So you have begun the car shopping process, but the last thing you want to do is pay way over the vehicle’s invoice price. This is a common problem faced by car buyers everywhere when negotiating with car dealers. Maybe you’ve been burned by a dealership when you went to buy a car before, or you just want to make sure that you are getting the best sales price possible.
That’s where we come in! No matter what your credit score is, the best way to get a great deal on a new car is by using the tips and tricks that only industry insiders know. It’s not rocket science, but there are just some things you need to know before you go shopping for your next car.
As car industry insiders, we want to show you a few tips and tricks to stack the odds in your favor, so that you can drive away with the best possible sticker price, and have the best car shopping experience possible. Whether you are leasing a car or you plan to pay cash, knowing what you are doing is invaluable. So without further ado, here are 10 rules of thumb for getting both the perfect car for you, and the best car deal. These tips apply both to new and used cars.
You want the car you chose to fit your monthly budget. So make sure you have all the information by comparing each car price from multiple dealers within your area before you go in to buy a car. This will help ensure that if one dealership offers more upfront incentives, they’ll also offer better financing rates or a better trade in price later in negotiations. You may find out that other dealerships provide better overall deals.
Make sure you call and email every dealership that has a potential car you want. This will give you different options to compare, and will give you familiarity with the current market.
So shop around! It may be hard at first – especially if you are used to only shopping at one dealership. That’s a common scenario for infrequent car buyers. But if you get in the habit of comparing prices and making sure that your offer is as good as it can be, then you’ll stand a much better chance of getting an amazing deal on your next car purchase price.
Research Your Car Online
Good car research is essential for getting a great car price. Once you have a list of potential cars that you want to purchase, it’s time to research the car online. You’ll want to do your research on the exact models that you want. Make sure you find all of the different models and their corresponding prices. This will make the car buying process easier down the line.
Most new car dealerships will not honor prices from other websites once they know that you’ve visited them. But what dealerships can’t see are the hundreds of thousands of third party resources that you may have visited.
Especially if you’re trying to save money on your new car purchase, then it’s worth it to spend hours researching your desired car before ever stepping foot in a dealership.
Look for Rebates or Financing Incentives to Lower Your Monthly Payment
One of the best ways to find a fair price is to look for rebates and special financing incentives such as 0% or 0.9%. Rebates for new cars given by the manufacturer reset every month, so make sure you get the current ones available. You can do this by going online to the manufacturer’s website, and looking for special offers and incentives.
Sometimes it is better to get your own auto loan through a credit union and take the rebate. It’s pretty simple to do the math on a finance calculator for auto loans to find out how much interest you will pay on a loan and compare that to a rebate. If the rebate saves you more, go with the rebate.
Other times, the amount of interest you will pay may be less than the savings rebate. In that case, you may want to go with a dealership’s financing incentives. Plus, you can always pay the car off early to save even more money on the interest. Remember the interest is only based on the time you borrow the money, so if you pay extra and pay it off early you end up paying less interest.
Look for Dealerships that Sell a Lot of Cars
A car dealership that sells a lot of cars are more likely to give you discounts.
That’s because car dealerships must meet certain sales volume quotas in order to keep the manufacturer happy, which means they may be compelled to discount their volume leaders. These are the new vehicles they have the most of, and they usually receive a commission from the manufacturer to sell a set amount. The more cars they sell, the higher that set quota is going to be.
You can get an idea of how many cars a dealership sells by the size of its inventory.
A dealership will sell roughly 30% of their new cars they have in stock each month. If a dealership has a thousand new cars in stock then that is a good sign because that means they sell at least 330 cars a month.
When purchasing a used automobile, take note of the amount of previous models they have on hand. They typically sell half of the used cars in inventory.
Look for Overstocked Models and Trims
If a dealer has too many of a specific model or trim of a car, they may be willing to offer discounts to get them off the lot.
If you’re looking at a Toyota Camry for example, the dealerships may have an overabundance of the SE model but only a few XLE Toyota Camry hybrids, so they won’t offer you the same discount on the new vehicle they have fewer of. However, if you want all of the bells and whistles, you will pay more and receive less discount. It really depends on what is most important to you: the extra features or saving the most possible money.
Know What You Want
Dealerships love customers that don’t know what they are looking for. That’s because customers who don’t know what they want can potentially be talked into buying a car the dealership wants them to buy. Remember that car salesmen are very good at convincing you to act against your best interests, so if you go into a dealership unconvinced on which car you want, you are more likely to be talked into buying something you don’t want.
Do some research on what type of car you’re looking for, and write down the model numbers, colors, features etc. that you want on a piece of paper so you can hand it to them if necessary. Negotiating a great deal doesn’t start when you sit down with a finance manager; it starts when you set foot on the lot. So get your game face on, and come prepared.
But! Don’t Be Too Attached To the Exact Car You Want
We know, we just said that it’s vital to know what you want. That is true. But there is one caveat: While you should know exactly what kind of car you’re looking for, don’t get too attached to the idea of getting that exact one if there is a better deal on another. The dealership may have an even better model than what you were originally looking for on the lot. If they do, be willing to tell them that while it is not what you’re exactly looking for, if they can offer a better deal than what your original car of choice was, then go ahead and compromise with them. The idea is to be rigid in your resolve, but open to opportunity.
It’s also important to know what you can afford and how much your trade-in is worth before going to the dealership, as those values will help determine where you stand in negotiations and whether or not it makes sense for you to buy a car from that particular dealer.
Determine the Value of Your Trade-in
Having a car to trade-in when buying a new car can make a massive dent in your overall cost or monthly payment. To determine the true value of your trade-in, you shouldn’t take the dealership’s word for it. You should shop around and do your research. Optimally, you should get at least 3 different quotes for your trade-in. Go to multiple dealerships to get a more accurate estimation of what your trade-in is worth.
One owner trade-ins with clean title and no accidents fetch the most money. However you can still get good value if your car doesn’t meet that criteria. All you have to do is make sure you do some research beforehand. This way, when the dealer gives their quote on your trade-in value you can decide if it is fair or not.
Make an Informed Offer
One of the best ways to save money on a new car is to do your pricing research beforehand, so that you can make an offer informed with real-world data. Using an online pricing site like Cars.com or Kelley blue book, or programs like the Costco Pricing Program will allow you to get a good idea of what the specific car you want is going for cost-wise. You can then use that information as an anchor point when making an offer on a car.
Once you’ve done your research, you want to take the best quotes you’ve gotten so far and present an offer to the dealership that is in your favor. Try to keep it reasonable so that the sales people take you seriously, and be prepared to buy it if they are willing to accept your deal.
Hold Firm in Your Negotiation
Once you sit down with a finance manager, that’s where the real game begins. Finance managers are usually the best salesmen at a dealership, and they will use every trick in their wheelhouse to turn a good deal for you into a bad one. They’ll try to offer warranties, service agreements and other add-ons that you don’t want or need; they will also use clever phrasing like “It’s standard on all of our cars” as a means of getting you to accept costly additional products without realizing it.
The best way to counter their tactics is by getting everything in writing. If you want the $1000 value package for free, ask them to write down that they are including it with your purchase at no cost. Get everything in writing so there is no room for confusion later when you get home and review what you just purchased.
Better yet, just say no. Say no to everything the finance manager offers you. They will be surprised by your resolve, but if they know you are serious about getting a good deal then it is in their best interest to let it happen. Remember, the people you are negotiating with work for the dealership. Sure they want to take you for all you are worth, but not if it comes at the cost of losing the deal altogether. They’ll still make a profit on what the dealership paid for the car.
Ask About Extra Fees and Other Charges
In the same vein, before you sign the paperwork on a new car be sure to ask about all of the extra fees. Remember you are already going to have to pay registration fees on top of what you paid for the car, so you want to get the best out the door price possible.
Every dealership will try to sneak extra fees into their contract with you in order to take more of your money. This can be anything from a “marketing fee” to an extra charge for putting the car’s information into their computer system if it is bought on a weekend. Many of these fees can be avoided if you just ask about them.
In addition to these fees, ask the dealership what their “destination fee” is going to be. This charge covers the costs of transporting your new car from a previous location – usually another city – and getting it ready for you on lots in your current market. Many dealerships will try to slide this one past customers as well, but just ask about it and see what they say. If you feel you’re being charged an unfair amount for this fee then be sure to let them know that as well.
You need to know what these fees are going to be and negotiate them away before you sign any contract–if they refuse, then take your business elsewhere!
Go Through Other Dealership Departments
Let’s say that you want to buy a car and the sales manager won’t budge on his price. Don’t give up! Did you know that there are a couple different departments (besides the sales floor) you can go through when buying a car at a dealership? Going through these alternative departments can end up saving you a great deal of money on a new car, if you know where to go and when.
The Internet Sales Department
If you’re able to work with an internet sales manager they usually will give you the best deal upfront as they do not get paid off of the gross profit but the volumes and bonuses that correlate with that.
They have a set quota of new cars they have to sell for their dealerships and that’s why you get such good deals from them.
The Fleet Department
The other secret is to go through the dealership’s fleet department. A car dealership’s fleet department is a special division of the dealership that deals with cars and trucks, usually for businesses. These are brand new cars just like you would get on the lot, but because the fleet department is focused on volume instead of profit, they are often willing to give a big discount.
Unfortunately they will not deal directly with an ordinary customer. To access the deals that a fleet department has to offer, you will have to enlist the help of a licensed auto broker.
Use an Auto Broker
If you want to save the most possible money on the out the door price of a new car, the best way to do it is by using an auto broker. Yes, they have access to fleet pricing, but it’s so much more than that.
An auto broker is essentially an intermediary between you and the car dealership. Brokers are familiar with each dealership’s practices and how they operate, so you can feel confident that the process is not being manipulated in any way by the dealership trying to get more money out of you.
In addition to saving you money, they will save you time and stress. Here’s a simple overview of how it works:
- You tell the car broker exactly what you want.
- They search until they find the car.
- They handle all negotiations with the dealership to get you the best deal.
- They have the car delivered right to your door.
No more endless hours looking for cars online, no more sneaky salesman on the car lot trying to upsell you to hell, no more excruciating 6+ hour waits in the finance department dealing with high pressure sales tactics. They can even arrange for you to test drive your new or used car without being badgered by salesmen. Plus, you get the car delivered right to your door. A car broker goes through all of that for you, so you don’t have to.
Doesn’t that sound nice?
All in all, using an auto broker can save you a lot of money on a new car–and they’re always available whenever you need them! They can lower your monthly payment and down payment. Their reach extends beyond local dealerships. They can get the best possible deal on your new car, new car loan, or new car lease. They can also often get you a major discount on a car’s invoice price. They can also deliver the car straight to your door.
Best of Luck on Your Car Buying Journey!
Buying a car can be difficult because there are so many different options available to you. In this article, we’ve given you some tips and tricks that only insiders in the industry know about how to get the best deal on a new car. Whether it is negotiating for lower prices or going through other departments at the dealership–these methods will help ensure your satisfaction with your purchase.