Not many of us can boast to be a great negotiator. While everyone revels in telling their personal stories of “besting the dealer”, the sad truth is that most people get ripped off by salespeople. Now, it is hardly disgraceful to be conned by a salesman. Salespeople are highly trained and seasoned professionals who know exactly how to size a person up and pull on the right heartstrings.
In order to get a better deal on your cars and save a whole bunch of money, you need to arm yourself with the proper negotiation tools to combat any tricks that the dealer might bust out. This guide will show you just how to do that, and with any luck, it will prevent you from getting ripped off again on your next car.
Negotiate From a Position of Power
Hands up, how many of you have ever heard of the phrase, “The customer is always right”? This demonstrates perfectly the power that you have as a customer. Too often, people forget that they hold all the power when being pushed by an aggressive salesman. Always remember that your options are open. There are plenty of dealers available, do not be afraid to walk away from one if you feel uncomfortable.
The best way of securing good negotiating leverage is to create competition between different dealers. When looking for your ideal car, always be sure to contact a number of dealers beforehand to ask for their best price. Then, present the lowest offer to the other dealers and ask if they can better it. This way, the dealers will know that you do have a back-up offer and be more willing to lower their prices. Either way, you are guaranteed to get the best deal out of the dealers you have contacted.
If your dream car happens to be really exclusive and is only carried by one dealer, never fear. Cars often have many different makes and varieties, while this usually makes shopping for a car really complicated, you can also use this to your advantage. Inquire on a number of varieties of your car and keep your options open. If need be, try to bluff the dealer by appearing to be interested in a type that the dealer does not stock but “settling” for your actual target in the end. This strategy could lead to discounts and other perks from your dealer, who thinks that they have to make it up to you. Poker experts would excel in this area.
Finally, the last trick to obtaining the upper hand is to be flexible. Keep your options wide open; do not go into your dealership with only one target in mind. Once your dealer senses the slightest whiff of desperation, he will surely mark up the price or pull some other trick to maximize his profits. If you find that the conditions for your first choice are too unreasonable, remember that you can move on to your next choice or simply walk away.
When walking away from a dealer, always keep the door open for a counteroffer. Let your dealer know you can still do business with them if they meet your price demands.
Setting Your Targets
When negotiating, there are a number of things that you will need to keep in mind. Dealers often try to sell cars based on the “sticker price”, the price written on a piece of card stuck to the car’s windshield. This is also known as the “Manufacturer’s Suggested Retail Price”. Never agree to pay this amount. Treat this as the highest price that the dealer will be able to get for the car.
Instead, you should try to reach for the “Invoice Price” or the cost price that the dealer pays to purchase the car from the manufacturer. Of course, no dealer in their right mind would reveal the cost price to you; you will have to obtain this information through searching the internet. Also, the dealer receives a “Holdback Price”, a sort of sales commission that the dealer receives from the manufacturer upon selling the vehicle. This Holdback Price is usually about 3% of the Sticker Price. When negotiating for your car, you should aim to settle as close to the Invoice Price as possible.
Avoid Unnecessary Charges
When paying for your vehicle, always peruse the contracts carefully. Examine everything that you are paying for. Some unscrupulous dealers will include unlawful charges to try and earn extra money. Examples of such charges include “Administrative Fees”, “Advertising Fees” and “Handling Charges”. You should never agree to pay for these charges. Tell your dealer firmly that you will not sign anything until they have agreed to drop the charges from your contract. If they refuse, just walk away, this sort of dealerships are not worth your time at all.
If you are ever unsure about a charge, ask your dealer about it. Listen to your dealer’s explanation, if you still remain uncomfortable with the charge; try to negotiate out of it. If worse comes to worst, request some time to think things over and look up the charges on the internet. Listen to your gut feeling when negotiating, you should never feel uncomfortable when paying for your car.
Negotiating for a new car can be difficult for the inexperienced. However, remember the basic tips of this guide and you will be able to secure a much better deal on your next car. Keep in mind that not all dealers are bad though, do not resent or hate them but keep calm and reasonable. Treat buying a car just like buying anything else and you will be able to get along with your dealer just fine. With this, I wish you all the best on your next purchase, try these tips out, you will be surprised at how much you can save!