By: Chris
Fox
Many of us have
been at the car dealership and have been drained by a salesperson
during price negotiations for the purchase of a new car. Most people
give in too easily or do not negotiate at all to avoid the dreadful
act. This only means more money in the car dealers’ pocket, while
you are out of several thousand dollars! Yes, they make that much
in profit per car.
This article
unveils the dealer’s selling tactics and how you can get around
them. But before we dive into the new car buying tips, we need to
understand what makes up the dealer’s profits.
In addition
to the MSRP (manufacturer suggested retail price), which is the
dealer’s cost for the car plus an additional 20-25% profit, a dealer
also gets financial incentives from the manufacturer when a new
car is sold. This is called Holdback.
Depending on
the car, dealers can make hundreds on each car through holdbacks.
Dealers also get additional incentives and bonuses on selling a
car before the end of the month and/or quarter.
A shrewd dealer
can make several thousand on a new car even by selling it at invoice
price. This is how new car buying can become tricky for the consumer.
Ready to learn
how not to put a dent in your wallet on your next car purchase?
Here are four tips to get you started. Each one is a dealer tactic
to watch out for.
1. The Guilt
Trip
As you may have
noticed, every desk in a dealership has photos of the salesperson’s
family, instead of photos of cars. Midway in the negotiation, the
sales person will bring them up and make it look like his little
commission check can hardly pay for his daughters college and little
Bradley’s braces.
A seasoned salesperson
will soon have you feeling guilty for driving the price down and
hurting his commission. Watch out not to fall for this tactic, since
you already know about holdbacks and incentive programs from manufacturers.
2. Wearing You
Down
Come prepared
to spend half a day at the dealership or pay whatever the dealer
asks for. Car Dealers are trained to delay and tire you out to the
point where you give in and accept their price just to get out of
there.
After you make
your offer, sales people typically claim they would have to run
it by their manager. You may then have to re-start negotiating with
the manager, who is also a seasoned salesperson. This dance goes
on for a while until you give in.
Remember, there
are multiple dealerships in a city, so they need you more than you
need them. Demand to speak to the manager after a certain time period
or threaten to leave.
Because you
are devoting a lot of time to bargain with the dealer, they know
you are a serious buyer, so they will not let you leave. The earlier
you can speak with the manager, the faster you can leave.
3. The Test
Drive
We all enjoy
a good test drive and look forward to it. Although it is essential
to test drive a car before you buy it, remember to not show your
absolute love for the car to the salesperson. Their goal is to get
you emotionally attached to the car, so it becomes a must have for
you. I have learned it the hard way.
To hide your
emotional tears from the salesperson, mention the features of a
competing car in the same class, like the new shape, light, leg
room, resale value etc. This will make the salesperson a little
vulnerable.
4. Monthly Payments
This one is
to confuse you. Dealers will start talking about monthly payments
rather than the total price of the car. They will start by asking
how much you are willing to pay per month and how much of a down
payment you are willing to pay. Since people don’t want to look
like they cannot afford a certain car, they will usually give a
higher number. Big Mistake!
You have left
little room for negotiation when this happens. Always steer the
conversation to the total price of the car and do NOT mention any
trade-ins at this point. Only after the total price of the vehicle
is completely negotiated then talk about interest, monthly payment
and trade-ins.
General Rule;
As a general
rule, remember to only focus and negotiate on the Total Price of
the vehicle. Everything else is pretty much the car dealer’s trough.
If the above
new car buying tips seem like a lot of hassle, yet you still want
to get the best price in town, there are some websites that do this
for you. www.autoauctionbids.com
for example is a great website for this because you can collect
price quotes from multiple local dealers for a particular car as
well as its competing car models (like Honda Accord, Toyota Camry
and Ford Taurus) and compare them.
The website
then allows you to send back the lowest quotes received for each
car make to all participating dealers in your area through the website
itself.
Dealers view
this price and continue to submit new lower prices over a 3 day
period. By putting local car dealers in such a price competition
allows you to avoid the dreadful face to face negotiation and yet
gets you the lowest price in town for up to 3 competing car makes.
The best part
about AutoAuctionBids.com
is that it is absolutely free for you and there is no obligation
to buy after the new car auction is over.
This article
was posted on August 20, 2005 |
