New Car Buying Guide
This weekend I helped my friend's mom buy her new 05 Nissan Murano. I negotiated a decent deal... $350 under invoice + tax, tag and tittle. Buying a new car can be scary so I thought I would share my some of my tactics that I've learned with you.
- Most view car sales people as the scum of the earth. While sometimes true, most of them are just doing their job - make the most money from you as possible. Your goal, as the buyer, is to get the best deal possible.
- Do your research. Information is key here. The lack of information or misinformation will get you ripped off. The dealer does not rip people off, ignorance rips people off. Before even walking into the showroom, go to the manufacturer's website of the car(s) you are interested in and configure one to your liking. The price listed is MSRP. Then go google the invoice price of the car and its options and packages. Google owner forums to read real world opinions/problems about the car. Learn as much as there is to learn. Become an expert. Get a feel for how much others are paying. If you're not a car person, ask a friend who is to accompany you.
- Invoice cost is not true invoice. Dealers often get their cars from the manufacturers lower than invoice so negotiate $500 to $1,000 below invoice price and up. Then how do they still make money? Well, dealers make money in one of four ways. One, profit from the sale. Two, manufacturers often offer their dealers rebates and incentives, so they get cash back. Three, interest rates. Banks often give cash back to the dealers. Finally, from trade-ins. Low ball buyers on their trade-in and resell high for a huge profit.
- Everything is negotiable. Price, options, dealer fee, destination charge, even the interest rate.
- Play their game. Tell them that you got another quote from another dealer for $250 over invoice and you want them to beat it, even though it might not be true. Lie. Make up a story about how your friend's Uncle brought his car from this dealer for $500 under invoice and you want the same deal.
- Be quick. For every comment they make, reply. If they ask, how am I supposed to make money off this deal? Reply, from all the business that I refer you.
- Be strong and firm. Figure out your ceiling and don't go beyond that. If they sense a weakness, they will pounce on you.
- Be prepared to walk. If you don't like the deal, walk. If they want your business and they will, they will chase you down in the parking lot and give in to your demands.
- Say no to extras. Don't let them sell you extra options that you don't need or want. If they tell you they only have this model with xyz packages, tell them to locate exactly the car and options that you at another dealer and perform a dealer trade or order the car you want not what they want to sell you.
- Get financing before. Go to your credit union or bank and get financing before going to the dealer. Credit unions offer lower interest rates usually. My S2000 is financed through a local credit union.
- Price out insurance before too. Big mistake for many buyers, as most look at the insurance after they have already taken their new car home. If you finance and lease any new car, the bank will require full coverage insurance so price it out. Make sure you will be able to afford the monthly payments on the car, insurance, gas and eventual maintenance.
- Never tell them about your trade-in until its time to talk about it. Negotiate the price on the new car first. If they ask, tell them no you are not trading in a car. If you say yes, they will give you a good deal on the car but low ball you on the trade in. After the price is settled, then tell them oh I decided to trade in my car just now, then negotiate that. I would suggest to not trading in the old car, but sell it in the private market or sell it to CarMax. You will get more money for it.
- Some cars you can't negotiate on. Car in high demand, like the Mini Cooper, limited production cars, like the Honda S2000, or newly released cars, like the 05 Mustang, are usually not negotiable. Some dealers even mark up from MSRP. So if you want a good deal, you will have to wait a couple of model years to pass or buy it for MSRP now.
- Test drive the car, then negotiate. When test driving, drive it like you stole it. Take it all the way to redline, slam the brakes, make some sharp, sudden turns. Test it in city traffic and the expressway. A test drive is more than doing a lap around the dealership and kicking the tires. Make sure this is the car for you.
- Shut them down at every opportunity they can make money off you. Negotiate the price of the car and packages. Negotiate the trade-in. Negotiate the dealer fee and destination charge. Negotiate the interest rate.
While these tips are useful for buying a new car, most can be used in an used car buying process as well. Instead of invoice cost, find out the trade-in and market value from the Kelly Blue Book. If dealing with an used car dealer, negotiate from the trade-in value and up. If dealing with a private seller, find the market value of the car under the worse conditions, and use that as a starting point. Never buy an used car from CarMax. I made that mistake once. Also run a CarFax report, although it is not 100% accurate. Finally I recommend taking the car to your personal mechanic for a full inspection. Check that all the VIN stickers match up. Check for mismatching paint, body panel separation, stress cracks or out of place weld marks, suggesting previous body repairs from an accident. Ask for full service and maintenance records.
- Most view car sales people as the scum of the earth. While sometimes true, most of them are just doing their job - make the most money from you as possible. Your goal, as the buyer, is to get the best deal possible.
- Do your research. Information is key here. The lack of information or misinformation will get you ripped off. The dealer does not rip people off, ignorance rips people off. Before even walking into the showroom, go to the manufacturer's website of the car(s) you are interested in and configure one to your liking. The price listed is MSRP. Then go google the invoice price of the car and its options and packages. Google owner forums to read real world opinions/problems about the car. Learn as much as there is to learn. Become an expert. Get a feel for how much others are paying. If you're not a car person, ask a friend who is to accompany you.
- Invoice cost is not true invoice. Dealers often get their cars from the manufacturers lower than invoice so negotiate $500 to $1,000 below invoice price and up. Then how do they still make money? Well, dealers make money in one of four ways. One, profit from the sale. Two, manufacturers often offer their dealers rebates and incentives, so they get cash back. Three, interest rates. Banks often give cash back to the dealers. Finally, from trade-ins. Low ball buyers on their trade-in and resell high for a huge profit.
- Everything is negotiable. Price, options, dealer fee, destination charge, even the interest rate.
- Play their game. Tell them that you got another quote from another dealer for $250 over invoice and you want them to beat it, even though it might not be true. Lie. Make up a story about how your friend's Uncle brought his car from this dealer for $500 under invoice and you want the same deal.
- Be quick. For every comment they make, reply. If they ask, how am I supposed to make money off this deal? Reply, from all the business that I refer you.
- Be strong and firm. Figure out your ceiling and don't go beyond that. If they sense a weakness, they will pounce on you.
- Be prepared to walk. If you don't like the deal, walk. If they want your business and they will, they will chase you down in the parking lot and give in to your demands.
- Say no to extras. Don't let them sell you extra options that you don't need or want. If they tell you they only have this model with xyz packages, tell them to locate exactly the car and options that you at another dealer and perform a dealer trade or order the car you want not what they want to sell you.
- Get financing before. Go to your credit union or bank and get financing before going to the dealer. Credit unions offer lower interest rates usually. My S2000 is financed through a local credit union.
- Price out insurance before too. Big mistake for many buyers, as most look at the insurance after they have already taken their new car home. If you finance and lease any new car, the bank will require full coverage insurance so price it out. Make sure you will be able to afford the monthly payments on the car, insurance, gas and eventual maintenance.
- Never tell them about your trade-in until its time to talk about it. Negotiate the price on the new car first. If they ask, tell them no you are not trading in a car. If you say yes, they will give you a good deal on the car but low ball you on the trade in. After the price is settled, then tell them oh I decided to trade in my car just now, then negotiate that. I would suggest to not trading in the old car, but sell it in the private market or sell it to CarMax. You will get more money for it.
- Some cars you can't negotiate on. Car in high demand, like the Mini Cooper, limited production cars, like the Honda S2000, or newly released cars, like the 05 Mustang, are usually not negotiable. Some dealers even mark up from MSRP. So if you want a good deal, you will have to wait a couple of model years to pass or buy it for MSRP now.
- Test drive the car, then negotiate. When test driving, drive it like you stole it. Take it all the way to redline, slam the brakes, make some sharp, sudden turns. Test it in city traffic and the expressway. A test drive is more than doing a lap around the dealership and kicking the tires. Make sure this is the car for you.
- Shut them down at every opportunity they can make money off you. Negotiate the price of the car and packages. Negotiate the trade-in. Negotiate the dealer fee and destination charge. Negotiate the interest rate.
While these tips are useful for buying a new car, most can be used in an used car buying process as well. Instead of invoice cost, find out the trade-in and market value from the Kelly Blue Book. If dealing with an used car dealer, negotiate from the trade-in value and up. If dealing with a private seller, find the market value of the car under the worse conditions, and use that as a starting point. Never buy an used car from CarMax. I made that mistake once. Also run a CarFax report, although it is not 100% accurate. Finally I recommend taking the car to your personal mechanic for a full inspection. Check that all the VIN stickers match up. Check for mismatching paint, body panel separation, stress cracks or out of place weld marks, suggesting previous body repairs from an accident. Ask for full service and maintenance records.
Labels: Opinion
written by Tommy at 8:06 AM |
link: New Car Buying Guide
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digg it!
Thank you, very interesting!
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