The Slickdeals Approach to Negotiating the Price of a New Car (Updated July 22, 2010)

Nice write-up

Thanks!

here are additions/corrections

0) Don't get attached to the particular car/price/dealership
Be ready to walk away if you don't like the deal.

1) Price
Why mention MSRP price at all?
IMO it's better to just mention the offer you've got or you can convert your quote to invoice_price(incl destination)+$X, where X can be any number, even negative, if car is no selling very well. For avg selling price check Edmunds.com

Dealers like to start negotiation from MSRP - $Y because it seems like they are giving you a discount.

2) Fees
Do ask about all fees in addition to the price of the car. Document and/or DMV fees can be up to $200. Document, window etching, advertising fees are just a ways to make price higher. They are not mandatory.

3) Financing
If you are financing prepare a print out that will let you determine what an approx. monthly payment will be for different price/interest rate. Or have somebody who you can call and run calculations on-line (Dealer might tell you that interest rate is X%, but give you monthly payment amount for a (X+Y)%.

4) Incentives
Check to see if there are any dealer/buyer rebates and/or special financing offers.
Dealer may be getting a rebate from a manufacturer

5) Signing
read everything what you sign. If there are any fees added other than Price of the car and reasonable (i.e $50-$100) document fee, ask sales person to remove them.
If document fee is too high ask for some compensation (i.e. free oil changes for a year or some additional accessories like trunk liner, all weather floor mats etc...)

fotomaniak,

Thanks for the comments. To reply:

0) You're exactly right. The more options you have, the better. The article was very limited in scope, but if you're looking at an Accord, you should probably be doing the same thing w/ Toyota, Nissan, and Chevy.

1) I mentioned MSRP because that helps identify a particular model. In 99% of cases, there's only one way to get a particular model to an MSRP of $x. So if the MSRP is the same, you're talking about the same car. I've read that people like to start from invoice rather than from MSRP, but I'm unconvinced that can make a difference when everything's said and done.

2) Good point regarding fees. DMV fees should be the same, document fees will vary from dealership to dealership and should be addressed before you walk in. I'd have to imagine that window etching would be included in whatever bid the dealer submits.

3) Financing is going to be the topic of another article- there are way too many combinations of things that can happen w/ financing. But you're right that you should figure out financing before walking in to the dealer. (maybe check this out)

4) Incentives do matter, but they will probably be built into any bid that the dealers send you via email. If they know you're going with the lowest price, I can't imagine that they'd try to hide some $500 bonus and lose out on the sale.

5) You have a fair point with the signing. I agree that you should read everything, and I guess it can't hurt to ask for free oil changes.

What happens if I can get an employee discount from a family member (Ford A Plan). Should that be said up-front or wait until I get a winning bid and then say "by the way, I have an A Plan pin number"?

Quote from kubel : What happens if I can get an employee discount from a family member (Ford A Plan). Should that be said up-front or wait until I get a winning bid and then say "by the way, I have an A Plan pin number"?

the major benefit of the A plan is you don't have to negotiate price for the vehicle, only for trade-in and to get any rebates if available first. of course if the dealer is looking to get rid of the vehicle you may be able to get a low price and then the A plan won't be worth anything

Quote from thelnel52 : fotomaniak, 1) I mentioned MSRP because that helps identify a particular model. In 99% of cases, there's only one way to get a particular model to an MSRP of $x. So if the MSRP is the same, you're talking about the same car. I've read that people like to start from invoice rather than from MSRP, but I'm unconvinced that can make a difference when everything's said and done.

I like to refer to cars by make model trim + options. This way I don't mention term MSRP at all.
Mentioning MSRP may make dealer believe that you are actuallyn thinking that MSRP is a meaningful number. When it fact, from buyers point of view, what matters is market value.

Quote from thelnel52 : 4) Incentives do matter, but they will probably be built into any bid that the dealers send you via email. If they know you're going with the lowest price, I can't imagine that they'd try to hide some $500 bonus and lose out on the sale.

Don't count on the dealer. After all why would he lose potential profit by disclosing the info?
If you know about incentives you can ask for it. If you don't know dealer will keep that manufacturer's rebate for himself and/or pocket the difference between the prom APR and regular APR.

My approach is similar, but slightly better. Try this method.

1. Go to carquotes.com and pick all the cars you are interested. You will have to pick a financial institution,- pick any credit union. Give your details. You will get a detailed brochure of the car, options, invoice price, ongoing rebates and a pre-negotiated price on the car, and a dealer to go to, whom to contact, etc. It will also give you the rebates, etc. Note the dealer name, price.
If you do not like to hear from the dealer, register for a Google voice phone number. Callers can leave all messages they want on that. You can call them back using the same number...nobody need to know your real number.

2. Go to Zag.com, buy a car, and pick a car, options. This will give you a price on the car without
actually giving your details. Note this price down. Don't give any details here.

3. Go to Edmunds.com and see if there are any 'manufacturer to dealer' incentive on the car. Note that down.

4. Avoid the dealer nearest to your house. Reserve that for the very last.

5. Pick another dealer for test driving the car. This dealer should not be the one from 4, and should not be the one from 1. Test drive the car and mention to the dealer that you did not like it, so that you are never bothered by them.

6. Collect one more reference price from carsdirect.com. Note that down.

7. Now you have 3 reference prices from 1, 2, and 6.

8. Go to cars.com and invite bids via email from different dealers. Avoid dealers from points 1, 4, and 5. You can do 3 dealers at a time. You can repeat the bids for as many dealers as you wish...for as long as you can travel. You will get a bid, if you mention that you are serious about buying and are willing to do business with in the next 5 days. Make sure the bid includes destination charges, and carpet floormats, which the dealer rips you out. Request him to itemize the quote - price, - rebate - dealer cash, + destination charge. Verify the prices and dealer cash info from e-brochure from 1 and information from 3.

9. I would pick dealers couple from two different neighboring states as well. Sometimes rebates are regional... if you pick a different region, you may be eligible for a different set of rebates. That is truely for a MOTIVATED bargain hunter...like me. You can ignore this one if you are not.


10. Pick the lowest of the bids from 8. Compare it with the prices from 1, 2. Subtract 500 from the lowest bid and then invite fresh bids again - stating that this is the lowest bid. Allow the dealers to get back to you with their revised bids. You can continue this process a couple of times more, - either by picking different dealers each time or same dealers and asking them to respond to a revised bid. You can play one dealer against the other openly.

11. Once the price stops going lower, you have hit rock bottom. Note that price and the dealer. Thank dealer that responded with the price you got and the dealership that gave you the price and mention that you are buying the car from the winning bid.

12. All along, keep watching the inventory on the dealer from 4, from his website. Watch out for cars that have been sitting for a long time. You can do that for a couple of other dealers too if you are motivated. If you are a credit union member, pre-apply for a loan and be ready with the best rate you can get outside..

13. Go to the dealer in 4. Ask for the car/color/options... Ask for a test drive. Act like you are one of those impulse buyers.. Ask him what specials the dealer will offer him in terms of service - like free oil changes, free loaners, carwashes, etc. Let him boast about how good a dealer he is.. He will cough up a lot of freebies. Tell him that you are pleased and will buy the car and ask him what his best deal would be. Compare with your notes. If the offer is better than what you already have, then you are good. Else, make an offer of $500 below the price from 11. Tell him that you will buy it now if he honors that price. 99% chance that you will get it. Close the deal - making sure that you do not buy anything extra - like fabric protection, rust proofing, mudguards, or extended warranties. You can shop for all that later on.. The dealer will ask you to finance thru him. At this point, you can say that you have an approved loan - rate from your bank.. He will hate that but will beat that rate by at least 1%. If you have been following this dealer's inventory and the car you have picked has been on the lot for some time...then you can use that to your advantage as well.

14. If you cannot get it for that price, then just walk away and wait for a day or two. If he does not call back, then you have the dealer /price from 11. You are good to go there and close the deal.

15. If 14 does not work, then you have the deal from 1 and 2. You have multiple options for the same car. You are truly powerful at this point.

16. I have bought 2 cars using this method. My friends, family, everybody has used this method, accounting for dozens' of cars without ever stepping into a dealership for negotiations ( other than test driving ).

Try it out and any feedback is welcome.

Quote from vyahoo : My approach is similar, but slightly better. Try this method. 1. Go to carquotes.com and pick all the cars you are interested. You will have to pick a financial institution,- pick any credit union. Give your details. You will get a detailed brochure of the car, options, invoice price, ongoing rebates and a pre-negotiated price on the car, and a dealer to go to, whom to contact, etc. It will also give you the rebates, etc. Note the dealer name, price. If you do not like to hear from the dealer, register for a Google voice phone number. Callers can leave all messages they want on that. You can call them back using the same number...nobody need to know your real number. 2. Go to Zag.com, buy a car, and pick a car, options. This will give you a price on the car without actually giving your details. Note this price down. Don't give any details here. 3. Go to Edmunds.com and see if there are any 'manufacturer to dealer' incentive on the car. Note that down. 4. Avoid the dealer nearest to your house. Reserve that for the very last. 5. Pick another dealer for test driving the car. This dealer should not be the one from 4, and should not be the one from 1. Test drive the car and mention to the dealer that you did not like it, so that you are never bothered by them. 6. Collect one more reference price from carsdirect.com. Note that down. 7. Now you have 3 reference prices from 1, 2, and 6. 8. Go to cars.com and invite bids via email from different dealers. Avoid dealers from points 1, 4, and 5. You can do 3 dealers at a time. You can repeat the bids for as many dealers as you wish...for as long as you can travel. You will get a bid, if you mention that you are serious about buying and are willing to do business with in the next 5 days. Make sure the bid includes destination charges, and carpet floormats, which the dealer rips you out. Request him to itemize the quote - price, - rebate - dealer cash, + destination charge. Verify the prices and dealer cash info from e-brochure from 1 and information from 3. 9. I would pick dealers couple from two different neighboring states as well. Sometimes rebates are regional... if you pick a different region, you may be eligible for a different set of rebates. That is truely for a MOTIVATED bargain hunter...like me. You can ignore this one if you are not. 10. Pick the lowest of the bids from 8. Compare it with the prices from 1, 2. Subtract 500 from the lowest bid and then invite fresh bids again - stating that this is the lowest bid. Allow the dealers to get back to you with their revised bids. You can continue this process a couple of times more, - either by picking different dealers each time or same dealers and asking them to respond to a revised bid. You can play one dealer against the other openly. 11. Once the price stops going lower, you have hit rock bottom. Note that price and the dealer. Thank dealer that responded with the price you got and the dealership that gave you the price and mention that you are buying the car from the winning bid. 12. All along, keep watching the inventory on the dealer from 4, from his website. Watch out for cars that have been sitting for a long time. You can do that for a couple of other dealers too if you are motivated. If you are a credit union member, pre-apply for a loan and be ready with the best rate you can get outside.. 13. Go to the dealer in 4. Ask for the car/color/options... Ask for a test drive. Act like you are one of those impulse buyers.. Ask him what specials the dealer will offer him in terms of service - like free oil changes, free loaners, carwashes, etc. Let him boast about how good a dealer he is.. He will cough up a lot of freebies. Tell him that you are pleased and will buy the car and ask him what his best deal would be. Compare with your notes. If the offer is better than what you already have, then you are good. Else, make an offer of $500 below the price from 11. Tell him that you will buy it now if he honors that price. 99% chance that you will get it. Close the deal - making sure that you do not buy anything extra - like fabric protection, rust proofing, mudguards, or extended warranties. You can shop for all that later on.. The dealer will ask you to finance thru him. At this point, you can say that you have an approved loan - rate from your bank.. He will hate that but will beat that rate by at least 1%. If you have been following this dealer's inventory and the car you have picked has been on the lot for some time...then you can use that to your advantage as well. 14. If you cannot get it for that price, then just walk away and wait for a day or two. If he does not call back, then you have the dealer /price from 11. You are good to go there and close the deal. 15. If 14 does not work, then you have the deal from 1 and 2. You have multiple options for the same car. You are truly powerful at this point. 16. I have bought 2 cars using this method. My friends, family, everybody has used this method, accounting for dozens' of cars without ever stepping into a dealership for negotiations ( other than test driving ). Try it out and any feedback is welcome.

My point 11 is slightly ambiguous. Let me restate it.

Thank all the dealers( except the winning bid ) for responding to your bid. Mention to everybody ( except the winning bid ) that the winning bid was X$ and Y Dealer and you are buying the car from them. Mention to the winning dealer that you are still waiting for bids.

Quote from fotomaniak : I like to refer to cars by make model trim + options. This way I don't mention term MSRP at all. Mentioning MSRP may make dealer believe that you are actuallyn thinking that MSRP is a meaningful number. When it fact, from buyers point of view, what matters is market value. Don't count on the dealer. After all why would he lose potential profit by disclosing the info? If you know about incentives you can ask for it. If you don't know dealer will keep that manufacturer's rebate for himself and/or pocket the difference between the prom APR and regular APR.

1. Trim + options is ok, but I just find the sticker easier to remember and to compare. If someone responds "I don't have car A w/ feature set B; I do have it with C", that's not as easy to compare as something like "I don't have an MSRP of $21000, but I can sell one w/ an MSRP of $21450 for x." And, like invoice or any other number, MSRP is just a point of reference. I'm still unconvinced that acknowledging that the number exists somehow puts you in a worse bargaining position.

2. The reason a dealer would lose potential profit is that this system is designed to promote competition. If someone else factors a rebate in, then anyone who didn't will have no chance of making the sale.

Rebates are regional but they will use the rebates that apply to the state you are registering the vehicle in. So you can't go to a different state and get a better deal.

Let me ask you guys something. Why not just go in and ask your salesman if he's willing to sell you the vehicle at invoice minus all rebates and incentives? I mean a true, dealers invoice is easy to find all over the internet

A new car is the easiest negotiation of all. Pick out the car, be willing to buy and ask for what you want. Your salesman will appreciate it, you will spend less time with all of the above.

Now your trade? That's the hardest negotiation. A dealer will give you invoice in 2 minutes but will not overpay for your trade. But we know most slickdealers sell their own trade anyway...right?

Save yourself and your salesman some time and ask him upfront if he/she is willing to sell you at invoice. 8 out of 10 in todays climate will say yes.

Let me recap. Sell your trade or expect wholesale. Acquire financing before you buy to compare with what the dealership offers. Find the car. Call the dealership and ask for the price you want, upfront. Go in and buy it.

It's simple and you didn't take up some poor, commission only saps time with no intentions of buying from him/her.

I cannot argue that either of these lengthy methods could be successful at negotiating a deal, but I can tell you from experience that many dealerships do not take you seriously until you set 2 feet on their lot - playing the internet game is often just that for them, a game.

Educate yourself about the rebates, incentives, and invoice price via the internet, but when you know what you want, any dealer can sell it to you for that same amount. Once they realize that you know all of this information, you are prepared to buy, and if they don't give you this reasonable deal, someone else will - you are now in control. Your dealer down the street will sell you this car, likely give you some car washes or a free oil change, and it's better for everyone involved. No need to involve half a dozen or more dealerships in a false bidding war - their bottom dollar amount is near enough to identical - you just have to know how to get them there. The key to this is walking in the doors as a highly educated consumer.

FWIW, I worked at a dealership for a while, and have helped purchase several cars since. The last of which I walked in to help a friend purchase a new Toyota Matrix, we found what she wanted, drove it, walked in the door and I didn't even let the guy speak about price, just told him what we were willing to pay for it, and we'd drive it home today. Knowing the car sales "tricks" and using them against them, I wrote down on a blank sheet of paper "Willing to purchase 2009 Toyota Matrix that we drove today for XX,xxx plus tax, title, and licensing fees", had her sign it, and he delivered it to the desk. He conversed with his manager, his manager was obviously frustrated that I was one of "those guys" and 10 minutes later they were printing her paperwork. So easy that it's funny how many people fear the process.

Car buying need not be difficult if you are educated and assertive.

E-mail contact is good and bad at the same time. Good because it saves time. Good because the dealer doesn't get the upper hand of you already having invested time by getting there. Bad because you will not get the dealer's truly lowest price in e-mail. Just think of selling something on Craigslist: if somebody replies and wants to know how low you would go, would you disclose your lowest price? It is indeed worthwhile to push the lowest bid down a few hundreds more by showing up in person and enticing the dealer into 'impulse selling'.