When it comes to car buying, people make a lot of mistakes and dealerships love them for it. If it is time to get your new car, why not educate yourself on what it takes to get a good deal and save yourself thousands of dollars. Ready to begin, great, here we go.
The first thing that you need to know is that the dealership is always going to win. You will never beat them. How can you expect to beat a dealership when you buy one car every five years and they sell a couple dozen a week. That being said, you can do everything that you can to stop the bleeding and save as much money as possible on the purchase. Here are some of the biggest mistakes people make.
Not Having Pre-Arranged Financing
The dealer makes money on everything, including the financing. Unless you have impeccable credit and can qualify for the elusive “0 percent financing”, bring your own to the table. It will save you several points in interest.
You can get a quick online approval with Fresh Start here. You can then go to the dealership with financing in hand and a number that they would have to beat if they want to earn your financing business.
Check with local credit unions for the best rates. They are usually much cheaper than the big banks.
Not Knowing Your Trade’s Value
It is easy enough to get your trade in value these days. Just go to the NADA or Kelly Blue Book website and enter your vehicle information and boom, you have it.
When you go to a dealer, they are going to low ball you on the trade in value, that is a given. If you do not know the value of your trade, you might not know by how much. They will usually come in with an offer 1000 dollars or more under what they are willing to pay.
It is also entirely possible that you over value your trade. In that case, you might think that the dealer was the biggest crook in the world and it would totally wreck the negotiation process. Get your KBB Value here and be prepared.
When you look up your vehicle value, keep one thing in mind. The dealer is not going to give you full retail value. They need to make money on it and that is the price that they would likely sell it for. Look at the average trade in value and be honest with yourself about the condition.
Not Knowing Average Selling Price
With a little research online, you can see what the average selling price is on a vehicle. MSRP is obviously not the price that you want to pay but the dealer will try to get you as close to that price as possible.
Check forums, internet sales pages of other dealerships and every online resource you can find to see what people are paying. Edmunds.com has a true market value tool as well that can give you an idea of what people are paying.
Dealers can usually come off the MSRP’s by thousands of dollars unless it is a special high demand model. The vehicles with the biggest profit margins will be trucks and Sport Utility Vehicles. You should work for at least a 10 percent reduction in price on these models and that is before rebates.
Not Realizing That Everything Is Negotiable
It all starts with negotiating the sales price and the trade in value but that is not where it ends. Everything at the dealer is negotiable because they make money on every step of the process.
After the price and the trade are handled, you will need to deal with those pesky dealer add ons. They can add hundreds of dollars to the price but you can get them to come down.
Your first step is to tell them that you want them completely removed. This will work with things like security etching and service contracts.
If your vehicle has a dealer add on for something that can not be removed like tent, you will not be able to get it removed but you can certainly get the price reduced. No point paying 400 dollars for a tint that cost them 100 dollars or even less.
Next, comes finance and if you have not arranged your own financing, you will have to do some work to get a better rate. You can typically work a discount of 1 or 2 points off of the financing rate that they first offer you.
If you will be behind on the vehicle for the first year or so, don’t forget the gap insurance. It is a great product but the price is also negotiable. If they offer it to you for 800 dollars, offer them 400 dollars.
Not Being Prepared To Walk
It is the most powerful tool that you have as a car buyer, the ability to simply leave.
If negotiations stall, politely say that you will think about it and get up to leave. Chances are that the deal will be sweetened by the time you hit the door. If not, you will probably soon get a call from a sales manager.
If you have a trade in, they will likely try to stall your departure by holding onto the keys and even keeping your car around back in a different parking spot. Once they appraise your trade, ask for the keys and it’s location before proceeding.
Tina’s Last Word
If you think that you are going to beat the dealer and get the deal of the century, you are very much mistaken. The dealer knows all of the tricks and they have ways of working the sale that you can not even imagine. Everything that they do is designed to manipulate you.
Go into the deal realizing this and avoid making the major mistakes and you will come out with a good deal. The dealer will still make money but you do not have to be the sucker that they make a fortune off of.