BEFORE YOU BUY
- Browse without a salesman first. Get an idea for what you want. Do you want a small car, an SUV, a truck? Two rows, three rows? Automatic, manual? What special features do you want? Knowing what you want is the first step to finding the car you need. Go to a few dealerships at night or on Sundays. If you want to go during the day simply telling the salesman you don’t need help might not be enough to get rid of them, telling them you have a car in service for an oil change usually works.
- Read Reviews. Once you have an idea what you like, looking online for reviews helps you to narrow down the field.
- LOOK ONLINE! Almost all dealerships put very good prices on the internet. They know that if you are looking at their website you are probably also looking at the dealership down the road. They must be competitive online to get you in the door.
- LOOK ONLINE!!! This will give you a good price point to start figuring out what you can afford. Don’t get sucked into a car you can’t afford by a good salesman. Find the car you want at the price you want and stick to it.
- Take a good test drive. When you go on a test drive feel the car, listen to the car, pay attention to the car. That hum that the salesman says you won’t notice over the radio will be getting on your nerves 6 months from now. That rattle and bump, it’s going to be a problem. This is even more important on a used car. Use everything you see, hear, and feel later in your negotiations.
- Try to find a car without add-ons. That Jeep with a lift kit, the sports car with an aftermarket spoiler, the truck with the big tires. The dealership adds this things on to add on to the price. This just makes it even harder to figure out exactly how much the car costs the dealer. These accessories are marked up excessively, so either look for a car without them or negotiate the accessories separately. (It will almost always cost you less to get the accessories put on afterward)
- Don’t let them nickel and dime you. That $22,000 Truck you saw online, well now it has pinstripes ($300). VIN etched into the glass ($800). Fabric stain protectant ($500). Rust undercoating protectant ($900) and a spray in bed-liner ($1500). Now your 22,000 Truck is $26,000. Just like the accessories these are much less expensive done after you leave the dealership (even if you come back to have them done). Thanks /u/IvanTheTerrific
- Look up the Rebates online. Some dealerships will try to hide the rebates that are available and act like they are just taking that money off the car. Knowledge is power, and if you know what the rebates are then you can quickly figure out the exact dealer discount being offered. Also, check if you qualify for a military, student/teacher, or other rebates.
- Don’t look at the Invoice. Many salesmen and dealerships flaunt their invoices. This is a tactic to make you think you are getting a good deal. The Invoice might say they paid 22,000 for a car however there are small things that you probably wont see, such as the Hold Back (this is an amount the dealership gets back from the manufacturer once they sell the car)
- Don’t Look At The Invoice! Dealerships get bonuses from the manufacturer monthly, quarterly and annually according to sales volume. They know about how much that bonus is going to be and base their prices accordingly.
- DON’T LOOK AT THE INVOICE!!! Seriously, The dealership is not going to lose money on the car they are selling. Everything is a numbers game, and they can make the numbers say whatever they want.
- The salesman likely knows as much as you do. While the salesman might know a small amount more than you they are likely not experts on the used car you are looking at. Most used cars are purchased at auction. Even on the cars that were trade-ins the salesman has no way of knowing how the car was driven, if it had hidden mechanical issues etc.
- Do your homework. Asking for a CarFax is always a good thing. They are not 100% accurate but you can bet that when you try to resell it the dealership is going to look at the car-fax and use it against you in negotiations. CarFax does an alright job but you always still need to…
- Inspect the car. How does the outside look? Is the paint chipped or bubbling? Is the plastic fading? Get on your stomach, is the bottom rusting? How about the inside… Is the carpet stained? Any distinct odors? Are the buttons fading, bubbling, cracking, or in any way discolored? Seriously, this is what the dealership is doing to your car. They are looking for any reason to knock down the price they will pay as low as they can. You should be doing the same.
- Negotiate online. While negotiating over email might not sound the most appealing it will likely get you the best deal. It will also save you the 4+ hour day at the dealership if the salesman can already have all your paperwork ready and the car prepped before you even get there.
- Negotiate with multiple dealerships. Negotiating with multiple dealerships at once forces the hand of the dealership. Make sure you are talking about a car with a very close MSRP and have at it. This is done easiest via email and they will likely do whatever it takes to get you into the door (it’s also nice to have written copies of everything the salesman says).
- Never negotiate payments. The total price of the car matters the payments don’t. You can make the payments almost anything you want once you agree on a price. (if your salesman tries to use a 4 square ask for a breakdown of the price)
- Don’t jump at 0% Rates. Usually you are giving up a pretty substantial rebate to get the 0% rate. If you already have financing set up at a reasonable rate you are usually better off paying the small interest rate and taking the larger rebate.
- Always bring your own financing. You don’t have to use it, in fact the dealership might have a better rate for you (Don’t use 0% though). If you already have financing lined up it makes knowing what interest rate you deserve easier. Say the dealership gets you a 2.9% rate, they will likely tell you they got you approved at 4.9% this is called marking up 2 points. (In the state I worked there was a 2 point limit, I believe in other states it may be higher)
- Use the dealership financing. If you already have your own financing the dealership will do what they can to get you to finance with them because they get a kickback from the bank. Use this to your advantage. If you were approved at 3.9% from your bank and the dealership only offers to match it, ask them to take another $100 or so off the car if you finance with them. It is worth it to them in the long run.
- Don’t Use KBB (or other similar sites). Kelly Blue Book is an interesting website. While some of the information on it is quite good, other things aren’t. As far as pricing a car they are pretty bad. KBB isn’t going to buy your car, and they also aren’t going to sell you a new one. Prices change daily on cars, and even more so fluctuate differently by region and they simply don’t keep up. Your 4WD car might be great in the snow up north, but people in the deep south have no use for it. Just as a convertible wouldn’t be a big seller up north. For this reason their numbers tend to be off. Sometimes by 500 dollars, other times by $5,000 or more. If you have a trade in, look online to see what similar cars (model, class, features, miles, etc.) are selling for and then make sure you…
- Go to CarMax. Don’t sell CarMax your car at first, just get a quote. This will be useful at the dealership when you are trying to…
- Negotiate on Price. Don’t worry about how much they are giving you for your trade in, negotiate the price of the car, then worry about the trade in. You already know what your car is worth, and if the dealership won’t pay it, CarMax will.
- Get your keys back before you begin to negotiate. If you have a trade-in the dealership is likely going to need your keys to appraise your car. Get them back as soon as possible, otherwise you wont be able to…
- Walk out the door. Don’t threaten, just do it. If you were close to a deal but they are no longer willing to budge, walk our the door. There is a 90% chance the sales manager will be at your car before you are. The sales manager is the only person who can change the price. Most salesmen don’t even get to see the cost of the cars they are selling.
- Additional Warranties. Additional warranties can be a good thing but you should decide if you want them before you walk into the dealership. As is everything else in a dealership they are negotiable. In fact, if you did all your negotiations online, you can likely get the finance manager to negotiate the warranties and other services online as well. If you are still between a couple dealerships at this point negotiating between them can save you big money as this is where the dealership makes a large portion of their money.
- They do this every day. While many salesmen are very honest people some are not. Even the honest ones know what buttons to push and what documents to show you to get you to buy. They do this every day, you do not.
- The Salesman is your ally. Although many people see the salesman as their mortal enemy, the truth is the salesman wants to do whatever it takes to sell you a car. On new cars usually the sales staff makes a flat rate per car. For that reason they would sell you the car at a huge loss if they could, because it doesn’t effect their income one bit. Thanks /u/ChristopherSquawken
*ADDED 0% Interest and KBB sections
**ADDED Read Reviews, Nickel and Dime, Rebates, and Salesman is your ally sections.
article here: http://www.reddit.com/r/personalfinance/comments/1knnhr/im_buying_a_car_from_a_dealership_for_the_first/