Buying a New Car: Everything You Need To Know
Buying a New Car: Everything You Need To Know
Originally Posted by Jabber @ Club3G.com
Here is how the whole process works:
How we get our cars:
Dealerships get a "preference" or "allocation". In simple terms, this is the total number of new cars they will receive in a given period. Some companies are every week, some once a month. The number of cars you get is based on prior sales. If a dealership is selling only 5 trucks but selling a 55 coupes, guess what vehicles will be on the allocation? Correct, alot more coupes than trucks. This way the manufacturer can get the product to the customers more efficiently. How the dealership pays for these cars is with a "floor plan". A floor plan is simply a line of credit with the company to purchase. Not all dealers have one. If they do, you can negotiate a little harder because they are paying interest for every day it sits on the lot. However, just about every company gets a grace period of 60 days before the interest gets tacked on. Hence the reason why a dealer will try and push out an older car versus a newer car. **Make sure that after you test drive a car, you note the stock number. It is very common for a dealer to have you drive one car, but sell you a different one with the same options due to age of inventory** If a dealer has 6 white cobalts with the exact same equipment, he may have you drive in the newest one, but sell you the oldest one. Now you can also see the reason why it is important to take a car out of stock rather than locate one at a different dealer. I want to lower my interest payment to the company, not help another dealer. This is another area where you can get a better deal. Always try to take one out of stock. I have seen customers get free options (maybe an upgraded radio) because it was on the ground and in stock.
How to conduct yourself at the dealership:
DO NOT walk in and say, "Who here wants to sell me a car?" Any decent salesperson will walk away from you. Simply tell the salesperson that you are interested in Model X and any equipment you may want on it. Take a test drive. But don't waste 3 hours on a drive. Sales people hate that.. especially if they have no idea yet whether you will be buying a car or not. An angry salesperson is a hard headed salesperson. If a customer comes at me with hatred in their eyes, how likely do you think it will be that I really do help them out? VERY rarely. Just be courteous. If the salesman is an ***, leave. There are always other dealerships to visit. If you generally just don't like the salesperson, leave. Remember, there is absolutely nothing keeping you in that particular store. Most people feel pressured to purchase something right then and there. That is because the salesman has control of you. That is what we train our guys to do. If a customer is in control, he has all the power.
Lets pretend everything is fine. They have a car in stock, in your color and options. You want to buy it right now. The salesman will ask you if you have a trade in. Some people still think that they should say NO and spring it on the salesperson later. That is Myth #1. Just tell him you have a trade and a payoff if you do. It just makes everything go smoother. Here is how 2 different scenarios play out:
Scenario #1: You tell the salesperson that you like the car and you have a trade. He gets it appraised, and a payoff if necessary, and you get some figures to start within 20 minutes.
Scenario #2: You hide the fact that you like the car and that you have a trade. The salesmen spends 30 minutes trying to figure out if you actually want to buy the car and gets a price from the managers. You go back and forth and finally agree on a price. Thats 45 minutes. Now you mention the trade (that the salesperson know about all along). Another 20 minutes to get it appraised. And you start haggling over figures again.
Here is the kicker... both scenarios result in the same profit. No way, you say? I hate to say it, but a car is worth what a car is worth. Just because you mentioned it early in the conversation does not dictate its value to the dealer. Let's use some numbers.. 27,000 msrp. 2000 discount. 10000 trade in value. Scenario one: you get a price of 26,000 and a trade in of 11,000-- your price is 15,000. Scenario two: You get a price of 25,000 but only 10,000 for your trade-- your price is 15,000. The reason this happens is because most customer are sentimentally attached to their vehicles. They will pay more attention to the price of their trade than the price of the new car. So it stands to reason that a dealership will use some of the profit to "show" you a higher trade in value. Either way, the dealership will make a certain amount of money. Get over it. It is a business and needs profit to run. Last time I checked, nobody here has called DNL motorsports and asked to see what the cost of an item is and negotiate from there. But people are terrified of paying to much at a dealership. I can totally understand that. You just want a fair deal. If you are the type that wants the dealership to make no money at all, stop reading this. You are an idiot to ever think someone will sell you something at a loss.
How to negotiate:
Simple... go to 3 dealers. Get the best price from all three. If one guy is 3,000 less than everyone else, he lied to you. Yes, carsalesmen lie. He is trying to get you to go back to that store and give him a second shot after you have gotten numbers from other stores.
OK, now you have 3 numbers from 3 different stores. They are probably within 1,000 of each other if you have a trade. If no trade, they are probably closer to 300 apart. Which dealership did you like the best? Which one is most convenient for service work? Which one offers better services like loaners, shuttle service, hours, etc? Which salesperson did you like the best? Hopefully, you like one the best out of the three. Take your number and walk in. Hand it to your salesperson and say, "Beat this and you have a deal RIGHT NOW". That is how easy this is. He can either beat it, match it, or he says no way.
A) He matches the deal and you have a new car.
B) He beats the deal and you have a new car.
C) If he says no way, he will try to explain why he can't. You can politely listen, but remind him that someone can. If he still says no, leave. He will either chase you down in the parking lot or call you the next day. If neither happens, go to your next favorite store. If he is VERY close, within 200 bucks, just buy the car. What is the difference over 4 years of ownership. Skip starbucks once a month and you have the money back.
Here are some things to never say to a salesman:
1) What is my payment? Well, not before negotiating on a price. If you try and negotiate a price, you will lose this battle. There are too many factors involved in a payment.. interest rate, term, cash price, price, payoff, "wiggle" room, etc. By wiggle room I mean most dealers pack the payment by 20 dollars and you never realize it. If your real payment would be 300 month for 60 months, they will tell you 320 and let you talk them down to 300 giving you the impression that you are getting money off. Hence why I say never talk about payment ahead of time.
2) My credit sucks.. can you get me approved? This is pretty self explanatory. A dealer will crush you if you say this.
3) This is the exact car I am looking for! At least never say this before you negotiate. Even if it is, tell them you would like a (insert color they don't have) instead, but might settle for the color they have (the one you really do like).
Some things to do before going into a dealership:
1) Arrange financing before hand. If you have good credit, ask your bank what their rate is or visit capitalone.com. If your credit is marginal, go to roadloans.com or capitalone.com and try to get pre-approved before hand. Tell the salesman that you already have financing arranged. They will never let interest rate stand between them and a deal. Most of the time, they can beat the rate you have. If not, no harm, no foul, you already have your money anyway.
2) Figure out your budget. I have seen countless times a customer come in and want a vehicle that winds up being way out of their price range when it comes to payment. A general rule of thumb is $20 for every $1,000 you are going to finance on a 60 month loan. A $15,000 car including taxes and money down is about $300 a month with good credit.
3) Get your down payment together. If you can only put $500 down, don't figure on future income.. "Well, next weeks paycheck will be another $500..." You either have the money or you don't.
Here are some myths:
1) There are 2 invoices. No, there is only one invoice on the car. There are two different prices on it though. The "invoice" that everyone talks about includes "Holdback" and "Advertising Fees". Holdback is a dollar amount that the manufacturer pays to the dealer quarterly as a bonus. On some cars, it is negotiable. Since you already have 3 quotes, it doesn't matter.
2) Edmunds, Kelley Blue Book (KBB), (Insert other internet site here), have the REAL invoice No, they don't. They are usually off by 2-3%.
3) KBB says my car is worth $XXX. No, it isn't. KBB is a guide only. If KBB is so sure your car is worth what they say, have them buy it. Oh wait, they don't buy cars. Your car is worth what the dealer is willing to pay for it. Some dealers will pay more because they need it more than another store. If Eclipses are hot sellers and a dealer has none of them, he will give you more than a dealer that has 15 of them. Make sense?
Ways to get a better deal:
1) As I mentioned, take a vehicle out of stock. I already mentioned about floor plan and interest that the dealer is saving by you taking one right now. There are a few other reasons. If you want one that the dealer does not have, he will take a deposit and get one for you within a few days. Dealers do not like this. I have taken deposits and had a customer go to the next dealer and buy one there. I have had customers come from another store and have a deposit down there already. Basically, deposits mean crap in this business. They are fully refundable by law. The only sure fire way to solidify a deal RIGHT NOW (the magic words to a dealer) is to have you take one off the lot. I would be more than happy as a manager to give a customer another $100-300 off the best price just to have him take a car right now.
2) When you are walking around the lot, take notice of the dealers stock numbers. If the car you want has a stock number of #7429 and you see the same car with #6875, guess which one is older? Drive the older one. There is absolutely no difference between the two vehicles as far as warranty goes. Have the salesperson work on the car that is older. Again, it goes back to interest being paid by the dealer to have the car on the lot.
3) Sometimes there is an odd ball car. An option that not alot of people want. Somebody screwed up and didn't order an option that everybody wants. If the option doesn't mean anything to you personally, look at that one. If it has an extra option that you don't necessarily want, go ahead and look at that one also. Maybe you get a significant discount on that particular car because of it. A customer that will take an oddball car will get a better deal than someone who wants the same thing everybody else is getting.
That is just a couple of other things to keep in mind. It really is no different than any other business. Since we are talking about a multi-million dollar inventory, it has to turn fast. Turning fast product means more profit. If you help the dealer by buying an older car or something that is not commonly purchased, you WILL get a better deal... as long as it is in stock and ready to go RIGHT NOW.
How we get our cars:
Dealerships get a "preference" or "allocation". In simple terms, this is the total number of new cars they will receive in a given period. Some companies are every week, some once a month. The number of cars you get is based on prior sales. If a dealership is selling only 5 trucks but selling a 55 coupes, guess what vehicles will be on the allocation? Correct, alot more coupes than trucks. This way the manufacturer can get the product to the customers more efficiently. How the dealership pays for these cars is with a "floor plan". A floor plan is simply a line of credit with the company to purchase. Not all dealers have one. If they do, you can negotiate a little harder because they are paying interest for every day it sits on the lot. However, just about every company gets a grace period of 60 days before the interest gets tacked on. Hence the reason why a dealer will try and push out an older car versus a newer car. **Make sure that after you test drive a car, you note the stock number. It is very common for a dealer to have you drive one car, but sell you a different one with the same options due to age of inventory** If a dealer has 6 white cobalts with the exact same equipment, he may have you drive in the newest one, but sell you the oldest one. Now you can also see the reason why it is important to take a car out of stock rather than locate one at a different dealer. I want to lower my interest payment to the company, not help another dealer. This is another area where you can get a better deal. Always try to take one out of stock. I have seen customers get free options (maybe an upgraded radio) because it was on the ground and in stock.
How to conduct yourself at the dealership:
DO NOT walk in and say, "Who here wants to sell me a car?" Any decent salesperson will walk away from you. Simply tell the salesperson that you are interested in Model X and any equipment you may want on it. Take a test drive. But don't waste 3 hours on a drive. Sales people hate that.. especially if they have no idea yet whether you will be buying a car or not. An angry salesperson is a hard headed salesperson. If a customer comes at me with hatred in their eyes, how likely do you think it will be that I really do help them out? VERY rarely. Just be courteous. If the salesman is an ***, leave. There are always other dealerships to visit. If you generally just don't like the salesperson, leave. Remember, there is absolutely nothing keeping you in that particular store. Most people feel pressured to purchase something right then and there. That is because the salesman has control of you. That is what we train our guys to do. If a customer is in control, he has all the power.
Lets pretend everything is fine. They have a car in stock, in your color and options. You want to buy it right now. The salesman will ask you if you have a trade in. Some people still think that they should say NO and spring it on the salesperson later. That is Myth #1. Just tell him you have a trade and a payoff if you do. It just makes everything go smoother. Here is how 2 different scenarios play out:
Scenario #1: You tell the salesperson that you like the car and you have a trade. He gets it appraised, and a payoff if necessary, and you get some figures to start within 20 minutes.
Scenario #2: You hide the fact that you like the car and that you have a trade. The salesmen spends 30 minutes trying to figure out if you actually want to buy the car and gets a price from the managers. You go back and forth and finally agree on a price. Thats 45 minutes. Now you mention the trade (that the salesperson know about all along). Another 20 minutes to get it appraised. And you start haggling over figures again.
Here is the kicker... both scenarios result in the same profit. No way, you say? I hate to say it, but a car is worth what a car is worth. Just because you mentioned it early in the conversation does not dictate its value to the dealer. Let's use some numbers.. 27,000 msrp. 2000 discount. 10000 trade in value. Scenario one: you get a price of 26,000 and a trade in of 11,000-- your price is 15,000. Scenario two: You get a price of 25,000 but only 10,000 for your trade-- your price is 15,000. The reason this happens is because most customer are sentimentally attached to their vehicles. They will pay more attention to the price of their trade than the price of the new car. So it stands to reason that a dealership will use some of the profit to "show" you a higher trade in value. Either way, the dealership will make a certain amount of money. Get over it. It is a business and needs profit to run. Last time I checked, nobody here has called DNL motorsports and asked to see what the cost of an item is and negotiate from there. But people are terrified of paying to much at a dealership. I can totally understand that. You just want a fair deal. If you are the type that wants the dealership to make no money at all, stop reading this. You are an idiot to ever think someone will sell you something at a loss.
How to negotiate:
Simple... go to 3 dealers. Get the best price from all three. If one guy is 3,000 less than everyone else, he lied to you. Yes, carsalesmen lie. He is trying to get you to go back to that store and give him a second shot after you have gotten numbers from other stores.
OK, now you have 3 numbers from 3 different stores. They are probably within 1,000 of each other if you have a trade. If no trade, they are probably closer to 300 apart. Which dealership did you like the best? Which one is most convenient for service work? Which one offers better services like loaners, shuttle service, hours, etc? Which salesperson did you like the best? Hopefully, you like one the best out of the three. Take your number and walk in. Hand it to your salesperson and say, "Beat this and you have a deal RIGHT NOW". That is how easy this is. He can either beat it, match it, or he says no way.
A) He matches the deal and you have a new car.
B) He beats the deal and you have a new car.
C) If he says no way, he will try to explain why he can't. You can politely listen, but remind him that someone can. If he still says no, leave. He will either chase you down in the parking lot or call you the next day. If neither happens, go to your next favorite store. If he is VERY close, within 200 bucks, just buy the car. What is the difference over 4 years of ownership. Skip starbucks once a month and you have the money back.
Here are some things to never say to a salesman:
1) What is my payment? Well, not before negotiating on a price. If you try and negotiate a price, you will lose this battle. There are too many factors involved in a payment.. interest rate, term, cash price, price, payoff, "wiggle" room, etc. By wiggle room I mean most dealers pack the payment by 20 dollars and you never realize it. If your real payment would be 300 month for 60 months, they will tell you 320 and let you talk them down to 300 giving you the impression that you are getting money off. Hence why I say never talk about payment ahead of time.
2) My credit sucks.. can you get me approved? This is pretty self explanatory. A dealer will crush you if you say this.
3) This is the exact car I am looking for! At least never say this before you negotiate. Even if it is, tell them you would like a (insert color they don't have) instead, but might settle for the color they have (the one you really do like).
Some things to do before going into a dealership:
1) Arrange financing before hand. If you have good credit, ask your bank what their rate is or visit capitalone.com. If your credit is marginal, go to roadloans.com or capitalone.com and try to get pre-approved before hand. Tell the salesman that you already have financing arranged. They will never let interest rate stand between them and a deal. Most of the time, they can beat the rate you have. If not, no harm, no foul, you already have your money anyway.
2) Figure out your budget. I have seen countless times a customer come in and want a vehicle that winds up being way out of their price range when it comes to payment. A general rule of thumb is $20 for every $1,000 you are going to finance on a 60 month loan. A $15,000 car including taxes and money down is about $300 a month with good credit.
3) Get your down payment together. If you can only put $500 down, don't figure on future income.. "Well, next weeks paycheck will be another $500..." You either have the money or you don't.
Here are some myths:
1) There are 2 invoices. No, there is only one invoice on the car. There are two different prices on it though. The "invoice" that everyone talks about includes "Holdback" and "Advertising Fees". Holdback is a dollar amount that the manufacturer pays to the dealer quarterly as a bonus. On some cars, it is negotiable. Since you already have 3 quotes, it doesn't matter.
2) Edmunds, Kelley Blue Book (KBB), (Insert other internet site here), have the REAL invoice No, they don't. They are usually off by 2-3%.
3) KBB says my car is worth $XXX. No, it isn't. KBB is a guide only. If KBB is so sure your car is worth what they say, have them buy it. Oh wait, they don't buy cars. Your car is worth what the dealer is willing to pay for it. Some dealers will pay more because they need it more than another store. If Eclipses are hot sellers and a dealer has none of them, he will give you more than a dealer that has 15 of them. Make sense?
Ways to get a better deal:
1) As I mentioned, take a vehicle out of stock. I already mentioned about floor plan and interest that the dealer is saving by you taking one right now. There are a few other reasons. If you want one that the dealer does not have, he will take a deposit and get one for you within a few days. Dealers do not like this. I have taken deposits and had a customer go to the next dealer and buy one there. I have had customers come from another store and have a deposit down there already. Basically, deposits mean crap in this business. They are fully refundable by law. The only sure fire way to solidify a deal RIGHT NOW (the magic words to a dealer) is to have you take one off the lot. I would be more than happy as a manager to give a customer another $100-300 off the best price just to have him take a car right now.
2) When you are walking around the lot, take notice of the dealers stock numbers. If the car you want has a stock number of #7429 and you see the same car with #6875, guess which one is older? Drive the older one. There is absolutely no difference between the two vehicles as far as warranty goes. Have the salesperson work on the car that is older. Again, it goes back to interest being paid by the dealer to have the car on the lot.
3) Sometimes there is an odd ball car. An option that not alot of people want. Somebody screwed up and didn't order an option that everybody wants. If the option doesn't mean anything to you personally, look at that one. If it has an extra option that you don't necessarily want, go ahead and look at that one also. Maybe you get a significant discount on that particular car because of it. A customer that will take an oddball car will get a better deal than someone who wants the same thing everybody else is getting.
That is just a couple of other things to keep in mind. It really is no different than any other business. Since we are talking about a multi-million dollar inventory, it has to turn fast. Turning fast product means more profit. If you help the dealer by buying an older car or something that is not commonly purchased, you WILL get a better deal... as long as it is in stock and ready to go RIGHT NOW.
I was in Corporate Sales for just over a year. I can tell you that there were a few key things that a client could do to get a better price:
1). NEVER let on that the item in question is perfect or even the one that you wanted. If the car on the lot is black, say: "Well, I don't mind black, but a green one would be better (make sure that they don't have a green one, or you will be SOL)." It may say that in the article, but I cannot stress enough the importance of that tact in a negotiation. THAT WILL COME INTO PLAY.
2). DO NOT EVER NAME YOUR OWN PRICE. Shop around, get as many quotes as possible, and let the dealership play how low can you go with another dealership. I remember that that was the bane of my existence as a salesman. If someone came in and named their own price, I almost completely ignored it and worked it back skywards. If someone came in with a lower quote, I had something to go back to my boss with and play let's make a deal. Other than that, no dice. Everyone negotiates differently. A ton of things come into play, like age of vehicle, number of miles, etc. Someone may be more anxious to get a car off of their lot than others. Use that to go back and talk with the dealer who has the car that you want.
Everything else is pretty much covered in the article. All information comes from trained and experienced salesmen. It doesn't get any better than this. Enjoy.
1). NEVER let on that the item in question is perfect or even the one that you wanted. If the car on the lot is black, say: "Well, I don't mind black, but a green one would be better (make sure that they don't have a green one, or you will be SOL)." It may say that in the article, but I cannot stress enough the importance of that tact in a negotiation. THAT WILL COME INTO PLAY.
2). DO NOT EVER NAME YOUR OWN PRICE. Shop around, get as many quotes as possible, and let the dealership play how low can you go with another dealership. I remember that that was the bane of my existence as a salesman. If someone came in and named their own price, I almost completely ignored it and worked it back skywards. If someone came in with a lower quote, I had something to go back to my boss with and play let's make a deal. Other than that, no dice. Everyone negotiates differently. A ton of things come into play, like age of vehicle, number of miles, etc. Someone may be more anxious to get a car off of their lot than others. Use that to go back and talk with the dealer who has the car that you want.
Everything else is pretty much covered in the article. All information comes from trained and experienced salesmen. It doesn't get any better than this. Enjoy.
By the way, if you guys want to, post WHAT you paid with what options, year, etc. AND WHERE you paid it. Remember, a quote out of context is useless. Cars in NY are going to cost more than cars in Florida. The template should go as follows:
NFSLancerRA
2009 Lancer Ralliart; Orlando, Florida
Color: Black
Options: None
Price (Before TTT): $19,700
Mileage: 50 and change
Notes:
1). This is just to get an idea of where you stand. Don't print this out and take it to a dealer. It won't do anything but **** the salesman off.
2). Please post price before Tax, Tag, and Title. Those are functions of where you live as well. This is just for simplicity. I don't feel like figuring out what the tax rate is in every single state.
NFSLancerRA
2009 Lancer Ralliart; Orlando, Florida
Color: Black
Options: None
Price (Before TTT): $19,700
Mileage: 50 and change
Notes:
1). This is just to get an idea of where you stand. Don't print this out and take it to a dealer. It won't do anything but **** the salesman off.
2). Please post price before Tax, Tag, and Title. Those are functions of where you live as well. This is just for simplicity. I don't feel like figuring out what the tax rate is in every single state.
Last edited by NFSLancerRA; Jun 1, 2010 at 03:43 PM. Reason: Notes
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Newbie
Joined: May 2010
Posts: 31
Likes: 0
From: Phoenix, AZ
Great Post, thank you very much for this. I wish I would have saw this post before I bought my 2009 RA which was also my first purchase from a car salesman. At least I will be more prepared going in when I go buy my wife's new car soon.
Also, here's my purchase info. I could have done better I think, but cars here can be expensive..
quaggo
2009 Lancer Ralliart; Phoenix, Arizona
Color: Red
Options: standard, but with dealer window tint and paint protectant
Price (Before TTT): $21,000
Purchase Date: May 2010
Mileage: 140 and change
Also, here's my purchase info. I could have done better I think, but cars here can be expensive..
quaggo
2009 Lancer Ralliart; Phoenix, Arizona
Color: Red
Options: standard, but with dealer window tint and paint protectant
Price (Before TTT): $21,000
Purchase Date: May 2010
Mileage: 140 and change
Last edited by quaggo; Jun 6, 2010 at 12:07 AM.
Newbie
Joined: May 2010
Posts: 5
Likes: 0
From: Cleveland, OH
Newbie
Joined: May 2010
Posts: 31
Likes: 0
From: Phoenix, AZ
Account Disabled
Joined: Jun 2010
Posts: 10
Likes: 0
From: PA
You also need to keep in mind the insurance premium difference when trading or buying a new car. I went from a supercharged sedan to a turbo and the change was quite substantial, though I sold the R/A and bought a older and used STi my premium did go down a bit.
Newbie
Joined: May 2010
Posts: 5
Likes: 0
From: Cleveland, OH
Yes, yes. seems like a lot more people leave than stay. TTT adds up, but I would still be pretty proud of your deal.
Evolving Member
Joined: Feb 2009
Posts: 195
Likes: 0
From: Phoenix, AZ
I think ppl should also put the date of purchase because when the RA first came out ppl were paying more
Menendez:
2009 Lancer Ralliart; Costa Mesa, California
Color: Black
Options: base model and threw in lo jack
Price: 24400 (before tax)
Milage: 007 (still had plastic wraped interior)
Purchase date: Jan 2 2009
Menendez:
2009 Lancer Ralliart; Costa Mesa, California
Color: Black
Options: base model and threw in lo jack
Price: 24400 (before tax)
Milage: 007 (still had plastic wraped interior)
Purchase date: Jan 2 2009
Last edited by Menendez; Jun 5, 2010 at 07:24 PM.
Newbie
Joined: Jun 2010
Posts: 4
Likes: 0
"Confessions of a Salesman" This is a very informative fr Edmunds.com
http://www.edmunds.com/advice/buying...2/page009.html
http://www.edmunds.com/advice/buying...2/page009.html
That seems fair. However, if your price and purchase date are way irrelevant, there is nothing saying that you have to post. But I didn't even think about that. Thanks.