Buying a new car is thrilling. Going down to the dealership and negotiating on the price and payments is not. You can make the negotiation process a little more pleasant and financially beneficial with some planning and knowledge.
Preparation
It is important to know the dealer cost of the car you want. The online services Kelley Blue Book, Edmunds, or NADA Guides will give you the invoice cost. Make a note of the percentage discount from MSRP for the base vehicle and options to get to the invoice cost. If you choose a car with different equipment when you get to the dealership, you can make a quick calculation of the invoice cost.
Call your bank or credit union and get its current rate for car loans and have them calculate the monthly payment on the amount you plan to finance.
Attitude
Car salespeople and sales managers strive to get buyers emotionally involved. They want you to love the car so much that the price will become less of a factor. The salesperson will also work to prove that he is on your side during the negotiations. Unless you are a regular customer, these tactics are designed to reduce your resistance to a higher price.
You must remember to remain calm and friendly. Do not get upset or emotionally involved. If you remain calm and business like, you will show the salesman and sales manager you are serious about buying the car but will not overpay.
If at any time you do not like the way you are being treated, leave the dealership. Sales personnel in dealerships sometimes act as if you must buy from them. Take away that belief by leaving. If they are willing to deal, they will call you back.
Negotiations
From the car dealer's side, the purpose of negotiations is to get you to accept a higher price and monthly payment than you planned. Your goal is to get the best price and financing terms the dealer can offer.
After the dealer opens negotiations by offering to sell you the car at full sticker, you will be expected to make a counter offer. Your first offer should be slightly below your calculated dealer cost. If your offer is close to a profitable deal, they will know you are a serious buyer. Avoid making any further offers until the dealer has lowered the asking price several times. If the offered price reaches an acceptable level, accept the deal. If they are not within a few hundred dollars of invoice cost, make one more offer at $100 above invoice and see if they reduce their price again.
Car dealerships usually have access to better financing terms than the local bank branch. They earn extra profit by writing the car loans at several percentage points above the buy rate. Your financial negotiations should be directed at getting a lower interest rate than you were quoted from the bank. Ask the salesman to disclose the rate and term for any payment quotes. Once you see the rate, counter with your bank rate and ask the dealer to beat the rate. If they can, they will. A well-negotiated car loan will save you significantly more money than knocking a few hundred dollars off of the selling price.
You should negotiate the price and financing terms simultaneously. If you drive the negotiations, the sales person and sales manager will be reacting to your initiative. After reaching a deal, you want to make sure the final documents have the same terms you agreed to during the negotiation process.
Enjoy you new car!
0 comments:
Post a Comment