Negotiating price on a new car

I never said don?t buy from a dealer. What I am trying to get across is why the salesman always ask: ?how much can you afford??

The whole issue is that the payments are figured NOT in the interest rate x the car price (plus all the junk, tax, etc)… it is figured out by the total amount you need, then they add a finders fee, that the bank rebates back to them (read: gmac, fomoco, chrysler financing, and even some local banks.)

That amount is then divided by the loan length. That is the mysterious monthly payment. It doesn?t necessarily add up to the amount you think, at your (dealer) interest rate.

BUT. If you go to a bank, get a loan commitment on your own, then you know you have eliminated ANY hanky panky from the dealership financing department.

The proper way to do it is to just buy the car (wherever you want to buy it) and negotiate a cash price. Don?t pay for ANY extras. Do work two or more dealers against each other for price. And Don?t involve a trade, dealer financing, or extra things like extended warranty, undercoating, body wash, glass etching, etc etc etc. Just the price of the car, and its cost to you, on the floor. if you want to buy that junk, AFTER you agree on a price, then negotiate the extras.
Sell your old one, on the side of the road, or in the paper.

your last post states a presumptuous question. You state that you will walk if they don?t match your best financing offer. That is EXACTLY my point. You won?t know if they are giving you an honest deal. (Unless you are particularly savvy, an know how much the bank payments will total, and all other costs associated with it, and can keep track of the difference. i know i get overwhelmed in there. hey, it’s a huge chunk of change to drop, everyone is stressed, that is why the dealers are adept at catching us off guard and getting that last extra bit of $$.

Do not pay the price below MSRP. Ask for the invoice price & negotiate from there. Remember there are rebates, discounts & other offers which you apply, if possible, after the negotiated price, plus your trade-in.

Price out your own financing as a backup like other posters stated.

There are no generic formula’s of price to get. If you were buying a low demand vehicle with high inventory(many domestics) you could get the vehicle for invoice or even less. I have no idea if there is any demand for the Yaris or much inventory. The magical answer is do what feels best. I will say with a low price car means less money for the dealer so your likely to be above invoice since the holdback(guarenteed money) is likely half of a normal transaction of Camry etc. They want to sell the car to make money so the price increases.

Good luck.

No one will ever know the true price, invoice price, whatever of a new car. This is one industry that has been able to hide their true prices. If you disagree then tell me how some manuf. can give thousands in rebates off sticker. And the dealer will never ever tell you what they paid. I won’t be surprised if they don’t even really know. Just my 2 cents.

The invoice price in the context abovee is a well published item and is what a dealer pays for a vehicle. Its not what a car maker actually incurs as cost. A rebate is either to dealer(incentives) or customer and comes out of car makers pocket and profit. Manufacturer cost is what your referring to and yes no one really knows that except them (hopefully).

My dealer showed me the invoice when they sold me my two Subaru’s and it was within $100 of what was published on internet. They sold at invoice without negotiation on one car and the other was a two offer exchange of me paying $200 above it.