Whether you are purchasing a new or good used car from a dealer, always keep in mind that basically the dealership wants to grab your money through a new or used car price, accessory sales and commission bearing finance deals, so that they can extract every last cent out of your pockets. Dealers know all the tricks of the trade and then some and can be real slick and silky in the process, but here is how to beat them at their own game and save some money along the way.
First of all, know exactly what you are after and don’t take any dealer advice on finance, market trends, advertising or recommended retail pricing. Needless to say, that shopping for a new car can quickly turn from excitement to uncertainty, because there are so many variables to consider and it’s easy to miss out on a better deal at another car yard. If you are thorough with your research and understand what kind of vehicle you want and how much you are prepared to spend, you will be well advised not to be conned by the inevitable car or aftermarket accessories salespeople and their rhetoric that your new pride and joy requires this, that or the other expensive bits of bling (which probably sell cheaper at auto stores). Steer clear of anything that encourages you to go further than your budget allows or inflates your loan amount and drive away with the most cost effective deal possible.
The end of winter auto run-out clearances are in full swing right now, as dealerships across Australia lock into ‘dog eat dog’ advertising campaigns to flog their superseded stock before the new model release. Dealers are dropping prices and manufacturers are promoting a new batch of zero per cent financing deals on select run-out models… But buyer beware!
Even with zero per cent loans, never lose focus that the dealer wins by netting as much of your hard earned cash as possible, so a deal needs to be thoroughly negotiated and be prepared to walk, even if it’s bargaining either way for 100 bucks.
As information hungry consumers delve into the plethora of media ads, internet car sites, relevant technical information and prepare to go on the hunt for the best deal in a new or used auto bargain, they become oblivious to the fact that they, indeed, are the hunted. It is a game and the consumer can win by knowing how to manipulate the rules by turning the salesperson into the prey and the buyer into the predator.
Primarily, you need to be firm and treat negotiating with a dealer like a game – the dealer wants you to spend as much as possible and you need to drive the price down using whatever psychological leverage necessary to turn the tables on the dealership for your own self-interest. Always remember dealers play this game every day and they do it profitably which is funded by consumer overspend, so don’t be shy or hold back, take the early advantage and hold onto it.
The aim is to start negotiating from what you think is the lowest price, even if it seems excessively low, but you have to open negotiations first, at rock bottom level. You can always increase your bid, but you can’t reduce an opening offer. To enhance your tactics, always link your price argument on your spending limit to someone else, such as your wife/husband or accountant. In this way, the salesperson will find it difficult to get you to lift your price as technically the dealer loses the advantage on the deal because the limit depends on someone else’s input who isn’t present and cannot be manipulated or convinced on the spot – that is how you start negotiating from the front foot.
· First find out what is the drive-away price offered by the dealer.
· Offer 20 to 25 per cent less than the price quoted by the dealer and tell them you can’t spend any more.
· If you have a trade-in, factor what the dealer valued it at as part of your offer.
· Blame the responsibility for your spending limit on someone else who isn’t there (wife /husband or accountant etc.).
· When they say they can’t go that low, reply with: “I really love this car, but I can’t spend more than my budget…. I’m just going to compare prices at some other dealerships….I’ll get back to you in the next few days if I can’t get a better price anywhere else.”
Then thank the salesperson for their time and walk out. Nine times out of ten they will come running after you or call you back the next day. No car dealer who really needs a sale will allow you to walk out the door without bending to a reasonable offer.
Lots of consumers do not like negotiating or haggling over price, so dealers exploit this situation to their considerable profitability. Remember that any time you are with a car salesperson, the normal rules of engaging in conversation and diplomacy do not apply. The main issue is to not feel bad about lying a little to stitch up the dealer, because given half a chance they are out to ‘fleece’ you on a ‘ride’ deal every way they legally can.
If you doubt your negotiating skills or bargaining abilities, you may want to seek out an independent car buyer that goes to many dealers and bats on your behalf. There is a fee on their service, however, it could potentially save you thousands of dollars or in the worse case scenario could end up costing you more in fees than the savings made negotiating on your behalf.
My advice is do it yourself and save money.