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Learn to negotiate a car deal like a pro!

Updated on May 4, 2013

Negotiating a car deal...like the pro you are!

A survey regarding a car buyers experience showed that people like going to the dentist more than buying a new car. Why is that? For the most part, people feel that they didn't get the deal like they expected. Others feel that they were not treated respectfully, and the ongoing question of "why does it take so long at the dealership!" is especially frustrating. I will show you how to get a good deal, and save you time.

The automotive industry is a very competitive business, and most new car dealers are always looking for that edge over the competition. Because a vehicle is a depreciating asset, most dealers try to keep the inventory from becoming "aged" as it sits on their lot, especially the used car inventory. Just knowing this information about how many days the dealer has owned the car, can be the best step in negotiation your next deal.

If you want to purchase a new or used vehicle, and want to experience the question "did I pay too much?", then be emotional and drive immediately on the dealers lot and purchase a vehicle! Surprisingly, many people still do this, and the dealer is the one that holds the advantage. Why is this? Because they can tell you anything about pricing, and you only have one option and that is believing them. Because a dealer is trying to make as much profit as they can on each vehicle, they are going to tell you pricing information that may not be true.

So you say, give me an example? You drive on the lot looking for a new GMC Acadia because you want a smaller SUV, and you like the styling of the vehicle. The salesperson approaches you and you tell them what you are looking for: A red Acadia with a sunroof and quad seating. The salesperson may tell you that these are very rare and that it may be difficult to locate one. This already has you hoping that they can find one that fits your needs...I may not be able to negotiate as strongly now.

Ok, so they find you a new Acadia with the specification, and you take a demo drive in the vehicle. Of course it has the new car smell, and you like all the new features that are not on your current vehicle...so you are becoming emotionally attached. However, this vehicle is about $7,000 over your budget that you "thought" was affordable. However, this Acadia has the special wheels, keyless GO, and a few other convenient items that you like and now you are considering as "must haves". The emotion is the strong part, because you start to like how the vehicle makes you feel, and you go over the threshold of wanting the vehicle more than you thought.

The salesperson asks about your vehicle trade in, which you explain how you financed it, what you owe on it, and how you have taken care of the vehicle. At this point, the used car manager is going to do a trade in appraisal on your vehicle...and any small thing that they find like door dings, cracked windshield, paint scratches, etc. are going to be noted. Why is this? While it is true the dealer will have to recondition the vehicle for re-sale, they want to be able to bid your trade lower than the trade in value to build more profit into the deal for them.

As you wait...which gives you time to think about how much you like the new vehicle, and how not so nice your vehicle is, the numbers finally arrive for your evaluation. Most of the time, the write-back will show you the new vehicle price, less a small discount, less a rebate, your trade in allowance, and the balance of the trade. Here is what happens....people don't like the price of the vehicle trade in allowance. The question to you often is, how much do you think it is worth? They will tell you due to the condition of the things they found wrong, that the value is very competitive.

Where does this leave you? On the negotiation table and at a disadvantage because now you are feeling bad, and so how do you salvage this? The salesperson will usually ask the question "if I could get another $1,000 for your trade in, would you agree to this price?". From which, now it sounds like a better deal, although it isn't that great of a deal, you think that you could live with that. Of course, the PAYMENT becomes the real negotiating figure, because although you feel like you are $3,000 behind the deal, the payment is "affordable" to you, so you start focusing on that.

After more time spent at the dealership, you are getting emotionally drained and would much rather be out doing something else. As the "grind" gets to you, the more apt you are going to be agreeing to the figures. In the case of the payment, you may find that it is $50 per month too high, so you let the salesperson know this. From here, it is a matter of running your credit, and figuring out what interest rate you qualify for, which may get that payment very close to where you have "committed to affording", and that is a big tip off to the salesperson.

Where is the salesperson going every time and who are they talking to? Most often, they are going to the new car manager in this case, and they are evaluating the best method of them making as much money as they can. The sales manager will ask the salesperson what you have said about the deal so far, and by the third approach back to you, they most likely will be close to what you think is a good car deal. So....after an hour or so you agree to the figures and you drive away with your new vehicle.

How do you make this process easier, and saving you money and time? Because the Internet is such an influence on buying decisions, car dealerships have paid more attention to doing business on-line. The Internet has brought about more transparency in the transaction, and dealerships have embraced this because the buyer feels better about the purchase, and manufacturers are VERY concerned about the customer satisfaction rating! If the dealer has very bad manufacturer scores, the dealer does not get the holdback from the manufacturers, therefore most dealers are more apt to have you satisfied and feel good about the purchase.

So what is the method for purchasing a new or used vehicle? If you are trading in your vehicle, go to a web site that evaluates the trade in value of your vehicle. Make sure you are honest and have the information correct, so you have a value very close to what the vehicle is really worth. Some people add features to their vehicle, inflate the trade in price, then when the dealer catches the error...you are at square one again in the negotiation table. Once you have determined the value of your trade, print it off so you can take it to the dealership with you.

Next, if you are looking at a used vehicle, price other comparable vehicles to the one you are looking at. If a particular dealer has the vehicle you want (used), but is priced higher than the other vehicles you found on-line, then print these vehicles for your negotiation time. Keep in mind, you must be reasonable I.E., don't find a vehicle in California with equal miles and $2,000 less...it isn't going to work. You need the alternative vehicle to be a practical purchase for you in case the dealer tells you to go walk. The more reasonable you are with this, the more reasonable the dealer is going to be in getting that price of their used vehicle to work more closely. Why is this? They can lose a sale after you make a 45 minute drive to look at the other vehicle you have found on-line. In this case, you being in front of them, they are going to not want you to leave without giving a good effort to sell from their lot.

On a new vehicle, use the Internet to get a price quote from several dealers in the area. This will give you a great evaluation of how the dealer is going to treat you and do business with you. If you have a very poor response that doesn't make you feel comfortable, I.E. "I only have one left so I can't negotiate on it" tells you that they aren't going to be very helpful. I would rather have an excellent response and would be willing to pay a little more with the dealer that is helpful and seems willing to put a deal together based on a good negotiated price.

Before you drive to the dealership, you should have a quoted price, your trade in information printed, and also check with your financial institution on what they can do for a vehicle loan. Most dealers use a lot of lenders, and if they can beat the interest rate, have the dealer finance you. If they quote you a higher rate, let them know you will be financing the vehicle through your bank. Don't try the negotiating tactic of "I am paying cash", that doesn't get you a better deal, as the dealer would like to finance your vehicle as well at a competitive rate...you may get a better deal just by letting them know you will be getting financing with them. BUT, always know the rate you can get before stopping in!

So, to make the transaction short, work with the Internet sales rep to get the pricing information complete. They will tell you that they can't give you a price until they see your trade, and that is fine because you now know its value, so when you show up, let them know that you have this information. When they come back with the write back and they bid your trade low, you can show them what the value is and that if they can't give you that for your vehicle, that you have to be leaving....they will get that value as long as you have the correct information for your vehicle!

And that is a nutshell is how to quickly and easily purchase a vehicle from a dealership. Whether it is new or a used vehicle, the more research you have done, the more you are able to negotiate a reasonable price. It shouldn't take more than two hours to purchase the vehicle, let them know that when you show up that your time is valuable, and that if they can't have you out the door in two hours, that you will have to come back at a time that allows this. Usually weekends are busy so they may have traffic and may not pay attention to you, so try and work your deal during the slower times during the week so that you have the full attention of the sales people and the managers.

Make it easy on you, and the dealership will also work with you if you have a reasonable value placed on the purchase and the trade in. It should be a simple transaction based on your research, the dealer will recognize this and work the deal as if you have been in the car business for 30 years yourself!

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