Recently I posted a picture of my car's odometer (for showing an unusually low temperature at the time in southern California), and Willie McFML made fun of me for having over 110,000 miles on my car.
Indeed, I've been driving about 25 years, and have only owned 3 cars.
My current car (a BMW 545i) is 8 1/2 years old, and despite online poker being basically dead for the foreseeable future, I decided to throw caution to the wind and purchase a new car.
I hadn't had to negotiate for a car since 2004, so I was out of practice, and in fact many things have changed since then. I learned what I feel is the best current process for new car buying, and will detail it below.
Feel free to add your comments and suggestions, as well.
First, it is important to understand that it is not 1975 anymore.
In the old days, you would come onto a dealer's lot with very little information, and be greeted by a pushy salesman who looked like this:
You would take a test drive, see the sticker price, and if you were still interested, would be stuck in a frustrating negotiation session with the salesman, and never really know where you stood.
Nowadays, it is a lot easier. This is because the internet provides you with all of the tools you need to be properly informed and deal from a position of strength.
Here are the steps I suggest:
1) Test drive, but don't buy. Pretty much every dealer will let you test drive whatever car you want. There is no obligation, and occasionally you even get some sort of incentive (like ski resort tickets) for taking a test drive. This can be time-consuming if you are thinking of several different types of cars, but is a free way for you to figure out what you really want. Most importantly, do NOT negotiate after the test drive. You can collect additional pricing information and put out some feelers, but tell the salesman that you will think about it and be back later.
2) Decide on what you want while in the comfort of your own home. Once you select the type of car you're interested in, go to the manufacturer's website and read about the various options you can select. Choose those, as well. You might want to go back to the dealer to see those options in person, in case you're undecided what you want. If you do that, again do not negotiate price at that point. The important thing in this step, however, is to decide exactly the car you want. Keep in mind that you don't have to match your desires to what is available at the dealer, as you can custom-order a car for the same price. The only downside to ordering is that you will have to wait about 6-8 weeks, typically.
3) Go to the Consumer Reports website and find out what the dealer is really paying for the car, and what he's really making on the sale. http://www.consumerreports.org/cro/p...ginMethod=auto If you already subscribe to Consumer Reports magazine, you can have full access to their database for $13. Otherwise it's $39 for the database plus a year subscription. This is VERY MUCH worth it. Keep in mind that this website is very user-unfriendly and a pain in the ass to navigate, but it has a lot of userful info. Most importantly, you are looking for three things:
- The "dealer invoice price" for the car you want. This is what the dealer pays the manufacturer.
- The "dealer holdback" value. This is additional money that the manufacturer ships the dealer, within a few months of the completed sale.
- The "dealer invoice price" on any options you're ordering.
4) Figure out what the "invoice price" is for the car plus the options you want. This is the price you should really be shooting for. Sometimes you can get it for less than invoice (because of the "holdback" money they get), but most dealers don't want to sell for below invoice, for a variety of reasons. It's most important to know the "holdback" so you have something to answer the dealer when he claims that he can't sell it at invoice price, because he'd supposedly make no money.
5) Call a bunch of dealers in your area. This includes dealers that are a bit far away. It may be worth it to go a little distance. Be up front and honest with them. Tell them that you already know exactly what you want, are ready to buy, but are price-shopping. Tell them you know what the invoice price is, as well as the holdback. Ask them for the very best price they can give you, and tell them that other dealers will be calling you back within the next 2 days with their own best prices, and you'll be selecting the best one. This puts the pressure on them to give you a great price, as they know they will lose the sale if you get a better price elsewhere. Do not go down to these dealerships in person. You will be wasting your time, and in fact they will try to pull shenanigans on you to get you to pay more. You have a lot more power over the phone.
6) Pick the dealer with the best price. If there are any manufacturer's incentives (such as rebates), make sure they understand that this is unrelated to your negotations, and want those, as well. Once you've selected a dealer, go down there in person. Make sure they don't try to bullshit you with extra charges to drive up the price. In most cases, you should be paying base price, plus tax, title, registration, and destination fees.
7) Do not trade in your existing car. You will not get full value. Sell it on your own, private party.
8) If paying cash, don't mention this until a price is agreed upon. Often they will give you a better price if they think they will make money from you on financing, so don't give away too early that you won't be financing it.
9) If financing, make sure you know the going rate for interest. If they try to force you onto a higher rate, demand the going one, or tell them you will secure financing elsewhere.
10) Do not buy extended warranties off the bat. You can always purchase them when the standard warranty is running out. You will get a better deal that way.
That's pretty much it. Doing the above, you can turn the tables on the dealership and negotiate from a position of strength and knowledge. You're pretty much calling them and saying, "I know how much you're paying for the car, I know how much you're making on top of that, and I'm calling your competitors, too. Give me the best price you can because the lowest priced dealer wins my business."
By doing the negotiation on the phone, they also lose the "home court" advantage of having you in their office, as well as the belief that they can talk you into an impulse purchase. You also waste a lot less time this way.
Some people may suggest leasing instead of buying, but I just never had a desire to do that. Leasing has its pros and cons, but it's just not really for me.
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Originally Posted by Dan Druff
no AWD version so no go
