How do you negotiate the price of a new car?

**Detwa** · October-30-12, 06:51 PM

I'm in the market to purchase a new car. I always hear people say, the dealer wanted x amount but I got him down to x. How do you get the dealer down? Other than bringing your discounts, how does this negotiating work? I'm already leery of being taken, but I want to get the best deal available too. And I'll be going alone or with a female friend so I need to know what to say or print out to bring with me, to make sure I get the best price.

**Jimaz** · October-30-12, 08:00 PM

I'm no expert but make sure your friend understands that she's to show zero interest in the car under negotiation or better yet she should show more interest in "the car on that other lot we visited down the street."

The best deal I ever got was through a AAA broker service in Arizona. At that time AAA Michigan didn't offer the service. Maybe they do now. AAA has a nationwide network. He located the car of my choice for $18k that was otherwise going for $25k in the Phoenix market at that time. I didn't have to negotiate at all.

Good idea for a thread. It should help a lot of people.

**Gannon** · October-30-12, 10:46 PM

Originally Posted by Detwa

I'm in the market to purchase a new car. I always hear people say, the dealer wanted x amount but I got him down to x. How do you get the dealer down? Other than bringing your discounts, how does this negotiating work? I'm already leery of being taken, but I want to get the best deal available too. And I'll be going alone or with a female friend so I need to know what to say or print out to bring with me, to make sure I get the best price.

First things first...get pre-approved for financing through your credit union ahead of time. Never share this fact with anyone, especially your accomplice. It is your secret weapon. You'll know when to bring it out.

Ask their people if any members work at dealerships, in case they'll offer something comfortable in advance. Then, check with your insurance agent if there are any vehicles to avoid, due to extraordinarily high theft, high cost of repair, or other issues.

Look around at the offerings, on-line...well beyond the stress of purchasing. Don't think you can wander around kicking tires, if you are really in the market...a good salesperson will soon learn that and deal with you more forcefully. They won't often let a decent lead walk away from the dealership, and have a book-full of devious tactics they use to get you to conform to their will.

Once you actually get to the negotiation stage...make certain every single offer contains every figure they are working to make their deal equation. I mean, final new vehicle price [[including all extras, destination and dealer fees, taxes, and prepwork) should always be declared clearly, along with the expected interest rate and monthly payment. It is a sick trick to get buyers looking only at the monthly payment they can afford...while subtly manipulating the interest rate and other numbers to swing the maximum profit out of the deal.

Never trust the person working in the F&I office, no matter how much it appears that they wish to make you their new best friend. That might stand for Financing and Insurance [[I forget), but in reality they are hardened deal closers. The only tougher bloke is usually the manager, who only cowers to the owner. You never want to meet either of them. The F&I Guy [[usually a man, an aging ex-football lineman or similar clean-cut thug who you know immediately can beat you at both drinking and card games) is the one who packs on the greatest amount of bullshit additions to the end of the contract.

He can be recognized by his insistence that his latest item only increased the monthly payments by $4.50, and isn't that what you pay for a cup of coffee?! Some get mesmerized by his delivery enough to nickel and dime their deals into serious cash kickbacks from the financing institution, extended warranty company, and aftermarket options makers. The F&I guy usually has a nice boat paid for by his bonuses 'earned' by stealing from unsuspecting folks this way. You'll never get invited onto it.

So...yeah...getting the best deal at a dealership is like winning at a casino. They've made it a science, and everyone who has purchased vehicles before you have been the guinea pigs. The whole game is designed to get as much out of your pocket as possible.

Buy used. You're pre-approved at the credit union, remember?!

**Detwa** · October-30-12, 10:55 PM

Goodness! So much to consider! I need to sleep on all of that! It's already sounding intimidating. I bought one car on my own post divorce, used, but it was a small private lot owned by a friend of a friend, so he didn't try to push me and did a great job. Perhaps I'll ask him for the new of a dealership that he trusts. This will be my first new car in many years.

Yeah, I've seen Fargo, lol, I'm gonna be playing that in my mind when they disappear to go talk to their manager. Ugh.

I'm bringing my own financing. Wish I could do the whole thing online and then just go pick it up!

Thanks for this, both Jimaz and Gannon. I need to read it again and again before I venture out this coming weekend....

**Gannon** · October-30-12, 10:58 PM

You can buy a Tesla on-line, I believe. If I was buying new, it'd be their $50k sedan. Seems they've got some unique ideas about doing electric right.

**Gannon** · October-30-12, 11:08 PM

Unless there is significant new technology in your vehicle, extended warranties are usually not worth the cost.

Never get soaked by huge dealer prep costs, they buy those chemicals in bulk. The seats don't need to be treated with scotchguard, and no modern vehicle requires any additional rustproofing. Your windows will be fine without having your social security number scratched onto them. Pinstriping is so-o seventies. Race-striping will only get you tickets. Window tinting makes you look like a gang-banger or federal agent [[federal gang?!).

Do not mention that you have your own financing until the actual moment you go to sign the deal. Let the dealer think they are arranging everything. Heck, for fun, let them let you drive the car home that night on a contingency deal...where they sell the package to one of their financial institutions the next business day. If you do this right, you can drive the car for free all weekend.

When they come back and tell you that, sorry, due your credit score [[or some other random bullcrap), they had to charge a few points higher interest [[which only raised the price by yet ANOTHER $4.50)...then you pull out your pre-approval, and show them where you wrote an escape clause into their contract before signing it. You can make the F&I guy actually change physical state...either he'll evaporate into his own frustrations, or explode in a wild rage. Both are fun to watch, if at all times you realize you can buy this exact car at any of at least fifteen dealerships in the state with in a decent drive.

Heck, you might never buy a car, this shopping thing can be so much fun.

**Pam** · October-31-12, 06:18 AM

Aren't there some places now that have no-haggle pricing? I'd say look for one of those dealers.

**tponetom** · October-31-12, 12:47 PM

Pam:

If all the Automobile Dealers, in all the gin joints in the entire world, sold their products on a “no haggle” basis, they would all go to heaven on chariots made of gold and platinum.
All the replies on this post are accurate and I would abide by all of them.

I had written a story, a long time ago, entitled, “Dr. Giggle and Mr. Hide”, also known as, “Buying a new or used car”!

I had sold new and used cars for a Chevrolet Dealer in 1957. I learned a lot from that experience.

Today if a Dealer sells a new car at the MSRP price, accepting the customers trade-in at the dealers allowance price, and the dealers financing figures, and selling the customer an extended warranty, he would make Ponzi look like a piker.

**Detwa** · November-01-12, 01:52 PM

I hear that when you trade a car, they never really "trade" it, but roll the cost into your new car. I have an old 98 Jeep that I wouldn't mind trading just to get rid of. Dealers always advertise that you can get a few thousand for your trade, but since I'm bringing my own financing, they won't be able to secretly roll it back into my contract. Should I even bother taking the old car in?

I have a friend who just bought a new car and she had an old van, they gave her $3000 for it. That old thing was probably worth $700 tops. But she financed through them, subprime, so I'm sure they stuck her with the additional $2500 somewhere in her contract.

I'm going this weekend, or Monday - want to get the car next Friday.

Haha, Gannon, you make it sound so fun!

**Vic_doucette** · November-01-12, 03:10 PM

You'll always, always, always make more in the long run if you sell your old car privately. Car salesmen are so slick at what they do and so good at finagling numbers that you never really know what you wind up paying. My dad was a car salesman -- I know of which I speak.

I'm a big fan of Consumer Reports, and they offer a service where you can "build and buy" an automobile with a no-haggle price quote from dealers in your area. You might find it worth checking into.

http://www.consumerreports.org/cro/c...ribe/index.htm

AAA Michigan also offers a car-buying service for members

http://savings.michigan.aaa.com/Defa...a753d8b&elog=1

**Vic_doucette** · November-01-12, 03:22 PM

One more note, something most people don't want to hear: If you can't afford to pay for it in three years, you can't afford the vehicle.

Stealerships [[that''s not a typo) would prefer to finance you themselves so they can make even more off you. The longer you stretch out the payments, the more the financier makes.

If you take out a loan for more than three years, you'll probably be "upside down" over most of the loan, owing more on the car than it is worth. If the car gets totaled during the life of the loan, your insurance company will only pay you what the car was worth, not what you owe on it. If it's worth $20,000 and you owe $25,000, you now have two problems -- you need another car, and you still owe $5,000 on that pile of scrap that just got hauled to the junkyard.

It's really easy to get caught up in the emotion of buying a new car, especially if you're replacing a real beater. But you need to treat it as a cold-eyed business decision, nothing more and nothing less. You have to be willing to walk away if the deal isn't to your satisfaction. Once the stealership knows you're hooked, they'll do the best they can to skin you alive.

Don't look at the monthly payment; that's deceiving. Look at the total cost over the life of the loan. The smaller that number, the better the deal.

Don't fall in love. Have three or four options, cars you could live with, rather than just one. The more options you have, the more willing you are to get up and walk away, the better you will do when it comes to signing the deal.

Don't take an extended warranty! That's almost pure profit for the dealer and of no value to you. Forget about all the stuff the Finance & Insurance [[F&I) tries to load up when they get you into his office. Practice saying, "no, thank you."

Good luck!

**Detwa** · November-01-12, 06:53 PM

Thanks for all of the tips!

What about the difference between leasing and buying? I mean, I know the difference, but which do you guys think is better?

**Vic_doucette** · November-01-12, 08:16 PM

Leasing might be right. Or maybe not. How much do you drive each year?

Most leases today seem to be relatively low-mileage, around 10,000 miles a year. If you drive close to [[but not over) 10,000 miles a year, it might be a good deal, at least on the surface. But maybe not.

Say you lease for 10,000 miles a year on a three-year lease. If you wind up driving 12,000 miles a year, you'll be 6,000 miles over at the end of the lease. I haven't looked at leases in a while, but last I knew you were typically hit with a charge of $0.25 per mile if you went over. In this case, they'll hit you with $1,500 in penalties for overages. You can "buy" additional miles up front if you think you'll need them, but this drives the cost of the lease up and might make buying more attractive.

My brother-in-law once leased a car at what he thought was a good rate, but wound up changing jobs and needing to drive much more than he thought he would when he leased the car. He wound up having to buy a cheap used car and use it for the weekday commute to keep from getting creamed with overage charges. He sold the used car to his teenage son when the lease was up, but it still cost him money and aggravation he could have done without.

They'll also nickel-and-dime you every way they can when you turn it in. Nick on the bumper? A couple hundred bucks. Ding on the door? Likewise. You'll also likely be charged for interior cleaning and detailing. There might be a "turn-in" charge, where you have to pay a few hundred dollars for the right to give the car back to them.

OTOH, if you don't go over the mileage in the lease, you'll be paying less per month for the right to drive the car than you would to OWN the car at the end of the agreement.

Once upon a time. there were tax advantages to leasing a car for business purposes. They might still exist, but I don't know about that. If you use the car that way, you might want to check with an accountant to see if it will help you come tax time.

I would never lease; I tend to buy cars new and drive them into the ground. I also usually drive around 15,000 miles a year, so it wouldn't work for me.

Whatever the case, make absolutely sure you understand everything you sign. The large print giveth and the small print taketh away.

**Vic_doucette** · November-02-12, 05:52 AM

Yet another tip -- It is far more efficient and effective to negotiate UP from the price the stealership paid than it is to negotiate DOWN from the sticker price.

All stealerships pay the same price for the same car. You can find out what they paid by using a service like www.edmunds.com or through www.consumerreports.org. Both of those sites can give you a reliable number for what the dealer paid for the car. Start there and go up; don't start with the sticker price and go down.

Speaking of stickers, some stealerships attach an additional sticker alongside the one the manufacturer puts on the car. This sticker will include dubious dealer-installed extras like rustproofing, paint protection, fabric protection, pinstripes and the like. If the car is especially popular and a hot seller, it may go as far as including a "market adjustment," where they attempt to jack the price up because they think they can.

Ignore anything on those stickers. Say, "No, thank you," when the salesperson brings them up. Just walk away.

**Vic_doucette** · November-02-12, 06:20 AM

What sort of vehicle[[s) are you considering, Detwa?

**Detwa** · November-02-12, 06:38 AM

LOL @ stealership!

I don't drive much because I'm self-employed, so all of my driving is local and limited except for summer when I'm doing more driving, plus vacations. But the little dings and such from kids would probably run my lease fees up. Those occasional nicks from my older kids tagging the car by parking too close to me in the garage, I don't think I want to be all stressed out about it so perhaps a lease wouldn't work for me.

I want an SUV so I'm narrowing it down right now to either a Ford Escape or Kia Sorrento or Dodge Journey. Leaning toward the Journey because of price but I will start test driving this weekend and that may push me to one or the other.

**Vic_doucette** · November-02-12, 07:27 AM

FWIW, of those three Consumer Reports rates the Escape 79/100, the V6 Sorrento 82/100 and the 4-cylender Sorrento 74/100 [[the 4-cyl is more reliable, according to the magazine's survey of owners), and the Journey V6 61/100. You might also care that the Kia's powertrain has a 10-year/100,000 mile warranty [[the rest of the car is 5-years, 60,000 miles), while the other vehicles have 5-years/60,000 miles on the powertrains and 3 years/36,000 miles on the rest of the stuff.

**Gannon** · November-02-12, 08:01 AM

And Police Reports rates the Dodge the most easily stolen!

So, if you'd like to replace it in a few years, regardless of mileage and condition, get the Dodge.

Keep it fully insured.

**Trumpeteer** · November-02-12, 10:13 AM

After driving my car for nine years I decided to buy something "new" about a month ago. I had driven a Chrysler 300 on a couple of vacations and REALLY liked it. So that's what I decided I wanted after also reading numerous car reviews on it and other comps.

I went to the Chrysler webpage and "built" my car and was shown the MSRP for that package. We also subscribe to Consumer Reports online. I went there and for an additional $13 I subscribed to their new car buying guide. Using that service you again "build" your desired car and Consumer Reports gives you a report based on your Zip code that shows what the MSRP is for your area, what the dealer invoice is for that same vehicle, AND most importantly shows you what buyers are paying on average for the vehicle!

At the end of this report I was asked if I wanted local Chrysler dealers to submit a guaranteed price to me online...sure I did. I received three online price quotes, two were a bit higher than the average being paid and one was a couple of thousand lower than average.

I contacted that dealer online, they replied that they had an exact match on their lot for what I "built" and gave me that vehicles stock number so I could go to their website and look at it. I saw online that their sales price was a $1,000 higher than the price they guaranteed to me through Consumer Reports. I e-mailed them telling them of the difference and the salesman replied that thye would in fact honor the Consumer Reports guaranteed price.

I drove 42 miles to the dealer and in 30 minutes drove out in a new 2012 Chrysler 300. BTW, after the new car price was agreed upon, I then traded in my 2003 vehicle with 170,000 miles and dents/dings, worn leather for $2,000 which was about what consumer Reports quoted as the average private sale amount for that vehicle in that condition! Bottom line is that I bought this new car for about $4,000 below Dealer Invoice.

As a side note, I know the Region VP for Enterprise Rent a Car here and at first thought I'd do like common "wisdom" says and buy slightly used. The cheapest price I could get from my friends at Enterprise for a used 2012 Chrysler 300 with 25,000 miles on it was about $2,000 MORE than what I paid for a NEW Chrysler!

Consumer Reports ROCKS! Easiest car purchase I've ever made. NO haggling, no pressure, NO "I have to check with my salesmanager" crap.

**Vic_doucette** · November-02-12, 11:15 AM

If you don't need the old car to help with the down payment, consider selling it privately or donating it to charity.

Whatever you do, DON'T GIVE THEM THE KEYS TO YOUR OLD CAR! Unscrupulous stealership employees have been know to "lose" keys to try to pressure customers into a deal.

**Trumpeteer** · November-02-12, 11:45 AM

Originally Posted by Vic_doucette

If you don't need the old car to help with the down payment, consider selling it privately or donating it to charity.

Whatever you do, DON'T GIVE THEM THE KEYS TO YOUR OLD CAR! Unscrupulous stealership employees have been know to "lose" keys to try to pressure customers into a deal.

I could not have sold my old car privately for what the dealer gave me for it AFTER we agreed upon a price for the new car. It's also a tremendous hassle to try and sell a vehicle on your own. People calling all times of day, having to meet, haggle about price, having to get a cashiers check or go to their bank so you don't get ripped off? No thanks. I could have donated it, taken a tax write off for the "trade in value" and save about a third of that in paying less tax. that would have been significantly less in tax savings than what I was paid for it. All subject to IRS audit on the claimed value of the car.

Also there was no down payment as I was pre-approved by my bank at 2.69%. Absolutely NO pressure in going this route.

**Vic_doucette** · November-02-12, 04:02 PM

I just took a quick look at the Kia website, and it looks like they are offering financing of 0.9% and 1.9% for periods of 36-72 months on the Sorrento for "qualified buyers." Do those rates beat what your credit union is offering? It might be worth taking them up on that if you qualkify and if you like the vehicle.

**Detwa** · November-02-12, 08:26 PM

Wow, how does that "losing the keys" work? Are you then stuck with letting them just have the car, because you don't want to pay for a locksmith to bring you new keys?

My CU is offering me 3.9%, and I might be able to get it slightly lower between them and my bank. I doubt that I could get 1.9% but who knows? I might try for it and see. Definitely sounds nice!

The car I'm trading is my son's 98 Jeep, not ugly but has some front bumper damage. I could use the tax write off since I'm self-employed, but I'll have to compare that against what I'm offered. I'm not real comfortable with selling it on my own because I don't like the idea of strangers coming to my house or going to meet them! So its going to be either trade-in or donate.