Arrange For Financing In Advance
Decide what kind of financing you need before
you negotiate. Compare interest rates for vehicle
loans at banks, credit unions and other lenders.
Then check the dealership’s financing rate. In some
cases, dealership financing may offer you the lowest
rate to motivate you to buy, but inevitably it is
coupled with a higher-than-necessary purchase
price for the vehicle. That complicates your negotiation.
If you are pre-approved for a loan elsewhere, you can
keep financing out of the negotiation.
Time Your Buying Decision
Dealerships are eager to sell older models in their
inventories to make room for new vehicles. That generally
means significant discounts on the older models.
You may be able to negotiate a better price at the end of
the sales week — usually on Saturday, after the 25th
of a month and at the end of the year.
Prepare Yourself For The Hard Sell
Most sales representatives want to begin negotiating as
soon as a test drive ends. Tell your representative that
you are only interested in the test drive and are still
considering your options.
If you have done your homework, you know what you want;
what you should expect to pay for the vehicle; what other
dealerships are charging for the same vehicle and other
pricing details.
Even dealerships that advertise "one simple
price" or "rock-bottom pricing"
will generally negotiate — especially if you are prepared.
Manage Your Emotions
Communicate your interest in negotiating and your
willingness to leave without buying if you are not
satisfied with a deal. Keep your interest in a
particular vehicle to yourself. Take a friend or
relative along who will be a strong ally when a
sales representative tries to pressure you.
Negotiate One Issue At A Time
Some sales representatives combine purchasing, financing,
leasing and trade-in negotiations together — often
focusing on a monthly payment amount. This tactic gives
the seller more room to offer you a favorable amount in one
area while inflating the numbers in another. Discuss your
trade-in, financing or leasing only after you have
settled on the lowest price possible. Negotiate each issue
separately.
Negotiate From The Factory Invoice Price
A vehicle’s sticker price includes a profit
for the dealership — as much as 10 percent. Begin
negotiating up from the factory invoice price which is
found on Web sites and in pricing guides. Many experts
suggest that you offer 1 percent to 2 percent over the
factory invoice price on domestic vehicles and 4 percent
to 6 percent on foreign vehicles. However, if the demand
for the model you want exceeds the available supply,
you may have difficulty convincing a dealership
to take anything less than full sticker price.
Alternatively, a buying service or broker may be able
to offer you a better price for vehicles that are difficult
to find.
Know The Value Of Your Trade-In
Consult used-vehicle pricing guides such as the
N.A.D.A. Official Used Car Guide to determine your
vehicle’s value. Dealerships will use the wholesale
value, not the retail value, to calculate your trade-in.
Mileage, condition of your vehicle, options and other
factors affect the final amount that you will be offered
for your trade-in.
Avoid Unneeded Items
Generally, you do not need extras such as rust proofing,
fabric protection and paint protectant. New vehicle
bodies are already coated to protect against rust.
You can treat your own upholstery and apply paint
protectant yourself with off-the-shelf products
at a cost far below the dealership’s price. If
you see these items on a bill of sale, mark through them.
Take Advantage Of Rebates
Many vehicle manufacturers and some dealerships offer
rebate programs on new vehicles. Rebates change
often and may be available only for a limited
period of time. Rebates can also have restrictions.
Read the fine print before you agree to a rebate.
Rebates may be deducted from the price before the
sale or it may be paid to you in cash after the sale.
Always deduct the rebate from the price you pay
rather than accepting a check after the sale. If
the rebate is deducted from the purchase price, you
avoid paying sales tax on that amount. By deducting
the rebate from the sales price before you finance,
you avoid paying interest on that amount. Discuss
rebates with a dealership only after you have
negotiated the lowest possible price without a rebate.
Read All Paperwork Carefully
You will be asked to sign a legally binding
sales contract. Verify that the numbers on these
forms match the agreement you have made with the
dealership. If you find any discrepancies,
refuse to sign until the documents are corrected.
Ask questions if you do not understand what you
are being asked to sign. Resist pressure to rush
through the process.
Inspect Your Vehicle
Your vehicle should be detailed and filled
with gas as part of the conclusion of your sale.
Look for scratches, dents and dings on the body.
Inspect the interior. If you find anything wrong,
document what needs to be corrected in writing.
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