12 Tips on how to Get a Good Deal on a New Car
I recently found the above video, which was taken at an Ignite Conference, on how to purchase a new vehicle at a good price. I’ve never heard of the presenter, Rob Gruhl, but he has some pretty sound strategic advice on how to buy a new car for a good price. Here’s a summary of Rob’s advice mixed in with some of my thoughts:
1. Plan on taking two full weekends
In other words, there’s no need to rush to a purchase, and rushing can result in making choices based on emotion.
2. Get financing from your bank
This way, you don’t need to rely on the dealership for financing, which gives them the upper hand.
3. Sell your car on your own (no trade-in)
Dealers have no incentive to give you a good deal on your trade-in. They want to turn around and make a decent profit in selling it to someone else. Having sold a car on my own through Craigslist at the same price I bought it for two years earlier, I definitely concur.
4. Choose 3 cars
Focusing in on one car limits your options and flexibility, and gives the dealer all of the power.
5. Test drive the car
But never buy it on the spot. Go home. This puts you in the negotiation ‘drivers seat’.
6. Make a list of the options you need, and the options you want
This way you’re not paying for options that you don’t need.
7. Never start with invoice price
Dealers get around pricing at invoice by piling on additional fees. This is not the pricing model that you want to chase.
8. Competitive bid, and ask for the ‘drive it off the lot price’
Find 8-10 local dealerships and tell them that you are competitive bidding. If they say they ‘don’t do competitive bidding’, tell them that ‘if they give you the price and it’s the best, I would come down there to buy it today’. Getting the ‘out the door’ price is important in comparing apples to apples when buying a new vehicle. I think that this part of the buying process is the absolute most important in getting a good price on a new car.
9. During the first visit, just leave
Rob’s point here is that something always goes wrong on the first visit. They don’t have the car, the car is slightly different than what they said they had, there are fees added on, etc.
10. When they call you back, stick to your guns
They will try to wear you down. Stick to your guns. If you feel like an ass, don’t worry about it. You will. That’s only normal.
11. Don’t sign anything until you’ve got the deal that you want
12. Don’t buy any of the ‘back room’ offers
Extended warranties, rust protection, waxjobs, etc. Rob’s argument is that all of this stuff can be bought elsewhere for much cheaper.
New Car Negotiation Discussion:
- What car buying tips can you share?
- Have you tried any of the above car buying strategies? How did they work?
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I completely agree with the selling vs trading in of your old car. A few months ago I took my old New Yorker to several dealers and compared the trade-in value with what other dealers offered me in cash, and the difference was between $500-1000 extra in cash. This isn’t a lot, but was still a good 50% or so extra in value that I would have saved.
Good information… one of the tactics I hate is when the salesman tries to get me to commit to a payment and then has to have the deal reviewed by his manager.
Not that I’m thinking of working with a car lot again, but next time I will insist on dealing directly with the decision maker. The salesman will claim he’s the guy but will then try to leave the desk. The deal then becomes if he leaves the desk I leave the showroom. If he’s lied to me, I leave the showroom.
Car salesmen – for the most part – are slimy. If the market refuses to tolerate these hijinks their tactics will clean up.
Good discussion, thanks!
Dave
Why would you ever buy a car on credit?
It looses value, and on top of that you are paying interest, so its double suicide.
Imagine what else you can use that money for as opposed to being stuck with monthly payments for 5 years.
@Do you – Agreed. That would be a good time to walk.
@Tom – Buying a car on credit is never optimal, but if you don’t want to pay cash up front and can’t get a 0% interest loan, I don’t know that you have many other options.
How about public transit? Car pooling? Bicycle? Saving up for a used car?
There are plenty of options
Tom – you’re making a lot of assumptions by stating those options there.
In fact, it may be a better idea for those who can attain low percentage financing to do so instead of paying cash, even if they have it. If you could get 1.9% financing on a 20,000 car and you have 20k in hand, you could invest that money certainly somewhere and safely receive a return higher than 1.9%.
Just my take.
I wrote a blog entry recently on how to sell your upside-down car and get out of a bad car loan.
Basically, you use credit card balance transfers to pay off the loan, then sell the car, then use the proceeds to buy another one.
I’d go used over new any day. For those who must go new, wait for the cash for clunkers program to pass before you decide. With so many Chrysler and Jeep dealerships being closed in June, there are deals aplenty. And don’t be afraid to offer waaay under invoice. These guys are happy to get what they can before the 2010 models arrive.
my friend swears by this process: http://excarsalesman.typepad.com/
We recently purchased a new car and I agree with the tips you mentioned. I would also advise people not to get emotional, be patient and don’t be afraid to walk away. We knew what we wanted specifically, and it was frustrating when the first local dealership we visited wouldn’t negotiate with us. Aren’t we in a recession with a struggling car market? In the end, we went to several dealerships, found the car we wanted, and negotiated for the deal we wanted. It is important to feel good about your purchase, especially when you are spending so much money!
I agree, never buy after a test drive or on your first visit to a dealership. Use online car quotes services to get bids from muliple car dealers at once and then negotiate with them via email. Make them compete with each other’s bids until you’re happy with the price.
Also never mention your “target price” to the dealer. If you do that, there is no chance they will go below that number, so why limit yourself? Just ask them to beat your best price.
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