Three weeks ago my wife and I realized we needed to buy her a new car before it was too late. She was driving a 2003 Ford Focus with only about 47,000 miles on it. The problem was it was in an accident and was never properly cared for. That happened back when we lived in Pittsburgh and thanks to all the salt on the roads up there, the car was suffering from a severe rust problem.
She had done a ton of research as to what type of car she wanted, and she ended up deciding on a Toyota Rav4. The reason I singled out Toyota for this post is because it should be pretty easy to get a car under invoice from a struggling automaker like Chrysler or Saturn. Toyota had suffered their first loss in (I think) 40 years. Even with the loss, they were nowhere near as desperate as the other manufacturers.
Buying a car is a fun game, and my first piece of advice for you is to remember it is just a game. We negotiated the car down to $500 under invoice, and I’d like to share with you all my negotiation strategies to do just that.
Do your research. You’re going to need to be well prepared for the negotiation, so start doing some research online. Figure out exactly what car and amenities you want. Once you have both of those figured out, head over to Edmunds and do an invoice lookup. The invoice price is the price of the price the dealer paid to purchase the car from the manufacturer (in my case, Toyota). Make sure you add in all of the amenities that you plan on getting with the vehicle. This will help you get as close to the actual invoice price as possible. Remember, this isn’t going to be 100% right, and I recommend you check other websites as well. Edmunds ended up being the most accurate for me.
It is also important for you to know that the invoice price might not actually be the price the dealer paid for the car. Manufacturers sometimes offer them rebates and other discounts. Still, this is going to be your main negotiation point.
Ok, let’s fast forward to after you’ve test driven the car and found the one you want. It’s negotiation time. Brace yourself for some hilarious excuses, and remind yourself that you are in control. Not them. They need you a hell of a lot more then you need them.
State your price and stick to it. Remember all of that research you did? Now’s the time to put it to use. State the price you want (in my case, I requested $500 under the invoice price I had found), and prepare for instant rejection! The first thing they’ll say is “Absolutely not. Not that car. There is no way I can sell that car for that price.” They’ll wait for you to say the next word, and just reply “that is all I’m willing to pay.” Use the following strategies to fend off his attacks.
Don’t mention a trade-in. If you’re planning on trading in a car, don’t let them know that. By letting them know you have a trade-in, they’ll try and adjust the price of the car you want by using your trade-in as leverage. For example, if you are shooting for a $25,000 price tag, and they are offering the vehicle at $27,000, they will just say they can give you $2,000 for your trade in and all will be good. What really happens is that you get screwed by them because you can talk them down to your price and then get your trade-in money off of that price. You should know, though, that no matter what you will get screwed on your trade-in. I recommend selling it yourself, you’ll definitely maximize your value that way. If you don’t feel comfortable doing that, try using CarMax, I hear they give very fair prices for trade-ins.
Don’t show your cards. Avoid any and all questions regarding monthly payments. This is another trap the dealer is laying down. If the dealer brings up monthly payments during your negotiations, tell them you only want to discuss the overall price, you aren’t interested in discussing monthly payments just yet. The reason they want to know what you were thinking about is because they will tweak your interest rate, the length of your loan and anything else they can do to get your payments where you want them while not touching the price.
Tell them you’ll buy it right now. Dealers love a quick sale. If you go home to think about it, there’s a good chance they might lose you. Tell them that what you are offering is a quick way to get another car off their lot for a fair price. Be clear that you will buy the car right now if they can meet your price expectations.
Threaten to leave. The last thing they want you to do is leave. I guarantee they will pull out the excuse that no one will sell you that car for that price. Thank them and say that you’re going to look around and see if someone can meet your price. Whenever they pull out another excuse, just follow it up with “ok, well I guess I’ll have to look around and see what else I can find. Thanks for your time.” Before you know it, the manager will be on his way to negotiate you. And that’s just what you want.
Beat the manager. At this point, you might be getting nervous and will want to adjust your price. That’s fine, if you only adjust it by $50 and don’t go any higher than that. When the manager comes out to negotiate with you, say that you’ll do it for $50 more than you told the dealer originally, and say that’s as far as you can go. Again, when all else fails, threaten to leave. Remind the manager you are willing to buy the car right now if they can meet your needs.
Once they have finally offered you a price you are comfortable with, bring up the trade-in (if you decide to sell it to them). The key to successfully negotiating the price of your new car is to not be a dick. You need to be someone they like and respect. Don’t become arrogant, and they will want to keep negotiating. This is a game for them, too, remember.
Finally, you might not end up walking out of there with the car. Stick to your threat and actually leave if a deal can’t be made. If that’s the case, don’t be afraid to email other local dealers and get their feel on the price. They might be able to meet your requirements. Also, take a look at nearby cities. They might be willing to ship the car, and you might be able to save enough money where it would be beneficial for you to drive all the way out there to get the car. Keep your options open and above all, stay patient.
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