Arrange For Financing In Advance
Decide what kind of financing you need before you negotiate.
- Banks
- Credit unions
- Dealership financing
Then compare interest rates. In some cases,
dealership financing may offer you the lowest
rate to motivate you to buy, but inevitably
it is coupled with a higher-than-necessary
purchase price for the vehicle. If you are
pre-approved for a loan elsewhere, you can
keep financing out of the negotiation.
Time Your Buying Decision
Dealerships are eager to sell older models
in their inventories to make room for new
vehicles. That generally means significant
discounts on the older models.
You may be able to negotiate a better price
at the end of the sales week — usually on
Saturday, after the 25th of the month and
at the end of the year.
Prepare Yourself For The Hard Sell
Most sales representatives want to begin
negotiating as soon as a test drive ends.
Tell your representative that you are only
interested in the test drive and are still
considering your options.
If you have done your homework, you know what
you want; what you should expect to pay for
the vehicle; what other dealerships are
charging for the same vehicle and other
pricing details.
Dealerships that advertise “one simple price”
or “rock-bottom pricing” will generally
negotiate — especially if you are prepared.
Manage Your Emotions
Communicate your interest in negotiating
and your willingness to leave without buying
if you are not satisfied with a deal. Keep
your interest in a particular vehicle to yourself.
Take a friend or relative along who will be a
strong ally when a sales representative tries to pressure you.
Negotiate One Issue At A Time
Some sales representatives combine purchasing,
financing, leasing and trade-in negotiations
together — often focusing on a monthly payment
amount. This tactic gives the seller more room
to offer you a favorable amount in one area
while inflating the numbers in another.
Discuss your trade-in, financing or leasing
only after you have settled on the lowest
price possible.
Negotiate From The Factory Invoice Price
A vehicle’s sticker price includes a profit
for the dealership — as much as 10 percent.
Begin negotiating up from the factory invoice
price which is found on Web sites and in
pricing guides. Many experts suggest that
you offer 1 percent to 2 percent over the
factory invoice price on domestic vehicles
and 4 percent to 6 percent on foreign vehicles.
Know The Value Of Your Trade-In
Consult used-vehicle pricing guides such as
the N.A.D.A. Official Used Car Guide or Kelley
Blue Book to determine your vehicle’s value.
Dealerships will use the wholesale value, not
the retail value, to calculate your trade-in.
Mileage, condition of your vehicle, options
and other factors affect the final amount that
you will be offered for your trade-in.
Avoid Unneeded Items
Generally, you do not need extras such as
rust proofing, fabric protection and paint
protectant. New vehicle bodies are already
coated to protect against rust. You can
treat your own upholstery and apply
paint protectant yourself with off-the-shelf
products at a cost far below the dealership’s
price. If you see these items on a bill of
sale, mark through them.
Take Advantage Of Rebates
Many vehicle manufacturers and some dealerships
offer rebate programs on new vehicles. Rebates
change often and may be available only for
a limited period of time. Rebates can also
have restrictions. Read the fine print
before you agree to a rebate.
Many times manufacturers offer rebates or
special finance rates (e.g. 2.9%). Be
aware that you usually do not receive
both. You need to use an online calculator
to determine which offer works best for you.
Rebates may be deducted from the price
before the sale or it may be paid to you
in cash after the sale. Always deduct the
rebate from the price you pay rather than
accepting a check after the sale. If the
rebate is deducted from the purchase price,
you avoid paying sales tax on that amount.
By deducting the rebate from the sales price
before you finance, you avoid paying interest
on that amount. Discuss rebates with a
dealership only after you have negotiated
the lowest possible price without a rebate.
Read All Paperwork Carefully
You will be asked to sign a legally binding
sales contract. Verify that the numbers on
these forms match the agreement you have
made with the dealership. If you find any
discrepancies, refuse to sign until the
documents are corrected. Ask questions
if you do not understand what you are
being asked to sign. Resist pressure to
rush through the process.
Inspect Your Vehicle
Your vehicle should be detailed and filled
with gas as part of the conclusion of your
sale. Look for scratches, dents and dings
on the body. Inspect the interior. If you
find anything wrong, document what needs to
be corrected in writing.
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