It is healthy to negotiate terms before financing a car. Instead of a negotiated value of the vehicle, some dealers try to charge for the Manufacturer’s Suggested Retail Price (MSRP). Some dealers may mislead you to believe that the factory- to-customer rebate is a part of their dealership discount and they need to subtract it from the MSRP. And then they announce that the negotiations are over. Dealers are already earning from their holdback checks.
Special financing is offered to those who pay at least 20% in cash. You may carry this cash for your car’s down payment. In case you are also opting for the same then you can save your money over the course of your loan.
But in case you are going the other way round, like if you are short of sufficient cash for your down payment, then you may apply the rebate to the cash down payment. Ensure the applied rebate should not get deducted from the MSRP.
There is a way to get the deal with rebate on paper. The dealership sums up the negotiated purchase price with the applicable taxes, license fees, document fees, and so on. And then all the rebates and the cash that you have submitted before will get subtracted from the total, giving you the final price as your balance amount.
When you are sure that you can adorn your home with a car, then it will be the best time to buy it. To escape from the dealer tactics, the safest and best time to go for the desired deal is at end of the month. It is because the dealerships generally submit their sales report to the manufacturer on a monthly basis. Not all that glitters is gold. We fall for advertisements and discounts that are published expecting to get a better deal. It can be unhealthy for auto enthusiasts. We should go for this step when we are planning to have year-end model closeouts. When a new model comes out, it depreciates the old model’s value and perhaps your savings.
Common Dealer Tactics
There are many tricks that a dealer employs to fool the customers. Some of them can be:
1. The guilt trip
Generally, a dealer keeps his desk covered with the photographs of teenagers and children. A good sales person tries to influence the customer emotionally to stop him or her from negotiating any further. The salesperson’s basic meaning is if the customer tries to bargain more and more, it will directly affect their salary and ultimately their source of income. Where the question of family and children arises, many of the customers turn soft for the salesperson, feeling guilty to hack away at their commission, which they might need for running their homes.
2. The lost keys routine
You get your car keys from the salesperson when going on your test drive. You like the car and start negotiating about its price. But if the negotiation is not serving your best interest and you want to leave, then this is the time when the dealer tries to run their defined tactic. They will misplace the keys. Then, an intensive search will be held by the car manager and in the meantime, the concerned salesperson will try to make the customer ready to buy the car. This led you to spend more time at the dealer’s counter. This way you are serving their purpose as a salesperson as well-versed into fooling the customer.
Once a salesperson gets the hint that a customer is not getting trapped in their laid net, they start their procedure in a pre-defined manner. They start giving you the details about all the schemes and discounts associated with that product. To your surprise, these offers get approved by the manager. Nothing is going from their pockets, but you are surely wasting your time over there. You can escape this wastage by letting the salesperson know that you want to have a word directly with the manager and within the given time duration. In case you are still kept waiting, then you must leave the place.
3. Monthly Payments
A car dealer usually starts the deal with a discussion about the monthly payments. They usually employ this trick to influence the customer. At times, they succeed in their trick as everyone is interested in getting to know about the money they need to spend. They will begin lowering said amount if you are not lured in by their offered payments. Do not allow them to influence you with their oily tongue. You may tell them that you only want to get involved with the asked price. Let them know that you are surely interested in owning a vehicle but on fair terms. If your salesperson persists in not telling you about the dealer’s invoice, then you may want to go to another dealer’s counter.
4. Good Bargain- Start with the invoice price
You may start negotiating from the invoice price instead of beginning it from the sticker price. In case you are looking for a vehicle in short supply, then you may take notice of MSRP; in other cases you may ignore the MSRP. At times the demand for a vehicle like a sports car may exceed the supply, and then the dealers do not feel pressured to sell any vehicle for less than MSRP. They serve their purpose especially in the case of cars that are hard to find.
You need to conduct intense research about the dealings as knowing about the 2% to 3% hold back payments to dealer by the manufacturer may get you the best deal. Being dear to the manufacturer, high-volume dealerships are eligible for incentives and discounts. Your little compromise can get you the best deal. You may allow the dealer to add some advertising costs to their invoice totals and show them that you do not have any kind of objections in their earning reasonable profits. Let them know that you are mainly interested in their asking price and that it should be based on dealer invoice.
Going for negotiating from the dealer’s invoice allows you to save your time and money in actual price negotiations. In case the dealer responds with lower prices, you may offer higher prices and vice-versa. You may keep your price increases under $100. To keep the dealer in confidence, you may repeat that you want to have a car in the next few days.
5. Going for haggling in case of used vehicles
There is no dealer invoice in negotiations for a used car price. However, negotiations for a used car and negotiations for a new vehicle share the same features. Dealers calculate every single expense following on fixing up a used vehicle. The only remaining fact is that they will never show you that worksheet. As a matter of fact, the franchised dealers make most of their profit from used car sales. They usually offer factory-certified used vehicles. These certifications are as good as warranties offered by a third party. It is always safe to visit a specialist dealer to get a bargain when buying a used car as they do not make much profit, but just see to the fact that their overhead expenses are less. Their offered warranties do not sound good as they exclude repair facilities.
If a person is well-versed in their research related to the desired vehicle, then he or she will surely get the best deal. Your mechanic reports should be well-equipped with the significant data. In case your mechanic has already proved the purchase then you may go for selecting other cars if the deal is less favorable to you and more to your dealer. If you think that your desired used car needs some repairs, then you should always deduct the repair costs from the cost asked by the dealer. It depends on your haggling skills. You may start with subtracting 80% or 90% of the repair costs from the asked cost and may vary it to the 100%.
Acceptable Deal/Best Deal Example:
Dealer’s Asking Price: $10000
Repair Estimate : – $1800
Sub Total: $8200
Fair Market Value: $9400
Repair Estimate: -$1800
Sub Total: $7600
You may show off your mechanical skills to the dealer. This way you have the best deal ahead of you. If a dealer is asking you for the $10000 with a fair market value of $9400, but in this case you think that your repair cost will turn out to be around $1800, then start with offering the dealer $7600. If the dealer is still not ready for the offered payment, then you may increase the amount to $100 but not more than this. In case the settlement is not coming out in the way you wanted it to, then you may see the next dealer. Just leave your contact number.
6. The End of the Choices
Finally, you have decided to buy the car. So, first think of your preferences and budget. This helps you a lot in compressing the huge list into a small one. Now, you have decided for a brand new car. Do not waste your time in thinking. Simply go online and find out the latest details about the car. Along with the Internet, you should visit local dealers of that car. Try to get as much information as you can. Write down all the details of the vehicle along with other vehicles in a notebook. Compare notes between both of the vehicles.
7. Compressing
At this stage, you must have driven all the desired vehicles of yours. Suppose you have compressed the choices in to two vehicles. Take a drive of both the vehicles on the same day. Observe both the vehicles carefully. Select one that makes you comfortable, as well as suits your lifestyle. Along with the cost that matches your budget, the most important things to consider are the safety equipment and gas mileage. Buying an SUV means you must have an appropriate garage. The length of new quad-cab pick-ups and SUVs with long wheelbases are more than 18 inches.
After a lot of consideration, you will decide on one vehicle. The work does not end here. You need to begin your research on pricing.
8. The Cost
On the Internet, you can simply get the invoice prices of dealers for the new vehicles. If you want to buy the vehicle from an online catalog then log on to reliable sites. Otherwise, the local dealers are always there to serve you. You can also get information about insurance, thus making you capable of knowing the overall cost.
9. Cost of Used Vehicle
The vehicle’s market value resides between the selling prices in its retail and wholesale value. According to the IRS, the market value of the vehicle is the price that both the buyer and seller are willing to buy and sell, after having relevant information about the vehicle. Moreover, there is no compulsion, neither on buyer nor on seller. If you want to know the rate of used vehicle then it need some kind of research. You can easily find out the rates of used vehicle through an online catalog.