One of the biggest concerns a new car buyer has is whether they are paying a fair price for the car they want. Some people feel like they are at the mercy of the salesman but if you know what to look for and what to say, you can make sure that you get the car you want for the price you want to pay.
As with anything, knowledge can be power. When you walk into the dealership, knowing the right kind of information, you will not feel like you are at anyone’s mercy and the salesmen won’t be able to pull the wool over your eyes.
Know Your Budget or Approved Loan Amount Before You Start Shopping
It is very important to know how much you want to spend on your new car before you ever step foot inside a dealership. Determine what you have for a down payment, what your trade-in is and what it is worth, and what you want your monthly payment to be. Payment amounts can vary, so you are better off having a payment range in mind rather than an exact dollar amount.
If you’re paying cash for a new car, you will already know approximately how much you want to spend. If you will be financing it, get a pre-approval amount ahead of time that you will qualify for. This amount will be dependent upon your down payment plus the value of your trade-in and any rebates that are being offered.
Once you have your budget set and know how much you can qualify for, start doing some research on the cars you are interested in to see just how far your budget will go. If you walk into a dealer and state exactly how much you want to spend, what you have to put down and trade in and ask about rebates you will position yourself in a much better place than if you walk in appearing to be undecided and flexible.
How Do You Know You’re Getting a Good Price?
There are a few sources that you can use to determine if the price of a new car is a good one. One of the best resources you can look at is Edmund’s True Market Value price which will give you a good idea of what a good price for the vehicle you want would be. Make sure that you include the options you want and if it’s a used car, include the current mileage as well.
This price that you will get is an average of what people in your area paid for the same car with comparable options. You will find that some paid more and some paid less so it is up to you at that point whether you feel like the price they are telling you is a good one.
Be cautious if the price seems too low. That may sound odd, but in many cases, the salesman will lower the price of the car only to increase it again through things like lowering the trade in amount they offer you or including an extended warranty in with the car.
Before you start the haggling process on a car you want, take the time to check around at multiple dealers to see what the quotes are. You can do this by calling them directly or using an online quote system that many dealerships have. When you are doing your multiple quote checks, don’t mention your trade in, don’t mention payments or how you will be financing the vehicle. Simply ask for a quote on the car you want with the options you want; that is also called the “out the door” price.
That will give you the best idea of what is out there. You should also be upfront about the fact that you are getting quotes from different places. Make them work to get your business. Just be sure to get whatever out the door quote they give you in writing.
Get Ready to Negotiate
Negotiations are a part of buying a car. You never have to walk in and pay the sticker price, so have it in your mind before you go that you will be entering a negotiation. Don’t be nervous. You are not obligated to pay what they’re asking. There are several factors involved in having a good negotiation with a good outcome for you. We’ve outlined these points below. Commit them to memory before you go to the first dealership.
Be Ready to Walk Away – The first rule of a good negotiation is don’t be afraid to walk away. If the salesperson thinks that you HAVE to leave there with a car, then you won’t get the best price they can give you. Don’t threaten to walk away or use it as some kind of strong arm tactic but don’t let them talk you into anything you don’t want to be talked into and don’t let emotion take over. Remain calm, friendly and relaxed.
Be sincere in your negotiations but if they don’t come down to what your ideal price is, then walk away. You are in a much better position than a salesperson is. It doesn’t mean you will never have the car you want; it just means you won’t get the car you want from that particular dealership. They want your business because that means money for them.
Never Tell Them the Price You Want to Pay FIRST – When it comes to buying a car, one of the best and easiest ways to get a good price is to let the salesperson tell you what their price is first. If they ask you what your price is and you tell them first, it may be more than what they can actually go down to. If they start with THEIR price first, you can see where that is in relation to your ideal price and go from there. You may end up paying a lot less for the car than you expected by using this tactic.
Shop During Off Peak Hours – Nights and weekends are going to be the busiest times at a car dealership so be sure to go in during the off hours. When are those? During the week, in the middle of the workday is perfect. Most people are at work and there is a lot less business so they are much more willing to give a good deal to get the business.
Only Talk about the Purchase Price at First – When negotiations start you only want to discuss purchase price. Don’t discuss trade ins, monthly payments or anything else. If you go in talking about your trade in or monthly payment, they can make it look like you’re getting a better deal than you are. In reality what can happen is that they will stretch out payments over a longer term or they may offer a higher trade in value and keep the price of the car higher to offset it.
Rebates and Incentives – Rebates and incentives are a great way to get buyers in the door. It may even be why you went to a particular dealership. But do not factor in the incentives or cash back offers until the purchase price is set. Then you will know exactly how much money was taken off.
Other Fees and Costs – Every buyer will have to pay for tag, title, licensing fees, tax and destination fees all that are set by the manufacturer. These fees are not negotiable. However another fee that can be added in that IS still negotiable is the dealer fee. It can also be called a dealer prep fee or marketing fee. These are fees that many dealerships will add in at the end of the negotiation process and next thing you know your price is back up. These dealer fees ARE negotiable and are usually added to try and recoup profit that may have been lowered during the negotiation process. Don’t be shy about asking them to lower those too.
Buying a car can be confusing and even stressful if you are not prepared or aware of the process. Walk in blind and you could end up paying a lot more than you wanted to or needed to. With these pointers, you will walk in confident and prepared to get the best price possible not only for the car itself but for your trade in as well.