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Negotiating price on a new car

I have found a new car I like, and am ready to go negotiating. I like to do it, but I have always had a trade-in and/or buying a used car, so the price is very negotiable and you can always find things to “help you out” (the tires are worn, it doesn’t have a warranty, etc).

How can you negotiate a new car? What is your leverage? The dealer is currently selling the car below the current MSRP, and I would be financing through them (the best deal I could find). I can obviously find prices from other dealers, but they’re all about the same. Nothing that’s a “deal-breaker”.

Any ideas/help? Is there a “magic” price/% below the amount they’re asking that I should shoot for? Should I try to get them to get rid of all of their fees? 1/2 of them? 1/4 of them?? It’s hard w/o actually going to another dealer and trying to buy a car from them, and I don’t have time to do that. Any advice would be appreciated!

You can offer what you want. Your better bet is to get them to make the offer, that puts the pressure on them.

I suggest finding a second dealer, even if it is out of town.  Go to both and tell them exactly what you want (if they don't have it they can get it, so you might as well get exactly what you want)  and explain that you are going to one or more other dealers (don't tell them which ones) and you want their best price to compare to the other dears best price.  Explain that the best price wins no second changes. 

This has worked well for me several times.  No haggle.  If they don't want to play your game, they really don't want to sell you a car, just think how well they will service you car after the sale.

The most important part is to remember that they start off holding all the cards. You get to hold more cards by turning the tables.  First never ever go to a dealer and fall in love with a car on the lot.  Let them know, truthfully that you have other options.  Also make sure you don't need to make a deal right away and that they know that. 

Be ready to walk.  You can always come back.  When they say the deal they are offering is only good today; turn the table, tell them that's good since it is a bad deal, you will come back tomorrow if you don't find a good deal elsewhere and maybe they can offer you a good deal tomorrow.  If the salesman needs to talk to his supervisor to ok the deal, tell him you have a better idea, he can bring the supervisor to you, who needs a middle man.  

If you don’t go with the first idea, plan on making a return visit or two. Come back in a week or two and ask if they are serious yet, or spend the time looking elsewhere.

Once they know you are serious and are not going to fall for their tricks you are in the driver’s seat, after all, you don’t need to buy a car, and if you did, you can buy it elsewhere. They need to sell cars to pay the rent.

Don’t get tied up with invoice price and such. Just look at the bottom line. Do you really care if they loose $50 or make $5,000 as long as you are getting what you want at the cheapest price available?

If you don’t have the time to shop other dealers, then you don’t have the time to do it right. Sorry, hard words but you gotta work to save money. You can also shop and order via the Internet but I have not done that. Where I live, there are plenty of dealers.

You can also get the dealership to throw in a free extended service warranty, free service and oil changes etc. But that is an absolute last ditch thing. The main thing is to keep the ammount of your loan low so you pay less in interest. I suppose you can also flog them for reduced APR. Do the math and see what reduces your 'Total Cost" when all is said and done.

Good Luck,
PS: What type of car?

IMHO, you have two problems; the first is that you are buying a new car (as opposed to a good used car), and the second is that you are planning on financing it. The combination of those two decisions pretty much guarantees that you are going to get hosed.

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I have done extensive research on new cars vs. used cars and the $$ it will save me, and for my personal money reasons, a new car is the best bet (currently top winner is the Yaris, FYI). As for the shopping around thing, you can only shop around so much without driving 50 miles to the next town, and the dealers in this area all offer the same price. The gas and time I’ll save is worth it to me!

Thanks for all of the advice/opinions!

Some more specific questions… can someone explain to me the following??

  1. Dealer Holdback
  2. Wholesale Financial Reserve

"Some more specific questions… can someone explain to me the following??

  1. Dealer Holdback
  2. Wholesale Financial Reserve"

Just a couple of ways they are making a profit, these articles talk about them (amongst other things):

Are you sure you want to buy a brand new car?

There are three deals going on here: 1) you are buying a new car from the dealer; 2) you are buying a loan and 3; the dealer is buying a car from you.

Do your homework. You can go online to find out the best price you can get on the new car you want. Shop for a loan through both credit unions and banks for the best interest rate. Finally, do the research through the books to find out what your car is worth. There should be a wholesale price and a retail price.

When you visit the dealer, do not reveal that you want financing or are trading a car. Go for the best price you can get on the new car. After the dealer has a price, then ask about financing. If the dealer wants to sell the financing, he will have to beat the rate of interest that you can get the loan from a lending institution. When this is done, then ask what he will give you for your car.

I think it is a mistake to do a package deal. Many people will make the purchase from a dealer based only on what the monthly payments will be. IMHO, you should know exactly what each part of the transaction will cost.

If you don’t just agree with everything, the salesperson will ask what can be done to make you buy the car. It may not be said exactly like that, but when it is asked, don’t be afraid to make too low of an offer. Make sure the car has a good rating. Consumer Reports April issue has a lot of car things in it and all their latest ratings. A good deal is one thing, a good car, quite another. For a fee, they (CR) will tell you how much the dealer really paid for the car. Since you did not mention which specific car you want, I’m guessing that there is something that you think we won’t approve of. Do us a favor and name it so we won’t be shocked when you write in for repair advice.

all excellent reading if you take the time to look through the site

i think that you are making a HUGE mistake buying AND financing through the dealer.
everyone thinks that they have made a good deal, when they get a car for say 1000 under MSRP. then they get hosed on the trade, and when the dealer does the financing, there is extra charges added on, which eliminate whatever savings you “think” you may have gotten.

the way to get a good deal is to be prepared to WALK out. have financing preapproved, and have a bank ready and available to finance the car. (you may have to do the leg work, driving to the bank, lettin gthem fill out the paperwork, and then getting the title/plates, but it is worth it IMHO)

there are several variables when buying a car.

  1. the price (msrp, and final agreed on price)
  2. the financing.
  3. trade in value.
  4. extras. (undercoat, extended warranty, souped up radio, color trim stripes, (the list in endless)

you have stated that you have removed #3 from the equation.

now remove #'s 2 and 4 from it also.

go there and only worry about the price.

i say this because i have seen (lived through) and heard about the dealership “finance department” finagleing of finances, interest rates, and fees. believe me when i say, any dealer is not above putting an extra percent or so on to your loan, in hidden handling charges, fees, costs and markups.

All great advice and I apologize if this was mentioned, but, after all your research, I have found the best conversation with the salesmen is to KEEP IT SIMPLE. I go in knowing what I want to pay and with a trad in, talk difference only…stick to that one figue as it includes all prep fees and taxes and NO hidden charges. Keep on the DIFFERENCE mantra and the negotiation goes smoothly.

  1. Find a loan at a credit union or a bank, in that order. You will get a better deal at either than a dealer. You probably have a good idea how much the Yaris will cost and you can get a promise on the loan before you buy the new car. Sign the contract, put a deposit on the car, and return the next day with the money from the credit union.

  2. Negotiate the price of the new car without discussing a trade in. They will ask and you will say that you have not decided whether you want to trade the old car or not. After you negotiate the price of the new car you can ask them to look at your old car and offer something for it. Now you know what they will charge for the new car and what your old car is worth to them.

  3. If you don’t like the price at the Toyota dealer, look at similar cars from other manufacturers.

People are paying about $375 under MSRP for a base Yaris coupe near me. That’s with no options. Expect to pay about 6% less than MSRP for options.

Thank you!

Yes, definitely sure about the new car. :slight_smile: Trust me, lots of extensive research has been done, and after buying two used cars already, it’s time for a new one.

Thank you!

Thanks for the advice, I’ve already gone through a lot of the CR stuff. I also stated yesterday (see above reply) that top winner currently is a Yaris. :slight_smile:

Another question related to this then:

Argue TOTAL price (including tax/fees?) from the beginning; or price of car THEN argue the fees?

Yes, I have done financing research as well and am prepared to walk out if they don’t meet the lowest rate I could find. You are also suggesting to have an approved loan from the (cheapest) bank BEFORE going to the dealer, in case they can’t match my financing rates?

May I ask who else you would buy a new car from if not a dealer? I really don’t see a problem with buying from a dealer if you’re prepared.

Good luck with your shopping.

If you don’t have the time to shop other dealers, then you don’t have the time to do it right. Sorry, hard words but you gotta work to save money.

I agree 100%…It’s NEARLY IMPOSSIBLE to negotiate a deal when you just deal with ONE dealer. I’ve spent weeks negotiating a deal before. I was going back and forth between dealers. If they don’t give you the deal you want…then WALK. If you don’t have a dealer to walk to you’re sunk.

For a fair price…do some searching on the internet to find out what the dealer is actually paying for this vehicle (with ALL OPTIONS). I figure $500 OVER what they pay for a vehicle is fair for both parties.

Don’t wait too long before you buy. Spring weather is almost here…and car sales drastically increase in the spring…so negotiating becomes harder.