The Internet era has brought new tools to the negotiating table when you’re planning to buy a new car – and since the Web’s advantages tend to favor buyers, you shouldn’t neglect these resources, since you can potentially save a considerable amount of money using them. Once you’ve test-driven the vehicle and decided that it is to your liking, it’s time to get serious about negotiating the best deal you can on price.
Using the Internet, research the prices available at dealerships in your area. Remember that dealerships are independent businesses, not branches of the car company, and that they therefore have an incentive to undercut the competition to win your purchase. Print out the offers you find, or use the factory website to “build” a car to your specs, then request prices from all nearby dealerships using the online tools.
Researching with the Internet cuts down hugely on the time and effort required to secure a range of “bids.” It also enables rapid followup on good offers even if you can’t physically get to the dealership in question the same day. While a printed-out offer is not a legally binding sales contract, it does give you immediate leverage in negotiation.
Acquiring a bid through the Internet makes the dealerships keenly aware that you are searching for the best price and will likely find it, thus cutting down on the amount of selling they attempt to engage in. You are likely to get something very near to their best offer quickly, without the need to parry their efforts to “upsell” you.
Wrangling the Best Price
Armed with bids from a number of local dealerships, you’re now prepared to start bargaining in earnest with the salespeople. Rather than simply accepting the lowest initial bid, take that offer to the next lowest bidder and see if they’re willing to beat it. There is an absolute floor below which the dealership won’t go, since it needs to make a profit, but leveraging one showroom’s bid against another’s is a key strategy to driving a great bargain. At some point, you’ll likely reach a haggling stage where you raise your offer and the salesman lowers his until you reach an agreement somewhere in the middle.
Alertness after achieving this initial agreement pays off in possibly major savings to you. At this point, many dealerships will assume you will relax and be off your guard, ready to sign without paying much attention to the actual purchase terms. This is an opportunity for them to stack fees and services of dubious value on top of the purchase price to make back some of the ground they lost through negotiation.
While doc fees (documentation fees) can’t be avoided entirely, there are many other fees that are unnecessary. For example, “advertising fees” are not something you should pay at all – this is part of the overhead the dealership should pay from its profits, not your responsibility to pay in addition to the main purchase.
Paint protection plans, fabric protection, and rustproofing are all superfluous and you should insist on their removal from the contract. While VIN etching on the windows is indeed a wise step to aid in the event your car is stolen, garages offer the service at a fraction of the price which the dealership generally charges. Eliminate all unnecessary add-on plans and services of this sort to keep the cost of your car more reasonable.
Getting a Good Deal on Financing
An outright cash purchase saves you the most money when buying a new car. Buying the vehicle outright spares you an array of fees. You also avoid interest that must be paid on any auto loan. However, most people cannot afford to pay the $30,000 or more up front that the average car costs new today. In that case, understanding the basics of financing in negotiation is critical to paring down the extra expense of your purchase.
Third party financing offers the best rates in the vast majority of cases. Arrange your financing with an appropriate institution before you set foot in the dealership, using whatever cash you have available as a pool for the down payment. Once you have financing, go to the dealership, but do not inform the salesmen that you already have a car loan lined up elsewhere.
If the dealership personnel believe that you will obtain financing through them, they are likely to offer you a somewhat lower price on the vehicle, believing that they can more than make up the difference through high interest and fees on a car loan. Once you’ve secured a good bid, decline the in-house financing and use your third party loan to complete the purchase.