Would you like to beat the dealership next time you go for an auto loan? Well, I’ll be the first to tell you. That isn’t ever going to happen. Think about it, you might buy a dozen cars in your lifetime and the dealer moves a dozen a day. You will just never have the experience to really beat them.
Now that I have got that out of the way, you may not be able to beat them but you can definitely save a lot of money if you know how to work around their tricks and play their game. They are always going to make some money off of you but let’s try to make it as little as possible.Here are some things that you can do to save money and get the best deal on your next car or truck.
Know What The Car Your Buying Is Worth
Seems obvious but many people go to the dealership without truly investigating what a car is really worth. You might know what the MSRP is but what is the vehicle really selling for. You can get an idea by looking at online dealer listings.
Look at online car listings to see what dealers are discounting their vehicles to. Search for the vehicle that you are interested on a website like Cars.com for example. Search a wide 100 mile radius and see what the best prices are. You should see some pretty good discounts as some dealers try to get as much as possible but others really just go for volume.
There is no reason that your dealer should not be able to match the hot deals that you see on a similarly equipped vehicle. Keep in mind though that some dealers may be advertising non qualifying rebates so they will not apply. Non qualifying rebates are those that you won’t qualify for like “$500 off for one legged dentists from Missouri”. Probably not going to get that one. To get the dealer discount, take the MSRP and subtract the sales price and then subtract the rebates. That is the dealer markdown that you should be looking for on a similarly equipped vehicle.
Know What Your Trade Is Worth
The dealer is always going to give you less than your vehicle is worth, that is a given. They do have to turn around and get it ready to sell and then make some kind of profit off of it.
Before you go in to the dealer check the price on Kelly Blue Book and NADA. Also look at some dealerships and see what they are selling your vehicle for new. This will give you an idea of what the dealer is going to sell your trade for. Keep in mind that you are not going to get retail for your trade, they have to make money on it. If you want closer to full retail, you would need to sell it yourself. Not a bad idea but honestly, a big headache.
Arrange Your Own Financing
This is a big one. You should always go into a dealership with financing arranged and here is why.
Dealers make money off of everything, including the financing. If you think that the dealer finance department is going to get you the best rate, you are wrong. What they will do is get you approved and then add a few percent for themselves.
By pre-arranging your financing, you guarantee that you will get a better rate. If you want, you can still give the dealer an opportunity to earn your financing but now they have a rate that they have to beat.
Coming in to the dealer with financing in hand is the best way to get the best interest rate.
Just because you agreed on a price for the new car and your trade does not mean that the negotiating is done.
Watch out for dealer add ons. They like to sneak those on. Sometimes you can get them completely removed but not always. If they have already added it to the vehicle, this is not an option, but you can negotiate the price. If they added tint for $399, offer 200 dollars, which is still probably more than they paid.
If you did not come in with your own financing, you will need to negotiate your interest rate. When you get your offer, tell them you think it is high and send it back. Chances are that they will find a way to knock a few pints off of it.
Another area where they make money is the extended warranty. Do not buy that at all, especially if you are financing. You can buy an extended warranty, if you want it, at any time after the sale. Why pay interest on it for three years before it even kicks in. Buy it later, before the factory one expires.
Last of all, there is gap insurance. If you expect to be backwards on your loan for a few years, you should get it. Just do not pay full price, because the dealer is marking it up too. If they offer you gap for $900, get it cut down so that you pay $500.
Be Prepared To Walk
The dealership thrives on you being so smitten with a vehicle that you could not bear to be without it. They try to instill a sense of urgency in you with every part of the process.
Know that if you do not get this vehicle, there is another almost identical one down the road. Be prepared to walk out at any time. Notice that I said walk out and not storm out. Always be polite so that they want to continue to work with you.
Chances are good that you will not even make it to the parking lot before a sales manger stops you to sweeten the deal. If you do, you will probably get a call the next day.
Even if the deal does not get better, the same deal will still be available later, no matter what they say, it will almost never cost you more money in the future.
So, my last word on the subject of saving money at the dealer is, always be prepared to walk.