12 Negotiating Tips to Buy Your Next Car
What if you could be confident in the price of your next car – confident that you didn’t leave anything on the table and got the best price out there.
Below are 12 tips to get a rock bottom price on your next new car. Some are really elementary, while others are a little more advanced. Sharpen your skills by using a few or combining them all.
First off, how are we qualified to give you these tips? We frequently negotiate cars for clients and really blow them away with the deals we get. Our personal experience in negotiating speaks for itself – below are some recently completed negotiations (plus Tax, Title, License and no Junk Fees):
2017 Chrysler Pacifica Minivan: $7,125 off MSRP
2017 Acura RDX Awd: $4,661 off MSRP
2017 Honda Civic Coup Turbo: $2,172 off MSRP
2017 Acura TLX Advance Awd: $6,796 off MSRP
2017 Audi RS7: $5,300 off MSRP
2017 Ram 1500 Laramie: $10,115 off MSRP
We started getting so much demand from non-clients that we decided to offer it as a service. Below are some tactics we use.
Know what you want: Two things here. First, by knowing exactly what you want, you won’t buy a car that you don’t even need. A new Audi A7 starts at $68,800 and the performance model, the RS7 starts at $110,700. You could potentially pay $40,000 more for extra features you don’t need. Research what you want and don’t be fooled into buying more car than you need. Second, you want to pre-qualify yourself to be an ideal customer. “I like that 2017 Audi S7 Prestige in Glacier White Metallic” is much more impressive than if you were to point to it in the showroom and say “I like that white one.” Knowing what you want makes the salesman much more inclined to believe you are a serious buyer who is ready to purchase today. Why is that important? It means he/she will be willing to negotiate more and give a better price so that you buy that day.
Make the test drive count: It is far too common that people test drive the cars a dealer has out front and never drive the car they actually buy. This is a problem. In today’s cars, some higher trim levels have features that make them better to drive. For example, some have more sound deadening materials in the doors and acoustically insulated glass. They also have active noise cancellation (think Bose headphones technology) to quiet the interior. The more affordable models may not have these features. Drive the actual car you are buying to be sure it’s the one you want. Likewise, people who test drive cars are more inclined to buy. “I test drove that car and really liked it” makes you a more serious buyer in the eyes of a dealer. Again, they will be inclined to drop their prices for serious buyers to make sure they get the sale.
Research and compare prices: This is a very overlooked aspect of the car buying equation. Go on cars.com, use truecar.com (just don’t sign up for their emails- you will get hundreds of dealers trying to sell you something) and research what prices cars are offered for. That way, when the salesman says “We are running a special today, that white Audi is $2,000 off!”you can reply with “Only $2,000? The Audi dealer in the next town over has their car advertised for $3,000 off already.” Why does this work? Because now the dealer you are at needs to BEAT the other persons price just to KEEP your business.
Find a car that is in-stock: A dealership has more incentive to sell cars that are currently on their lots. When cars sit on their lots, dealers have to pay money to hold onto that inventory. Financing costs, storage, cleaning, damage, depreciation – all these things add up, and if a car doesn’t sell in 30, 60, or 90 days, the dealers will make more wiggle room to get rid of it. They may be willing to drop the price $300 today rather than risk another $500 in costs for the next 30 days. Find a car that’s in stock and you’ll have a huge amount of leverage.
Be ready to pull the trigger: “I don’t know, let me think about it” doesn’t instill any confidence that there will be a sale today. (Dealerships always want to make a sale as soon as possible – again, the longer cars sit on their lots, the more money it costs them to hold onto inventory). Be ready to pull the trigger – “I’m ready to buy the car today and have the means to do it. My wife likes it and we both agreed that it would be a good addition to our garage. I just need you to meet me at my price.” Comments like that light a fire under a salesman to make a deal!
Don’t actually negotiate: After doing your research, you can get a good grasp at what a good price will be for the car you want. Present your price and tell the dealer that you will buy the car today if they meet you at that price. (Note: if you present an un-realistic and low price, the dealer will know and never take you seriously – present a fair price to keep the negotiations going.) The dealer is then going to come back with an offer higher than yours (99 times out of 100). This is where you don’t negotiate – politely decline the offer and stick to your price. They will have to come back with another offer. If this process drags on, continue onto the next step below:
Walk away if needed: Many people figure “That price is $800 more than I’m willing to pay, but I love the car and I’ve already spent such a long time here that its not worth coming back another time.” Walking away is the best negotiating tactic out there. Leave your contact info with your salesman. If the deal can be made, they will call you. Be sure you commit when you walk out. Too many times people stand up and threaten they are going to leave – the dealer calls their bluff and keeps them at the table for another hour. Make your exit confidently and wait for a call.
Skip the “Add-On’s”: So you got down to the price you want. Not so fast – its not that easy! Dealers will always try to sneak in some kind of “Dealer Prep Fee”, “Leather Protectant”, “Vin-etching”, and “Extended Warranties”. The only things that you should be paying for are the purchase price of the vehicle, tax, title, and license fee. Also be aware that many times dealers will include these “Add-on” items on the original offer and then claim that you “negotiated” their price down. Don’t forget what you actually came to negotiate – the car’s price. Get rid of the junk items and then concentrate on the price.
Consider trading in your car: Too many times people ignore dealer trade in prices because they know they are too low. The dealer will always want to pay you less than your car is worth. However, because of taxes, you may still come out ahead. Example: You are buying a $60,000 car and the dealer offers you $30,000 for your trade in. You know you can sell it for at least $31,500 on the open market, but still come out ahead by trading it in. Why? That’s because you don’t have to pay taxes on the $30,000 that your car offsets. ($30,000 x 7% tax = $2,100). So if you trade it in for $30,000, your total value is $32,100 – you still come out $600 ahead!
Leasing? Negotiate the purchase price: When someone leases a car, they are expected to pay for the difference in what car costs to what its value is when they give it back. So if you lease a $35,000 car for 3 years and it’s expected to be worth $20,000 by the end, you have to pick up the difference ($15,000). What many people don’t realize is that many times, these leases are calculated from the MSRP to the expected residual value. However, if the car is normally selling for $30,000 ($5,000 off), then you would only have to pick up the $10,000 difference in between. Negotiate the purchase price to reduce your total lease payments.
Leasing? Own a business? Write it off: If used for your business, you can write off any business use. What could this possibly accomplish? If you are in something like a 30% tax bracket, writing off the lease could save you 30% on your lease payments. As in our above example, $10,000 in total payments over 3 years could be reduced to $7,000 total. Talk to your accountant on how much you would be able to deduct.
How to get out of paying taxes: This tip is not something we do or even condone- but there are people out there who do. Let’s say you are paying $500,000 for a vehicle. It’s not as uncommon as you may think – RV’s can easily command half a million or more. You would setup an LLC in Montana (couple thousand bucks), and the LLC would purchase the vehicle. Since Montana has no sales tax, you could potentially save $33,000 ($500,000 times 7% tax, minus cost to setup LLC). However, you would have to use Montana license plates and your insurance agent wouldn’t be too happy. This is not ethical, and we don’t do it, but it’s worth seeing the concept!
In addition to the above tactics (except dodging taxes), clients come to us because we know how to spot and negotiate with dealers that provide rock bottom advertised prices, but when you come in, they turn around and say you don’t qualify for certain rebates or offers. Our experience and contacts in the industry give us the edge to be the best!
“I knew Martin Negotiated cars, but after he saved my mom $2,500 ($500 under invoice) on the brand new Honda Civic that just came out, I found out how good he is. Called him in the morning and by the afternoon we already had the car!” – Jason W. – Barrington, IL
“Saved $6,000 on my new Jeep. No stress, awesome financing, couldn’t have asked for a better experience!” -Julie V. – Gurnee, IL
“I got a price from my own dealer first and Martin got me a deal on a Buick that had a few extras. It was a year newer, had 4 wheel drive, an extended warranty,and the color I wanted. All this for the same price I was going to pay my guy! Highly recommend them!” – Joe G. – Inverness, IL
Woodfield Financial Advisors