about the condition your car is in. If you’re like me and love your steel baby with all your heart, you might be inclined to think it’s worth more than it is. For some perspective, check out what similar used vehicles (mileage, options, warranty) are going for at dealerships around your area. Obviously, there’s markup involved – used cars are where the money is made – so factor that into your expectations.
I opted to ask for the Private Sale Value (at Good Condition), understanding that even at this price, the dealership stood to make at least two thousand dollars from its resale. I had taken excellent care of my car and I did not budge on this.
6. Be prepared to discuss adding options.
The “closer” will try to talk you into added extras. Roadside assistance. Longer warranties. Tires for life. These are not necessarily without value. I opted to raise my monthly payment in order to have a seven year, bumper-to-bumper warranty. I opted out of the Lowjack. Do what feels right. Again, they want your money. But so long as what they’re selling is something you want, everyone’s happy.
Okay. That’s it. Any questions? I kinda hope not, because I’m pretty sure that’s the extent of my vast and amazing car buying knowledge. Best of luck!
All great advice Fish. Knowledge is power — especially when it comes to car buying.
One other suggestion which worked great for us when we purchased our last car — do all your negotiating online. Once you know the car you want and the options you’re willing to pay for, go to any of the car sites (Kelley BB, MSN autos, etc). Fill in the Get a Quote bit and you’ll get quotes from multiple dealers in no time. We played them off one another until we got a GREAT price. Best part is no negotiating at the dealership — you go in with a printout of the email and deal with the Internet manager, not the slimy salespeople. You might still have to talk trade-in, but it gets the worst part out of the way.
you are SUCH a Berber, baby.
Ha! Coming from you, Jen, that is the best of compliments. You were such a master Berber. When haggling would have come in reeeally handy, I was such a wimp! It’s a learned skill, for sure.
Excellent advice. With the Internet, there’s no excuse not to do your research first.
I just bought a car last month, and everything I learned was from: beatthecarsalesman.com. It was a great resource, and allowed me to be prepared to walk in and get the price I wanted. I paid EXACTLY what I was willing to pay for a 2010 Toyota Rav-4 – and ended up walking out with a 2011 for that 2010 price. I was so impressed with myself – hahaha. Good luck!
There are also Costco (and the like) programs which can save you bundles. When the friend who bravely accompanied me during my last vehicle purchase noticed the Costco binder on the salesman’s shelf, she saved me an instant $2300 on the price he was unwilling to budge on up to that point. In my case, my $50 Costco membership forced the dealer to offer my vehicle at $500 below invoice.
Excellent advice Fish!
Another thing I would like to add is this:
If you’re not happy with the way a dealership is treating you, go to another dealership! There are tons of jerky dealerships that try and hard-sell you into something. If you don’t like the way they treat you, go somewhere else. This may or may not be convenient for you, but you’ll have a better experience with a friendly dealership.
As someone who will have to purchase a new (to me) car sooner or later, as my 1987 Toyota pickup is starting to rust out from underneath me, I really like this post. Glad to hear if you plan ahead it won’t be so scary. Thanks!
This post is amazing! While I’m hoping to continue using my current car for at least another year, do not think I won’t bookmark this for future use. So much great, logical advice. I can do my homework and “wow” my parents (bonus points for that one!) before I even step foot on a lot. Thank you!
Wow. Thanks for getting that out there. I am so not a haggler. I’ve been learning a few things with working through contracts with wedding vendors, but still not great at it. Thanks for the tips on car buying. What was once a huge, cavernous mystery now has a headlamp shining on it.
This is such a good post, thanks for the advice! I’m printing this out and using it as a guide/worksheet. Hopefully it’ll help me get a handle on these slimy salesmen!
Thanks again,
Kristen (the single girl!)
To all the excellent advice above, I would add the advice to check out the cars direct website. They will compare prices for what you want at all the dealerships within a specified radius. They are especially good if you are flexible about bells and whistles, so there are more cars to compare. I got a honda accord last year for 20% less than msrp through them. What was better was that I got a chance to lock in a price before I ever set foot in the dealership, so I didn’t have to worry about getting snowed or pressured.
My other piece of advice is that, whenever possible, and certainly whenever your current car is paid off, you should start putting money aside every month as a pretend car payment. Earmark that money for your next car and do not spend it on anything else. The bigger the down payment you make on a car, the better, and best of all is writing a check for a car (and you do not need to be rich to do it, if you can be disciplined about saving money in advance – if you can afford to pay the money after you buy the car, you can usually afford to save the money before you buy the car). Financing a car is, in the end, paying interest on an asset that will depreciate. Paying interest on assets that might appreciate over time – like real estate (the recent past notwithstanding) or your education – is smart. Paying interest on assets that become less valuable over time – like cars – is not wise money management when you can avoid it.
http://www.truecar.com
i used their prices to negiotiate my Santa Fe in May and ended up with 2000 off MSRP plus a free cargo net, cargo tray, and iPod cable. I also negiotiated a 2.9% apr. I recommend walking in knowing more than the salesman.
I am a single woman in my mid-twenties. I did go with my mother but I did all the talking.
I did research prior to going for a test drive. I compiled a list of cars that fit my needs (SUV, mpg in 20′s, price below 30k) and had good reviews with CR, then used edmonds to accurately estimate monthly payment and kelly for a fair trade-in. I then test drove each one on the list. Narrowed it to three and test drove those again. I refused to talk about buying anything until I had test drove the vehical twice.
But, once I was down to the top two, it became about the salesman and the dealership. The Subaru place was trying to take advantage of me, so I walked away and into the Hyundai place where I was treated with respect and got exactly what I wanted.
Now, I was not under the wire to purchase and could afford a month and a half to do all this.
The Fish — Not afraid to be servicey.
Another stratagem to be aware of is to purchase as near to the end of the month as possible, an hour or so before the dealership closes. They will be much more willing to deal at that time, because 1) salespeople have families to go home to and want to go home as much as you and 2) managers will be more likely to make deals if they have monthly sales targets/quotas. Keep in mind that this is only if you know exactly the car you want and what you want to pay for it, otherwise you are wasting the sales staff’s time.
Also, if you are looking for used cars, look for higher-end dealers with small parking lots. They will often be forced to move trade-ins at or below cost because they have no room, and these cars are usually certified and are in better shape and better taken care of than used cars in the larger dealerships.
Another stratagem to be aware of is to purchase as near to the end of the month as possible, an hour or so before the dealership closes. They will be much more willing to deal at that time, because 1) salespeople have families to go home to and want to go home as much as you and 2) managers will be more likely to make deals if they have monthly sales targets/quotas. Keep in mind that this is only if you know exactly the car you want and what you want to pay for it, otherwise you are wasting the sales staff’s time.
Also, if you are looking for used cars, look for higher-end new car dealers with small parking lots. They will often be forced to move trade-ins at or below cost because they have no room, and these cars are usually certified and are in better shape and better taken care of than used cars in the larger dealerships.
Steve – that’s what I did! Waited til month end, when their big incentives were expiring. You KNOW they’re trying to make numbers then.
It’s funny. My husband was buying the car (last week) and they kept addressing their questions and sales pitch at me. And then I would look at him and he would answer.
Also, January and February are the leanest months for car dealerships. If you can wait until after the new year, you’re much more likely to get a salesperson in a bargaining mood. Be sure to remember you’ll have to inspect, emmission, and reigster your car every year right after Christmas.
Wow, I wish I needed to buy a car just so I could take this advice…
I used similar advice from my parents to buy a car a year ago. I had to walk away because the dealership wouldn’t accept my price. I wanted a new car but didn’t ‘need’ a new car and the salesman knew that. I was sad but stuck to my guns. Two days later the salesman called me and said they were willing to accept my price! I got the car I wanted at the price I wanted to pay.
THANK YOU EVERYONE!
MUCH APPRECIATED!
Thanks for your plan of attack! I do not intend to buy a new car anytime soon, but when I do, I would like to be the strong woman who fights for what she wants.
This is just the post that I needed. I usually rely on my dad to help me out with the big ticket life items. Buying a new car is one of those items. But since my parents live in Colorado, and I’m in Texas, it looks like I’ll be on my own when it comes time to buy a new car. And I’ve been thinking of buying that new car within the next 6 months. I won’t be a rush to do so, but it’s just time to do it. I am printing off this blog post and taking it home so that I can start my research! Thanks again!
I have been a fan and follower for years and never posted until now. I found this post to be most interesting…because I am in car sales.
Your advice is very good, especially when it comes to negotiating the price from the invoice up not the MSRP down. I work for a dealership that prices all the vehicles that way and have cut out the hassling and haggling. If you are shopping at a very large volume dealership they can afford to negotiate. The difference between MSRP and invoice is purely profit but don’t think all that goes into the salesperson’s pocket. Most dealerships have loaded certain costs into the price they want for each vehicle. Also correct-your trade-in should not be part of the negotiated price.
You (and Jim) are so right about being ready to walk, too. If you are not treated with respect or feel uncomfortable find another place to take your business. And in my opinion, roadside assistance should not be an option, it should come with the vehicle. It is just part of customer service, at least on the cars I sell.
PS I am glad you are getting what you want because some of your posts in past years have made me cringe and cry.
Ooh, thanks Fish! My hubby and I are probably going to be car shopping in the near future (since his beater seems to be wheezing its last), so this was just what I needed.
I used to work in the car business. Funny how as a woman I would get treated like crap until I threw out my business card with my title on it.
Its truly important for every person not just women. If you aren’t being treated well don’t buy a car from them. Why would you pay someone thousands of dollars just to be treated like crap. On the other end, go in with a positive attitude and don’t treat the salesman like crap. I’ve seen this too and it just creates a contentious relationship. Don’t be afraid to walk away ever, its the most important thing. You are not bound to buy a car from that dealership.
My last car I almost completely purchased online. When I walked into the dealership to finalize trade-in, etc. I was very clear; “I’m excited to buy a new car but, the invoice better not be one penny over what I’ve already negotiated online.” I was in and out of the dealership in less than two hours.
Be realistic as well. If you don’t want to pay dealership prices then purchase at COSTCO or another retailer that deals in wholesale. The dealership has to mark up prices to pay their staff, etc. Its the same as anything else; it is a business and they do have to make money to stay in business. I’ve heard so many people say, that isn’t my problem. It’s not your problem until you drive down a street that used to be filled with car dealerships and now they’re empty buildings and the thousands of people who used to work there are unemployed.
Yes, you do someone a favor when you buy anything but we help no one when everyone wants something for nothing.
The only times I’ve purchased a vehicle and felt like I didn’t get taken to the cleaners has been when I’ve had outside financing from my bank. I’ve gotten “pre-approved” for a certain amount and then looked for a vehicle that I could negotiate for less than that amount. The salesperson doesn’t have to know what sort of credit or monthly payments I have or need, (s)he just needs to know what I want and how much I’m willing to pay for it (including tt&l).
The most important thing to remember when buying a car is “This isn’t the only place you can go – walk away if you don’t think it is a good deal or you feel pressured!”
The first car I purchased by myself was a Honda Civic. I went in and looked, picked out what I wanted and walked away. The next day, the saleswoman called me and told me that there were people there looking at the car I expressed interest in and they wanted to put down a deposit, so she wanted to give me “first right of refusal” (oldest trick in the book). I told her I guess I’d pass because my Dad found the same car for $1,500 cheaper than she’d quoted me and although I didn’t really want to buy a car out of town I couldn’t pass up the deal (a COMPLETE LIE). She told me she’d have to call me back, she didn’t think she could meet that price. I told her that it was fine, she could just sell the car to the people that were there and wanted it. She called back 10 minutes later and told me she’d meet the lower price if I came in that day and so I did. When I totaled that car (2 years later) I made almost $3,000!
Moral of the story: Don’t be too eager, don’t be afraid to bend the truth (for negotiation purposes only!) and don’t be afraid to walk away. They will be back!
Good luck!
That’s Amazing. Will you plan my wedding?
Sally – you bet! For a small fee of ONE MILLION dollars. Plus tax.
I agree with a lot of the above, especially with the concept of trying to avoid having a car payment if possible. Remember, if they can’t get you on the price of the car, they may try to rip you off in financing. Plus, as was pointed out above, why pay more for a depreciating asset? (I wish my wife were on the same page with me on this.)
Speaking of financing, check your own credit rating through the Federal Trade Commission web site (I think it’s called annualcreditreport.com) to make sure that there are no “blemishes” on your credit and to have that credit score in your back pocket.
Also remember: DON’T fall in love. This is a hunk of metal, plastic, wood, rubber, fluids, etc., and it can’t love you back! Be open to a few possibilities and, if necessary, play the different makes off against each other. It is good to see that Toyota has been forced to eat humble pie; they deserved it BIG TIME.
If you are buying a used car, make sure to have a pre-purchase inspection by an independent mechanic. This “certified” business is so much marketing, and I am not totally convinced that such cars are really superior. You are probably better off buying a used car from a new car dealer of the same make. In any case, have the car checked out anyway.
If you are really interested in a car, maybe rent it for a road trip to see if it is really comfortable for you. You do not want to drop five figures on a car and find that you get chronic backaches from it.
This about your future. Two door coupes look cool, but if you are thinking about having kids, loading a car seat in the back is a real pain in a two-door. I know, BORING!
Good luck to everyone. We have two aging cars and are hoping for increased cash flow before the vehicles give out.