Alright folks, everyone seems to hate buying a car. And having sold cars let me tell you, it sucks on both sides. Here is a mixed bag of advice I learned on the job and from customers who walked away with killer deals. (This is for New cars only.)
The Pre-Pre-Game
- Use the Internet. Not only can it help you narrow down which car it is you want, but it can also help you nail down what the general asking price is and if any Car dealers or Manufacturers have specials going on. (Yes, sometimes those specials are real.) And you'll have good odds of a Dealership bending over backwards to price/rate match even if the numbers you're quoting are fake.
---- Special note for the Ad cars. They are real life clickbait, treat them as such. Every once in awhile you get lucky, but never count on it unless you are prepared to visit dealership after dealership for at least a few weeks.
- Do the math. You know your budget best. Figure out the maximum you are willing to pay per month over what period of time with what interest rate. Be sure to tell yourself that this is the solid limit to prevent overbuying.
- Understand the financing. If you go in and know nothing about how car loans work, or how they change based on negotiations, then the only information you have is what they give you.
---- The interest rate is basically the odds of you following through on your payments based on your credit score. Obviously the amount of the loan factors in. It also determines the overall net amount you will pay for the car.
---- Down payment, your first time payment on the loan, which affects the amount, see above.
- Know your credit score. There are a few places that will run your credit for free and it will give you an idea for what kind of interest rate you can expect to be offered. I was always told that anything above 700 should be okay. Be warned, there are a few different types of credit scores, which can vary by 10 points or more.
- Get Pre-Approved for an auto loan through your bank or credit union. From what I have seen, banks/credit unions will give you better interest rates than a dealership will. It also works as a litmus test for when the salesman gives you the initial interest rate. It's also a good ace to keep in your back pocket as many dealers will try to match or beat that interest rate when you reveal it. (True anecdote - My buddy showed a salesman "proof" of a pre-approved loan through the Marine Corp Bank and nailed down 2.35% interest.)
The real Pre-Game
- Practice negotiating. I know this sounds dumb but you are up against people who have done this for a living for years. They can and will dominate the negotiations and take you down the path they choose unless you actively resist.
- Do not go alone. Whoever roleplayed with you in the above step, bring them along. It's always better to outnumber the enemy and yes, they are the enemy. They are also schmucks just doing a job but a job that's paid based on sales. And make sure your car buddy knows why they are there. Just having them there can help but having them just about ignore the salespeople and interject with their own opinions helps a lot more. In addition, they are your failsafe. If it threatens to go over budget, pre-arrange for them to drag you out kicking and screaming.
- Schedule time. At the minimum I was with a customer for 2 hours hammering out the final numbers, if they came at 8 in the morning, on a Tuesday. Not only do you have to be willing to put the time in, but so does your friend. And that of course is assuming you only look at one car at one dealership that isn't busy. Personally I would schedule out an entire weekend, and accept the possibility of over-time during the week after. If you're still shopping different models of cars, expect a month long marathon.
Entering the Battlefield
- Start strong. Dominate the situation right away. Keep them answering questions instead of asking them, use their name a lot when talking to them and just generally take charge. Assuming you Pre-pre-gamed at this point the only things you have to do is test drive the car in real life and work on the numbers. Think of the salesperson like a set of car keys and a calculator.
- Keep strong. They will bullshit you. The idea is to sell the car to you, enough so that whatever number they give you seems reasonable. If you took control they will try to take it back. If they took control they will try and keep it. At this point, you can probably ignore anything beyond basic facts coming out of their mouths.
- MSRP. By law every car needs to have the pricing sticker and by law, nearly everything on the sticker is industry standard. But make sure to note a few things. First is the MSRP. Subtract about $2000-ish from it and that is probably a good a guess as any as to what the invoice for the car was. Secondly, if you want some of the options, look at how much they charge for them. They'll tell you no but some of those options can be swapped out like legos if you ask long enough.
---- Dealer add ons. Everyone has them. Be it lojack, scratch protectors, additional safety features etc., they add them and mark them up to hell. Again, you can get them removed and the price subtracted. If you really want them, sneak into the service department and ask how much it would be to get them added afterwards. It sounds stupid but it's probably cheaper.
- Drive. Your dream car could drive like shit. Or maybe the angles are wrong for your body. Or maybe it touches you in places you aren't comfortable with. This is your chance to find all that out. And also a good place for your buddy to pitch in. Front seat, back seat, doesn't matter where they sit, just make sure that you and your friend talk about the car, and talk over the salesperson if need be.
---- Don't fall head over heels in love at this point and if you do, make sure your friend is there to slap you.
- Skirmish. Now the hard part, numbers and the inevitable back and forth. Understand ahead of time that at this point, the salesperson, or whoever else will handle you, already has a tried and true strategy, possibly more than one. More so than ever the buddy system is your best friend. Let them make the first move and judge from there. You should have a trump card, the pre-approved loan, in the back pocket for the end game. Until then it'll just be a sloppy back and forth. Remember the foundations, MSRP minus $2000.00 as the invoice and know --they will go below the invoice if pushed. A dealership has more important ways of making money then the price they sell the car for. As for down payments, for every $1000.00 down the monthly payment goes down about $20.00. More importantly it can affect the interest rate.
---- Unless the dealership finances in-house, they have to negotiate with various banks. If it's after business hours, they make a best guess.
- The End Game. Trump card time. If the interest rate is above the pre-approved rate, use it and challenge them to beat it. They should at least match.
---- By now it'll have been a few hours but even still, if the deal isn't where you want it, don't be afraid to walk away. If they're desperate, they'll chase you down in the parking lot with a better offer.
Congratulations, you probably did not get ripped off.
---- Special notes.
- Trading in a car. A dealership will never give you the best offer. On the other hand, selling it on your own might be more trouble than it's worth. Word on the street is that CarMax consistently gives the best average offers. If you can, always give your trade-in a little spit shine.
---- The Kelly Blue Book. This is kind of the like MSRP, it works as a reference but not much else.
- Timing. Dealerships have sales quotas and it's more important to meet that quota than to make money on every deal. Ex - The dealer I worked for had a monthly quota and when it swung around, almost every car sold close to or below invoice. In addition, car makers have set schedules for when they revamp a model and a dealership is not going to want old body styles on it's lot. You can probably google it.
- Zero down/interest rate, etc. Ads like these aren't exactly gimmicks, but they aren't exactly real either. You know what they say... Again, the lucky who qualify and jump through the hoops can get it but at the same time, it may not mean you're getting the best deal.
- HammerSpace. The dealership is not limited to what they have on the lot. If you would prefer to deal through them, they can arrange to have the car you want but they may not have delivered. They may even trade cars with another dealership.
YMMV
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