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Your Car Buying Negotiating Strategy
You know what the dealer paid for the car, you've calculated your 5% profit offer, and you're in a better position
than most customers. Get the paperwork from someone who recently bought a car to become familiar with buyers forms. Now you won't be intimidated when it's show time
because you know how their forms work. They are very confusing.
Complete The Deal Quickly
If you make an offer as spelled out here, the salesperson might only get $50 for the deal if they are on commission. So don't play games about whether you are
financing through them or not, just get the deal done and get out. You hopefully have already approved by a bank or credit union. The deal is not worth it if they are haggling with you 2 hours to get it. Try to complete the deal in a half hour. You are offering
them the same type of deal that is offered, and accepted every day at other dealerships. Set your watch alarm for 30 minutes, and point out to them that if the deal
is not agreed upon by that time, you'll leave. Every time the salesman disappears to review an offer with the sales manager, inform them they just ate up 10 minutes.
If you can't convince them in a half hour, you'll never convince them, because now the salesperson has past the point where $50 is no longer worth it, and they want
more, and won't take anything less no matter what.
Never Negotiate On An Empty Stomach
Before you go to negotiate eat a good meal, make sure you are rested, showered, and dressed comfortably. Dress casually, not in shorts and a T-shirt with your
lint filled belly button showing, but in nice jeans or dockers and look smart. Walk in there looking like Warren Buffet, not Jimmy Buffet. Do NOT go car shopping
if you are sick, have a fever or a headache. Bring a low priced financial calculator with you, like Hewlett Packard or TI with loan calculation functions. The
most dangerous situation for a buyer is not knowing how to check the numbers. You've already played with the numbers, so
you know what your payments should be. Bring a folder with all your notes, printouts, documents,
ads from other dealerships, and prices from the internet. This sends a clear message that you did your homework. They dread seeing "the folder". Go in near the end
of relaxing day for you, and a tiresome day for them. You might even try stretching before you go, because negotiations will tense you up. Be sure you have
all model option prices in hand in case you need to price a car with different options than you had planned on.
During negotiations, they'll pull every trick in the book to bump up your offer, it's just part of negotiations. But often it's unfair, if they use more than one
salesperson on you. That's why we should go in with a buyers team and each one of us will take turns working them. Any place charging MSRP doesn't
deserve your money. Here's some Jedi mind games they use:
 "These cars are flying out of here,
there's no reason to lower our price. We can get top dollar, because everyone wants to be in this car."
NOT TODAY! Bah, Bye. If you threaten to leave, they try to call your bluff and panic you.
"this deal is only good today. Tomorrow
I won't be as generous. You're stealing all my profits. When you come back tomorrow, I can't promise you'll get this excellent price. 3 other buyers are
looking at it."
He also had 3 people walk out without buying. The deal will still be there tomorrow if they did not sell the car. If they say "This deal
is only good today", Tell them "So is my offer", then run, don't walk out of that devilship. Oooops! I meant to say dealership.
They'll show you the chalkboard of cars your salesman sold this weekend. Use it against them when they cry that you're stealing food from their children with your
low ball offer. Tell him he sold a lot of cars this weekend, his children aren't starving. Turn it around on him. Tell him he's stealing food
from your children's mouths! You can't afford to feed your kids with their deal. Many books tell you to shop at the end of the month for better deals,
as they are desperate to meet sales quotas and may part with less profit. I feel this gives you a false sense of security, so don't let your guard down. They will be
just as stingy on the last day of the month as they are on the first. They don't always give you a good deal on previous year cars at new model changeover. I think
the best time to buy is a combination of the end of the month, AND a factory to dealer incentive. If a manufacturer sets a dealer goal to sell 10 models of a car for
the month with 9 cars sold so far, and you walk in on the 29th, name your price.
Once you make your offer, don't budge.
You have the numbers worked out already on your spreadsheet so justify them before the salesperson has a chance to interrupt. You are talking so you are in control
of the conversation. If they try to interrupt, raise your hand indicating for the salesperson to stop. Go through your speech of how you arrived at these numbers, and
don't let them speak until you are done. Remind them of the big picture. You are offering them a profit on the car, but they'll also profit from you in the future for
warranty repairs, service, parts, and body shop. Those departments are more profitable than the new car department. The salesperson might laugh. They could care less,
next month they'll be working up the street for a dealer who has the next hot selling car. If they laugh, don't stop explaining until you are done. When you are
finished, tell them you are making this offer to other dealers, you refuse to take less, and you know one of the other dealers will accept your offer. Once they sense
your confidence, they'll know you are serious, you intend to get what you are looking for, and they might accept your offer. They'll shout at you, call you names, and
accuse you of stealing from their kids. This is part of the game. They'll shave a bit off MSRP, but stick to your guns. Don't get angry, don't shout back, just remain
calm, patient, and mature. Don't insult them back, let them be the immature person. Above all, remain calm and confident, and don't be confrontational because
you know you'll get the deal, maybe not here and today, but someone will accept your deal. Emotion is contagious, so if you are calm, friendly, intelligent and
professional they will be too.
They may offer to split the difference. "We are splitting the difference with you, giving up 50%, work with us."
If it's more than 5% profit, they are still not giving up enough. Don't budge! Don't give in more than a few hundred dollars from your offer. Be prepared to walk if
you have to. The deal will still be here tomorrow if you can't beat it. Tell them you know of the incentives and they'll still make a fair 5% profit.
"But we have overhead and we paid $13000 for this car". Wrong. They borrowed to buy this car, and it costs
around $150 in floor plan interest each month. Remind them of this and assuming the car was there 4 months (it better not have been or the dealer would fire his
sales manager), it cost them $600. The dealer doesn't shell out $20000 to buy a car, just the loan payment on that $20000. He would go out of business if he did. A
smart business leverages money. To buy an investment condo for $100000, if I have $100000 in cash, I'm not going to buy it outright, I'll invest $20000 in 5 condos
and leverage my cash. So don't fall for their lies. The salesman probably does not even know this.
Want more ammunition? Remind them that dealers are losing money to internet brokers, and other online car salespeople. They'll tell you internet sellers rip people
off, but you know better. The reason people are flocking to sites and other online programs is because they are tired of the scams and they can get a cheaper price from the
comfort of their own home PC. Tell the salesman you are not in the mood to waste any time and you'll make this same offer to other dealerships if they say no.
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Just The E-mail'am: A Great Way To Get A Good Deal
This is one of my most successful and popular tips. You have an offer from a dealer, but you may want to bounce it off others. Beware when a dealer says they'll beat
it by $200. Is it an apples for apples deal? You must decide whether to sign the deal now that could be done in an hour, or risk driving across town, getting $200
less on the car, but getting your butt kicked on the back end of the deal when they add useless fees to make their deal worse. Look at the COMPLETE deal, not just the
selling price. They'll play cash flow shell games, or they could be low balling you.
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Money Saving Negotiating Tips:
Negotiate from "Dealer Cost" upward, not from MSRP downward.
Remember, dealer cost DOES NOT mean invoice price! Forget banker's guides, use internet sites to calculate the true dealer's cost. Once you know it, you have powerful
negotiating ammunition. Walk in with research that cannot be disputed, not rules of thumb that can be dismissed by the salesman. Dealers may be quick to show you an
invoice, but you don't care about invoice price, you care about dealer's cost + a fair 5% profit. They will say your sources are wrong and outdated. So verify
your info with several sources. Compare MSRP of your source to the car's sticker, and` show them it matches. Check several online pricing sites, and don't let them
shake the ground beneath you. Make your offer to them and stick to it. If they counter offer a little lower from MSRP, ridiculing your lack of expertise, don't budge.
Tell them that's the deal, take it or take it, and be ready to walk.
"No Haggle" usually means "No Bargain"
If they don't haggle there are others who will. Many dealers use No Haggle selling on autos, and you think it means you have to pay their price. However, you
still hold the Trump card, because you can just get up and leave. Some no haggle dealers are good, others use the guise of no haggle to charge MSRP on everything they
sell. When people see "No Haggle" tags, they drop their guard. Many consumer advocates agree with me that No Haggle dealers sometimes are good, but not always the best
deal.
If their "No Haggle" price is more than 5% over dealer cost, then it's not a good deal, and it's time to haggle.
Many people are too meager to haggle once they see the tag, so the dealer makes more profit, without the high pressure sales tactics. Many people walk away thinking
they got a great deal. I prefer the dealers who just honestly come out and say "I'm sorry, Jeff, we just can't do business with you". Then your time isn't
wasted, their time isn't wasted, and no one gets hurt. Some places refuse to haggle. Don't buy into a deal that's too profitable for them, and not value added for
you.
Don't Be A Payment Buyer!
They love suckers who tell them they are "payment buyers". "Damn it I'm not paying more than $350 a month for this Camry, and that's it!" Well alrighty, then.
They'll shave a few dollars off MSRP to make you think you got a good deal. Don't be a payment buyer! If they ask you "What monthly payment are you looking
for?", you're being setup for the scam. Tell them that is irrelevant. What matters to you is the cost of the car, not just the monthly payment.
Tell them you negotiate the car based on its value, not a monthly payment.
Cash Is Not King!
People think paying cash gets the best deal. It's not true, they get cash from the bank anyway when you finance. It's none of the salesman's business, they don't need
to know your payment method until you get into the finance office after agreeing on the sales price. You don't want them playing games with the selling price based on
your payment method. Keep them honest, and get an honestly negotiated price. Then in the finance office, you can discuss payment terms. If you tell the salesman you
are paying cash, sometimes they won't drop the price. But if you finance through them, they make more money.
"But, If you're financing through us I can give you a lower price on
the car".
Why not give a lower price on the car anyway? Sure, he'll give you a lower price, but he'll just jack up the interest rate slightly, or "miscalculate" your monthly
payments by $10 per month, or require you to buy an extended warranty and credit life insurance if you have bad credit. By paying cash, they cannot pull any scams or
pad monthly payments, because there are no payments.
Don't Be An Impulse Buyer!
Here's another of my car buying physics formulas based on the experience of seeing impulsive buyers:
"This car is the hottest! We're selling them at $1000 over MSRP!"
Tell them you don't want a car that is "hot", you'll be paying too much, and next year it won't be worth squat, because the next "hot" car will replace it. Tell them
you are not interested in the car, if everyone's buying it. Now you are being proactive, and taking charge. Just keep chiseling at all their statements, always have a
comeback for whatever they throw at you. As for the Miata, remember the late 80's when it came out? Amid the hype, people paid $25000 - $40000 for an $18000 car,
because of demand. I read of a woman who bought 2 Miatas at $25000 each, hoping to resell them for over $40000, and she got stuck, unable to sell either for any price.
In 2000, suckers paid $4000 over MSRP for the Chrysler PT Cruisers, which are just Dodge Neons in disguise. Once the hype wears off they'll never get that money back,
People won't care if you paid $5000 more than MSRP, you're car is only worth market value, which is a residual percentage of MSRP, not what you paid for it.
Wait until the demand drops before you buy
When they double the output and supply catches up with demand, prices may drop, so be patient. What's the payoff for being patient a month or two?
Other than a potentially lower cost, you'll have more money saved up, than if you bought today. This will reduce your amount financed to a lower
price, and hence you'll have lower monthly payments than if you bought today. Like Mr. Miyagi says: "Patience, Daniel-San". I recommend not buying a
new high demand car as soon as it hits the showroom, or buying vehicles on backlog. You'll pay MSRP or more. When the air lets out of the hype, you are
left with a car that has greatly depreciated in value. How many of those $40000 1989 Miatas were worth $20000 the next year? MSRP was only $18000. But
if you must have a hot model as soon as it hits expect to pay for it. Wouldn't it kill you if your neighbor paid $2000 less than you for the same car
a few months later? Also, when you sell the car a few years later, you'll take a hit. Those extra $$$ above MSRP has nothing
to do with intrinsic value of the car. It is strictly a non value added over hyped profit for the dealer, and nothing more. "But I
paid $30000 for it". It does not matter. Only the market value matters. This is why I tell people don't go crazy and be the first
on your block to own the latest hot car, because you'll be the first on your block to lose money when you sell it.
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There Is No 3 Day "Buyer's Remorse" Law!
Contrary to popular belief, most states don't have a 3 day "Buyers Remorse" law for car buying, but many people think they do. The 3 day law in most states applies
ONLY to health clubs and door to door sales. I get lots of email from idiots who foolishly signed a deal, then decided to go do their research and tell
me "Gee, I know there's a 3 day grace period, why won't they let me out of my deal?" Some fools use this nonexistent law as a 3 day door stop while they look
for a better deal. You should shop your best deal before you sign, not 3 days after. This makes you as bad as the snakes. I don't reply to emails of this
nature.
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Always shop your deals around. Just because they write it up does not mean you have to sign right then. Chances are they did not give you a decent deal on the
first offer. Ask them to give you a copy to study overnight at home. I'll bet NONE of them will, unless it's MSRP numbers. If they don't give you a copy, write down
what you can, then go to the next dealer. Never sign a deal the first time they write it up unless you're sure you got the price you wanted based on this article.
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