If you’re a pro at negotiating when buying a new car, you’re ahead of the game – but, for the rest of us it’s like going to the dentist. We hate the process because we know it can end up hurting more than we thought. Shopping for auto insurance is easy compared to buying a new car.
The reason for this is that a good many of us are intimidated when we walk onto a new car dealership. Is our credit good enough to get the car we want? What are the monthly payments going to be and can we make them every 30 days like clockwork? How much is my trade-in worth and will they give me a fair amount for it?
Then, if that’s not bad enough – the intimidation factor creeps in the moment you’re swarmed by a half-dozen short-sleeved guys in ties asking you if you like the color or the model you’re standing next to.
Unless you know what you’re doing or how to beat car dealers at their own game, they’re in the proverbial “driver’s seat” and you’re just along for the ride. And, even though most of us have a pretty good idea of certain things we’re supposed to do and not do when buying a car, it can still be a struggle – especially if you’re facing a tough negotiator.
So, here are three common situations you’re likely to encounter the next time you enter the new-car-buying realm. How you respond can keep the conversation headed toward the best price you can get.
1. Your Trade-in
Most new car sales reps have eyes like an eagle and can spot you pulling up to the lot in your current ride – which leads them to entice you with – “Is that your car? Are you trading it in? Looks in great shape – we can give you $X,XXX for it.” Don’t be too quick to jump at his offer.
It’s always best to not discuss the value of a trade-in before you settle on a price for the new purchase, but that won’t stop the sales rep from trying to get the advantage, because he knows it works from time to time. He also knows that he can artificially exceed your trade-in’s blue book value to get you excited, only to make up for his apparent generosity on the purchase price of your new set of wheels.
What you may want to respond with is – “Thanks, that sounds pretty good and I may consider your offer – but that’s separate from how we’re going to price the new car.”
The sales rep will throw so many numbers at you; the last thing you need is to keep track of more while you’re negotiating the price of a new car. Besides, if you’ve done your research, you already know what your car is worth and can take it or walk away.
2. Factory Invoice
While it’s hard to buy a new car these days without a lot of extra costs, dealers can tack on silly fees to the window sticker that don’t necessarily make sense. Many are confusing and need clarification or a challenge. That’s why – ask the dealer to show you the factory invoice, because that’s where legitimate fees are listed. You might face a little resistance at first – depending on the dealership – but, unless he has something to hide, he’ll show it to you if he wants to close the deal.
Keep in mind that in California a so-called “document fee” applies. However, unlike some other states, California regulates the fee at a flat $80. For more information on fees that fall into the “legit” category, you can go to the Edmunds auto website for their guide to these fees.
So, when in doubt about all the listed fees on the sticker, you may want to respond with – “Can I please see the factory invoice?” Then, ask for clarification on each added fee.
3. Comfortable Monthly Payments
Asking you what you can comfortably pay each month for the car of your dreams is a tactic that has been around for ages. The minute you agree to a monthly loan payment, the sales rep will wrap what he now knows you can afford around the final price of the car.
Of course, a lot depends on your credit score, but don’t confuse the sales rep’s concern for what you can afford as an offer for credit counseling. What he’s trying to do is sell you a more expensive vehicle by extending the term of the loan, thereby, lowering your monthly payments to the amount you just gave him, or he’ll do it by switching you to a lease.
Unless your credit score qualifies you for a 0% interest loan that some auto manufacturers offer – don’t fall into his trap. Avoid going to the dealership without having first lined up backup financing at your bank or credit union. Once you’ve settled on a price for the new car, it may even force the dealer into a position to offer you a matching or better rate.
If the sales rep hits you with this question, you may want to respond with – “Let’s talk about that a little later and focus on the price I can get the car for.”
Bottom line is – the more research you do, the better off you’ll be when you start negotiating. The same can be said about car insurance. If you want the best auto insurance rates available – start by getting a free auto insurance quote comparison today.