Planning on buying a new car? Here are a few tips and tricks you can use when you go to the dealership.
Tips and Tricks
Your $ Range
When you are asked the price you are looking for, or the price range you are looking for, make sure you don’t tell them your final target. Negotiations are about give and take so you want to leave yourself some wiggle room to negotiate. Tell them a $ amount that is reasonably lower than your final target, yet still in the range (the low range) for the type of car you want.
After you find the specific model car you are interested in, make sure you look at and test drive cars of that model that range from the base model to ones with all the bells and whistles. Don’t get your mind set on a single car. Give subtle hints about some of the features you like in the different cars. A simple “I really like the wood trim” or “I like the backup camera feature” will do. Again I stress, don’t get stuck on a specific car… especially a base model. Remember, you want all the bells and whistles – you just want to pay the base model price for them.
The Bells and Whistles
The steps you took in selecting a car will help you negotiate the bells and whistles. Dealerships will often “throw in” bells and whistles to seal the deal. Remember, you are aiming to get more for your money so don’t hesitate to bring these into the conversation. Be careful not to move away from your target $ though.
When they come to you to discuss the loan options and you are planning on financing with the dealership, know this… Interest rates ARE negotiable. They will often knock 1-2% off the interest rates if YOU make it a point in the discussion or use it as a final make it or break it. You don’t want to be aggressive or play hardball as that is not good negotiation skills. You just want to make sure your payments end up where they need to be so this is an option if you get close to or above your target $.
Although it is difficult to negotiate a car for less than the list MSRP, know this… There is often some padding in that number but not a ton, and some dealerships are pretty firm about not going beneath that $. They are most likely to negotiate below the listed MSRP and reduce their padding % if they are trying to clear inventory. So buying a car when the new years inventory comes in is a great time to buy if you want to really reduce the price.
Before you settle on a price
Usually, it happens that you decide on a car and negotiate a good rate and are ready to move forward and then… while all the paperwork is being processed, they hit you with some extended warranty options. Of course they do it in this order because you have already sealed the deal with the price so anything negotiated after that is extra for them. There is two ways you can approach this. You can either ask to discuss warranty options and put them on the table to be negotiated BEFORE you agree to a final price – building it into the initial negotiation. Or, you can negotiate those separately if you still have a some money left to negotiate with. Either way is fine, you will just have to make sure you account for it ahead of time when you are figuring out your targets. If you do choose to negotiate after the fact, know that warranties are little to no cost to the dealership so they are really going to want you to buy them. Use this to your advantage because there is a lot of room to negotiate when it can benefit the other party regardless of how much you pay for them. Even dealerships believe that every dollar counts.
One important thing to know about warranty options is that they are customizable. The dealership will provide you with a list of options like a basic extended warranty, tire warranty, windshield warranty, maintenance warranty, etc. and most of them have an extended milage attached. If you can’t afford all of them but wish you could have them all, then this tip is for you. Sometimes you can change the milage of those warranties and add other warranties to make up the difference. For example, I negotiated a car recently and the owner wanted a maintenance warranty and the warranty that covers all the car parts/electronics. The owner also would have liked the tire replacement warranty but couldn’t afford it. Well the warranties for maintenance and parts were to both cover up to 100k miles. So what I did was negotiate the maintenance warranty down to cover only up to 75k miles and had the full 50k mile tire warranty added instead as a replacement for the 25k miles I took off the maintenance warranty. So if you really want full coverage but can’t afford it even after you get the price down as far as it can go, this is an option.
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