Spending too much for anything is a downer — especially a car. Here’s how to beat the dealer at his own game.
There’s really no such thing as a professional car buyer, but there are 268,300 professional car salesmen in the United States, according to the Bureau of Labor Statistics. And while you may go into a dealership shopping for a new car only a half-dozen to a dozen times in your life, these guys are selling that many cars each week, so you can take it for granted that they know more than you about buying a car.
There’s no doubt that most salesmen want to get you into a car that you’ll be happy to own . It’s in their interest to make you as comfortable as possible with the buying experience so that you’ll recommend them to your friends, and then come back yourself when it’s time to trade in for a new vehicle. But that doesn’t mean they’re not in the business for the money. It’s a car salesman’s job to make as much profit on each sale as he can get away with.
The car dealer has the home-field advantage, but with some preparation and savvy negotiating, you can place yourself in a much better bargaining position than the average rube off the street. Here we give you 10 tips for dealing with the savvy car salesman.
Tip 1. Browse with no intention of buying
The first time you go to a dealership, you shouldn’t be looking to buy. Tell dealers that you’re just looking and don’t let them talk you into anything. Better yet, drop by on a day when the dealership is closed. You can roam around the lot and inspect the window stickers with no pressure whatsoever. Take notes on what you like, then return home and do some serious research.
Tip 2. Find out what the dealer paid for vehicle
You can’t know the dealer’s hand in a casino, but you can in a car dealership. “Knowledge is key,” says Michael Royce, a former car salesman who now runs the website Beatthecarsalesman.com. “One of the most important pieces of knowledge a car buyer needs is the invoice price (the dealer’s cost) of the car he wants to buy. Fortunately, the Internet makes getting that vital info easy.”
Plenty of websites can give you the invoice price of any vehicle (you can search for invoice prices at MSN Autos here), so plan to negotiate up from there, not down from the sticker price. Make sure to get the invoice price that includes all the options you want, not just the base price of the vehicle — the options have a dealer markup, too.
Tip 3. Get an online price quote
In fact, get a few of them. Most dealerships have an online sales department that will get you a quote within two to three days. You can also use services such as Autobytel.com and PriceQuotes.com to cross-shop multiple dealers. You’re under no obligation to pay the quoted price, and it can be a potent bargaining chip with other dealerships.
Tip 4. Get your paperwork in order
Print out the invoice price on the exact model you want with an itemized list of the options you’re considering. Also, research any manufacturer incentives and rebates that apply to the car you’re shopping for, and subtract those from the invoice price. If you are interested in financing, find out your credit score ahead of time; everyone is entitled to one free credit report each year from each of the three major credit reporting agencies. Also, shop a loan by researching the rates at competing banks and local credit unions. Write down all the numbers and bring all the documents to the dealership. If the dealer can’t match or beat those rates, tell him you’ll finance the car another way.
Tip 5. Forget about leasing
“Dealerships love to push leasing because it is so profitable for them, but leasing is almost always a bad idea,” Royce says. “In a lease, you are simply renting the vehicle for a set period of time. Once that term expires, you must return the vehicle to the dealership with nothing to show for your years of payments.”
Tip 6. Don’t talk financing or trade-ins until you’ve settled on a price
A dealer isn’t doing you any favors if he gives you a deal on the new car, and then offers you $1,000 below market value on your trade-in. The new car, the trade-in and financing are three separate negotiations — treat them as such. It’s always in your interest to get the best possible price on each transaction; that’s why you should do your research ahead of time. If the dealer isn’t hitting the numbers you brought with you, shop or sell elsewhere.
Tip 7. Don’t fail the test drive
Taking a new car out for a spin can be an exciting experience, but don’t get too giddy. If the salesman sees that you’ve formed an emotional attachment to the vehicle, it may put him out of the mood to compromise. “The fact is that analytical car buyers pay less for their new cars than emotionally charged buyers,” Royce says. So stay calm, ask questions and pay attention to the behavior of the car. Take your time and inspect the environment of the vehicle, make sure that it’s comfortable and that the controls make sense to you. You’re going to spend a lot of time in this car, so it’s OK to nitpick.
Tip 8. Take a close look at the fees
Before you sign anything, take a close look at all the numbers on each contract to ensure they are what you agreed upon. Don’t be surprised to find a number of fees on the sales contract, but be aware that some are standard, some are negotiable and some are simply outrageous.
Expect to pay sales tax, a destination charge, title and registration fees, and a modest documentation fee ($50 to $100 is reasonable, but don’t be surprised if dealers in some states charge up to $300). Advertising charges, which are fees charged to the dealers by manufacturers, often get passed right on to customers. Feel free to push back on these, or at least demand a further break on the price of the vehicle. Then there are things like the “dealer prep fee,” which Royce characterizes as an outright scam. “All vehicles must be prepped before being placed on the dealership lot,” he says. “So you shouldn’t pay extra for it.”
Royce also warns against “market value” dealer markups on popular cars. “This can be anywhere from $500 to thousands of dollars,” he says. “It only works if you agree to it.” If dealers refuse to eliminate this fee, maybe you should consider a less popular car.
Tip 9. Don’t buy into pointless dealership services
As if predatory fees aren’t bad enough, there are useless extras hawked by dealers, including rust-proofing, window VIN etching, fabric protection and paint sealant. All are utter scams. The truth is that all modern cars already have rust protection from the factory. VIN etching can be done yourself with a kit, but it is hardly the theft deterrent it’s claimed to be. Fabric protection can also be done yourself with a spray can, and paint sealant is just a liquid wax you can buy at an auto parts store for $10. You don’t need any of it.
Tip 10. Be ready to walk away
Don’t forget that your entire leverage with the auto dealer lies in your ability to walk out the door. No car salesman is going to take a loss on a sale, but even a few hundred dollars is better than a dead deal. You don’t need to be obnoxious about it, but be firm in what you’re willing to pay and accept in the negotiations. If he’s smart, the dealer will come to terms that are acceptable, make the deal quickly and try to pull a fast one on the next sucker. But if he insists on trying to gouge you, then gather your things and politely say goodbye.