So, due to popular demand, we can fast-forward a bit right to a beginner's guide of car deal negotiation to help save you from impending self-destruction!
Remember, car dealers are set up to win. They conduct automotive sales transactions on a daily basis; their whole business life depends upon it. To them, you are very much an amateur when it comes to negotiation of a car deal, as you probably buy or lease a vehicle every 3-6 years with a 5-6 year trade-cycle being the rolling average in today's marketplace. Sales consultants and managers often undergo light to intensive sales procedure education - dependent upon the dealer's dedication to training - that may occur daily, weekly, or monthly. Managers typically hold weekly if not daily sales meetings, and good managers will constantly reiterate sales principles with their staff to ensure maximum return and performance. Effective car business managers know that keeping their staff sharp and on point increases their chances of selling you an automobile, truck, or SUV.
It is extremely important that you first realize that you are an amateur at this, as much as it may dent your pride. No, most sales consultants and managers simply aren't that sharp, and the consumer knows that they are being fed a line of bull. However, there are sales consultants and managers who use a number of effective techniques to actually form your reaction and are expecting how to take you right to the next step in their process. They are smooth, and they are seasoned. So, do yourself a great service and leave your ego at the door while embracing how to learn the basic steps to making a "good" deal, and keep in mind that a "good" deal is most certainly subject to being relative.
Once you have erased all of your pre-conceived notions about your own ability to negotiate a car deal, here are a few basic steps that will put the ball at least past the opposing 50-yard line and in your favor:
1) Before you ever step foot in a car dealership to consider a purchase, narrow your vehicle search down to 2-3 vehicles at the most. Ideally, you have narrowed it down to one specific model. How it is equipped is another matter, but the more ambiguous you are about your number of choices, the more likely you are to pay a bigger profit to a dealer.
By you not having specific focus, a slick sales consultant can change your entire direction through persuasive sales psychology and lead you in a direction that is most beneficial for him/her and the dealer. There may be special sales spiffs specifically attached to certain vehicles with which only the staff is familiar. There may be a sales contest running at the dealership. There may be a model that the dealer overstocked that are running up their carrying charges. There are any number of factors with which you are unaware that will ultimately lead you in an undesirable direction, and you will never know it happened.
Being more decisive and maintaining a more narrow focus will start to level the field in your favor and leave less room to be misled by an unscrupulous dealer staff who are out to fulfill their own needs and not the needs of the consumer.
2) Understand that you are being engaged in a process.
You may not know it or feel anything special, but informed dealers have captured you and are engaging you in the "Pied Piper Process", as I like to call it. Smooth salespeople are very calculated at enticing you into their sandbox and setting all the parameters to control your thought processes. This is what these folks do for a living, and many of them are good at it. They will ask pointed, canned questions designed to give them all the information necessary to load their guns and empty your pockets. So you have to set a pace and the parameters of the negotiation that are more in your favor.
INSIDER TIP: Before you ever take a serious physical look at a vehicle or take a demonstration drive, schedule a meeting with a sales consultant. This is a meeting and a meeting only. This meeting is designed to set the process up on your terms and at your own desired pace, and the only way you can achieve an advantage for yourself is to disrupt the sales consultant's rhythm. Do keep in mind, though, that these folks are used to disruptions and will move quickly (and sometimes effortlessly) to pull you back in. Most aren't that talented, but always assume that you are dealing with a pro.
Sales consultants are taught that if they get you into a vehicle for a "test drive" that you are 50% more likely to purchase. So, when you come in strictly for a consultation, the sales manager is telling the sales consultant to "take them for a drive", "get them to drive the car", "they won't buy it if they don't drive it", etc. This is why I am encouraging you to simply go to the dealership and have a sit-down conversation with a sales consultant to discuss a potential purchase. Your simple, but polite refusal to drive that day initiates a psychological advantage over the dealership from the outset. Yes, they are going to say that, "you wouldn't buy a pair of shoes without trying them on would you?" Stay focused.
You initial meeting is set forth to discuss the product that you are seeking and the features that you need/desire. In fairness, they know the vehicles better than you (or should) and you should give them an opportunity to show you options. Keep your discussion professional and at a desk and be honest about features you need. Get to know your prospective sales consultant a bit, and have him/her show you the facility and keep it light. This is not the time to answer questions about financing, aftermarket products, "money down", credit scores, trade values, etc. Believe me, they will ask. Just politely say that you are undecided and going about "information gathering" at this point.
3) The next step in the process of negotiation is to get organized. Now that you have started a relationship and started to gain control, realize that knowledge is power. Just keep in mind not to get over-confident as these basic tools are not an advanced skill set.
I also always suggest looking at a 2+-year-old vehicle, as you really do save thousands of dollars and still have the ability to purchase factory quality warranty coverage protection. New vehicles just depreciate very quickly and tend to not stabilize until about the 30-month mark.
INSIDER TIP: I don't want to convolute the equation at this point, as financing is an advanced aspect of the purchase process. Dealers can make huge profits from you financing with them. At this juncture, I would simply suggest talking with your credit union or personal bank to arrange pre-approval for financing. We will save financing for a more advanced article.
4) Once you have got a feel for the market and what is available within your geographic area, decide whether purchasing privately or from the dealership is a better option. Remember that no two cars are alike - even new ones. It is very important to set yourself up for a demonstration drive and mechanical evaluation at this point in the process.
If you are negotiating with a dealership, be sure to request a copy of the vehicle inspection checklist and repair order. The reason you request both is because a checklist is a "mandatory" list for the mechanic to check as set forth by individual dealer protocol. However, that does NOT mean that an issue was repaired once noted on the vehicle inspection checklist. An actual repair order (R.O.) would be in the record as it will show parts applied to the repair and labor times. This indicates that an actual repair was done.
The best way to ensure mechanical reliability is to have an independent technician do a pre-purchase evaluation of the potential vehicle at your expense.
INSIDER TIP: Dealers are often quick to say, "no problem, take it to your mechanic for an inspection." The reality for most dealers is that they are not excited for you to do that. They see it is a loss of control. Good.
Some dealers do a very good job of doing a total inspection, maintaining a thorough inspection record, and even posting the repair order on their website along with the vehicle info and pictures, but honestly this is rare. What is typical is "get the car through the shop" with as little expense as possible so they can turn a bigger margin. You usually have a used car manager whining about "the shop is trying to go up in me" rather than properly reconditioning the vehicle to save money. Sure, four new tires cost $480 to replace, but it makes the car safe and consumers should notice bald tires making the dealer appear lackluster.
This portion of the negotiation will certainly gain you more control in the process, and you are leaving little room at all for the dealer to wiggle.
At this point in the game, you have made clear what features you are seeking, verified what product is available in your area, compared prices both privately and at dealerships, spoken to your financial institution about financing, and have narrowed your available choices - and all on your terms!
Great job!
5) The last item on the basic negotiation list is to make an actual offer on the vehicle of your choice. I'm not going to delve into the advanced techniques of an actual negotiation at this time in order to keep with our basics premise. Honestly, you can get yourself in a heap of trouble trying to work outside of your capabilities as I previously described.
By consulting with online pricing guides like Kelley Blue Book, Edmunds, and NADA, you should have a basic idea of fair pricing. I might also suggest that since you spoke to your local credit union, it is advisable to ask them for a fair assessment of what you should expect to pay for the vehicle you are seeking. Naturally, many factors contribute to a price, but you should definitely be in the ball park.
Don't get in a huge hurry to buy, but also remember time can be of the essence. I know, it seem like a conflicting statement, but finding what you want at the right price with the right features from the right person at the right value means that it's ok to pull the trigger and buy. By the same token, factors such as being the end of the month for a dealer, an item that has sat for 30+ days in inventory, or an obscure color that you like but is not hugely popular are all factors that affect price and a dealer's willingness to cut profits to "move a unit". Don't be the person who believes that it takes 6 months or longer to buy a vehicle. At that point, you are over-analyzing the process and your strategy likely backfires.
If you follow this basic, bare bones program of negotiation, you have more than likely done much better than you would have done otherwise in saving some money towards the purchase of your new vehicle. This short program is designed to put the ball in your court and take some control away from the dealer by strongly reducing your exposure more than anything else.
A very good friend of mine and a great sales consultant says to me regularly that, "the person who speaks first loses..." He is right.
By reducing your exposure of being exploited by a lack of knowledge and experience in negotiation of car deals shuts the door on being led or unduly influenced in a way that causes you to lose. So, the less you say and do, the better for you and your wallet.
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