Negotiating the
Best Price
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NEGOTIATING THE BEST PRICE TODAY
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Buyer Navigator Step 7: The Dealership, Negotiating the Best Price. Trade-Ins: Most people buy a new car because they are tired of their current vehicle. The old car is either in the shop too often, it's on the verge of collapse, or it's just time for something new. But when it is time to buy a new car, people usually give up their old wheels without a fight. Prepare for the new car purchase by first completing the below steps. Always negotiate the price of the new car before negotiating the price on the trade-in. When the dealer asks whether you have a trade in simply say, you are not sure and want a firm price on the new car first. It is best to keep the trade in and the new car as separate negotiations. Otherwise if the dealer offers you more for your trade in than you anticipated, it is because they will try to make up for this by giving you less of a discount on the new car or with dealer add ons. Know the value of your trade. AutoNetDirect has information about Used Vehicles, under "pre-owned value" which provides both market analysis and trade-in values for used cars. We use Kelley Blue Book, as they are the leader in auto valuation as well as a priority for all dealers auto valuation. Be sure to add or deduct cost for mileage and options. Next, always compare the value of your car with the value of similar cars advertised in newspapers or used car magazines. After arriving at an acceptable value for your car, be sure to adjust for the condition of your vehicle. Any damage such as rust, door dings, dents or scrapes should result in a deduction. In our pre-owned value section, read the pointers for you to determine condition. Try to sell it yourself. You will not get the fair market value of your car by trading it in at a dealership. Some dealerships advertise "$3,000 for your trade! Push, pull or drag it in, and we'll guarantee the most for your car!" But the fact is, dealers that advertise such great deals are not losing any money. If you do trade it in be sure you negotiate the under-valuation of your trade in by the reduction in cost of your new purchase. They're getting their money back through dealer "extras" or they're simply not negotiating with customers on the price of the new vehicle. Don't fall for this scenario, everything is negotiable. If you cannot sell your current car yourself, or you simply don't want the hassle of negotiating with the public, then a trade is your only option. Just keep in mind that you will get hundreds, even thousands less by trading your car in than you would by selling it yourself on the open market. Now that you're sure you want to trade in your old jalopy, let's try to keep the damage at an absolute minimum. For starters, make sure to get the car detailed before letting a dealer appraise it. Be sure to review our "Car Care Tips" This will give you a simplified overview of how this process works. Remember, "You don't get a second chance to make a first impression". There's nothing more likely to ruin your chances at a great trade-in price than showing up in an unwashed or un-detailed car. The dealer, like any other potential car buyer, needs to feel that you have cared for the car during your years of ownership. Here's a list of things to do in preparation for a trade or sale: Wash and wax the exterior. Thoroughly clean the interior fabrics, vacuum the carpet, and remove any debris such as food wrappers, coins, aluminum cans, etc. Change the oil and oil filter. The dealer may check the dipstick to make sure the car's engine has been properly cared for. If any repair work needs to be done, get an estimate on the cost. The value of your car is lessened with every flaw, so know exactly how much repairs will cost. This will help you arrive at a fair value for your trade. After everything has been accounted for, and you know exactly what your car is worth, expect to get a few hundred dollars less at the dealership. Once the price of your trade is agreed upon, have the salesperson put the trade-in quote in writing. And ask for the actual cash value of the car to be put in writing as well. This will help you get an idea of what the dealership plans to make on the car and is another tool in the negotiating process. Sometimes, a dealership will agree to buy the car at the trade-in quote whether or not you end up buying a new car from them. That's the way it should be. If a dealer quotes a ridiculously high price for your trade, they know they'll make their money back some other way (either by loading the new car up with equipment add-ons, selling unnecessary insurance, or gouging you with a high interest rate and a long financing term). Fight the urge to accept a high quote on the used car, ridiculous as that may sound. Or, just see how hard it is to negotiate the sale price of a new car if you're getting way too much for your trade. It's impossible. The dealer is in business to make money and they won't budge on the new car's MSRP if they're already losing their shirts on the trade. Haggling for a New Car or go directly to Dealer Depot. To begin negotiating the price of the new car, tell the salesman you have the Actual Market Value price from the AutoNetDirect's website. If they are unfamiliar with this pricing system, tell them this figure represents a profit for them and a fair deal for you. Also tell them you went on the guidelines of Kelley Blue Book, as to they will understand the only Blue Book valuation system, as they most likely use this system of valuation. It is also good to let them know the figure has been tested with dealers and should be competitive in the marketplace. Chances are the dealership will offer MSRP or slightly below it. Now is your chance to tell him what you have in mind. Don't be hesitant to let the salesperson know that you know the dealer cost, or invoice. Explain that you also know the cost of each option, and that you know about any applicable incentives and rebates. You should also know about holdback, the money that the dealer receives from the manufacturer for keeping an inventory on the lot, though do not expect holdback to be negotiable unless you are ordering a car directly from the factory. Now it is up to the salesperson to make a counteroffer. The salesperson may express shock at your initial offer, but whatever you do, do not offer more money until you get a counteroffer. The dealer may pressure you to come up with a better opening offer, but if you jump the gun and give them a better offer just because they complain, expect them to complain some more. In fact, by not waiting for a counteroffer, you will be doing serious damage to your own credibility as a negotiator. From the time you make your counteroffer, you are immersed in the negotiations. If your opening offer brought a reasonable counteroffer, then try to anticipate the dealer's next counteroffer. In other words, with each succeeding offer, you and the dealer should be getting closer and closer to your target price. You can see why there is no substitute for knowing the Actual Market Value price during these negotiations. If someone walks in without knowing Actual Market Value for a vehicle, they may believe the salesman when he says, "I can't possibly sell you the car for what you want; we'd lose money." Even if the buyer doesn't believe the seller, they have no proof, and the salesman certainly isn't going to offer it. If You Don't Reach an Agreement: Although it may not feel like it, the consumer holds the power in the car-buying process, you really do. The most powerful weapon a person has is his or her two feet. At any time, you can simply say no thank you, and leave. If the salesperson isn't treating you respectfully or you simply aren't reaching an agreement about price, walk away! There are plenty of dealerships out there, and it's a good idea to shop around before you commit to something, anyway. Don't let the salesperson keep you there after you've reached a stalemate. Sometimes, when you get up to leave, the salesman will even wait to see if you're serious, then grab you just before you get into your car and come down in price. But if you're going to walk out on a deal, be prepared to leave. This tactic will work for you in a major way. If You Do Reach an Agreement: Once you've successfully negotiated a fair price for the vehicle and are sitting down to sign the contracts, be sure to look things over carefully. Inevitably, dealerships will try to sell you front-loaded equipment, or extras that you don't need. These extra features or services are supplied or performed at the dealership and simply allow the salesperson to line his or her pocket with profit. Do not accept dealer add-ons such as "Appearance Packages" or "Protection Packages." Such add-ons can cost you thousands of extra dollars, and they are completely unnecessary for the price their asking. Appearance and protection packages include such whitewash as "fabric treatment" (a.k.a. ScotchGuard for the seats and carpet), and "rustproofing," which might actually void the factory's rust warranty. Review our "car care tips" section for a better understanding of this protection issue. At AutoNetDirect, we believe in this protection system ultimately, as this initial process will add years to your cars finish, and prevent stains deep in your upholstery. Be smart though and have this protection done professionally at a fair price. Here are some other "charges" that amount to nothing more than thinly lined dealer profit manufacturer or by regional dealer groups. Due to the seasonal and regional variations of these fees, we can not provide details other than this: advertising fees, when charged, equal approximately 1% of the vehicle's MSRP. This fee may be passed on to the consumer, but is usually absorbed by the dealer as a cost of doing business. While advertising is a cost of doing business, it is paid for through the dealer's profit. So if you are negotiating a deal that includes a very small profit for the dealer, the dealer is going to look at other costs when determining whether the sale is a fair deal for them. Consider paying the advertising fee only if: it looks like it might break the deal, it's a reasonable fee of approximately $200 (or 1% of the vehicle's MSRP, whichever is less), or you heard about the dealership through a radio or newspaper advertisement. Sales Promotion: What's the sale? When's the last time a sale charged the customer money? Dealer Flooring Charge: Another cost of doing business, and one that is more than covered by the manufacturer-to-dealer holdback. Delivery & Handling: Delivery of the car is paid for by the destination charge, and does not need to be paid again. And "handling?" Your guess is as good as ours. Ask the dealer; the story may amuse you. The fact is that every dealer is paid a certain amount of what's called PDI -Pre Delivery Inspection. PDI is what the manufacturer pays the dealer, covering any type of adjustments to the vehicle, washing, waxing, prepping, etc. By asking the customer to pay for this, the dealer is trying to get paid twice. Tags & Title: Any administrative fees should total no more than $100, with $50 being a more reasonable charge. What Must I Pay? Following are lists that may help you sort out what is expected of you. WHAT
YOU MUST PAY:
WHAT
YOU SHOULD NOT PAY
(BECAUSE IT IS ADDED DEALER PROFIT): Warnings and Tips: If you see "dealer-installed options" on the window sticker of a car, be aware that you don't have to buy them. If a salesperson says there is an extra charge for ordering a car from the manufacturer, don't believe it. If you are ordering a domestic car, there should be no charge. If you are ordering an imported car, it is called "preferencing" and there should be no charge. If you are ordering a car from the manufacturer and there is currently a rebate or incentive on the car that might expire before your car comes in, make sure it is "price-protected." Don't just take the dealer's word on this; get it in writing before you order the car. Tell the dealer that you need a written guarantee on the purchase contract. Consumers may know more about a product and the financing than the salespeople. Don't take their word as law if something doesn't sound right. Also, if they say they don't know anything about "dealer money" (factory-to-dealer incentives or spiff programs) they may be telling the truth. Have the salesperson tell his sales manager that you want to participate in dealer money if he doesn't seem to know what's going on. "A
direct auto information mainstream for the consumer"
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