Originally posted at thisfish.com on November 3rd, 2010. I know, the images are still missing. I’m hurrying!
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. I did, however, do all the talkin’. You wanna take a dude with you? Go right ahead!
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!
 |
Heather Hunter, aka This Fish, is is from Dallas, Texas via Boston, New York and some other cold, snowy places. She spends a bunch of her time blogging, planning her May wedding and eating things made mostly of melted cheese. |
