by Bengt Halvorson
Monday, October 29, 2007
provided by ForbesAutos.com
The dealership experience can be extremely stressful, but it doesn't have to be. You could know everything there is to know about the cars you're considering, but that's only a fraction of the buying process. If you want that seductive new sedan at a good price, you're probably going to need to know what to say — and more importantly, what not to say.
Some people loathe the whole car-buying experience simply because they anticipate getting conned. A few hundred dollars isn't a big deal on the price of a luxury car, but it's the idea of smart shopping and that sense of getting a good deal that's especially important. For luxury car buyers — notoriously labeled the shrewd shoppers — a good deal is icing on the cake.
"The educated consumer is the one who will drive away with the best deal and the best experience," says Rob Gentile, director of car-buying products at Consumer Reports.
To help you take the driver's seat in the buying experience, first learn to play the game, and you might even end up doing some smooth talking of your own.
Ready, Set, Go!
1. "I'm ready to buy now."
This is an admission of weakness and an invitation for the dealer to throw out a price that's slightly below the manufacturer's suggested retail price (MSRP) to see if you'll take the bait. It shows that you're too eager and willing to consider an offer, and it also gives salespeople the advantage by allowing them to talk you up as opposed to you talking them down. But by adding some very precise parameters, you'll sound confident and strong from the start.
"Don't let them know that you're ready to buy without being very particular. If you're ready, say that you'll buy, but only under these particular conditions," says Gentile.
There are two schools on negotiating. Going into the process, Gentile reminds consumers to be wary of the dealer cost. Consumer Reports has something called wholesale price, which is the normal dealer invoice price minus all relevant rebates and incentives. Similarly, most longstanding price-information services advise buyers to research the dealer invoice, along with any relevant incentives, then make a lowball offer that's maybe just a few hundred dollars above invoice. The dealer will follow your figure with a counteroffer that then allows you to go back and forth until there is a compromise.
Conversely, a second school believes that making the first offer puts the buyer in a weak position. "When you make an offer on a car, you're digging yourself into a hole," says James "Spike" Bragg, a consumer advocate and founder of Fighting Chance, an information service for new-car buyers. "That offer will be as good as it gets. There's so much today in 'under the radar' sales incentives to dealers, you don't want to limit yourself."
According to Bragg, many of the dealer incentives today are awarded on a dealer-by-dealer basis, often handed out for meeting sales targets. Because of this, you can't pin down these incentives on a particular vehicle, and you never know which dealership might be able to provide the better price at a given time.
Bragg's method involves faxing quote requests from several different dealerships and asking them for their best bottom-line price on a particular model. His clients sometimes manage to negotiate prices well below invoice, even considering all published incentives. In this day of increased under-the-radar incentives, this method doesn't limit you to a bottom line and certainly has its merits if you're willing to put in the effort.
On ForbesAutos.com you can pursue both options. On each of our Reviews pages there is a link to detailed MSRP and invoice pricing. Also, if you go to our "Buy a Car" section, you can select a model, configure it how you like and then request a free dealer price quote.
Monthly Payment
2. "I can afford this much per month."
"Don't tell the dealer what you're willing to pay per month. This is the biggest mistake a shopper can make. Often the dealer will focus on a monthly payment scheme, insisting you are receiving a great deal, but at the end of the day you won't really know what you paid, advises Gentile.
If the dealer can get a number out of you, a common trick is to ask if you can squeeze out a slightly higher monthly payment, then raise the bottom-line price accordingly by hundreds or even thousands. Avoid this by insisting that you focus only on the purchase price. Walk away if the salesperson only wants to talk in monthly payments. Trade-in
Trade-in
3. "Yes, I have a trade-in."
Don't tell salespeople you have a trade-in until a final transaction price is set. If you do and the deal hasn't been made yet, they may try to distract you with the "great" deal they're giving you on your trade-in as they skimp on the real deal. And if you catch that, they may try writing your trade-up for less.
"You'll see games being played — they'll play one off on the other," Gentile says. Once you've decided on a sale price, then you can see what they'll give you for your old car.
Cash-Only Please
4. "I'm only buying the car with cash."
Car dealers make a significant chunk of added profit when they sell you financing. If you don't at least leave the dealer with the possibility that he or she might sell you financing, you simply won't be getting the best deal. Bragg recommends saying something like "I haven't really thought that through yet. Maybe we'll see what you have after we agree on a price."
But be truly noncommittal with financing, even though it's a good idea to line up tentative financing with your lender before you go car shopping.
Still Debating
5. "I'm not sure…which model do you think I need?"
If you're this undecided, you may end up driving away in a vehicle you neither wanted nor needed. Do the research in advance, and make your first shopping trip a short one. Use this opportunity to gather information and take your spec vehicle for a short test drive. If your uncertainty is apparent, you may end up buying the model with the most add-on equipment, the highest sticker price and, of course, the most profit for the dealer. Before you go shopping, narrow your choices down to three or four vehicles that fit your needs.
My Dream Car
6. "Oh, I've wanted one of these all my life."
As soon as you've lost yourself in the dreamy vision of that gleaming convertible, the salesperson has you hooked, and your chances of getting a great deal are over. "Don't get caught heavy breathing," says Bragg. "Certainly don't admit to your spouse — with the salesman listening in the backseat — that you're in love with the car." Here's where you need to have a communication plan. Try to sound objective and rational. Point out some pros and cons and be observant and calm. Just don't say that you have to have this car.
What Everyone Wants
7. "I'll take whatever the popular options are."
Don't ever ask for the "popular options" especially on a luxury model that already comes loaded. It's an open invitation for overpriced dealer add-ons such as interior protectant, window etching or undercoating. They're all things you can come back for later. Instead, go through the equipment list at home after your first visit to the dealership and then decide exactly what you need.
Lowest You Can Go
8. "What's the lowest price you can give me?"
Most likely, this question won't be taken seriously, and you will be met with a predictable performance. The salesperson will wince, maybe talk to the manager, fiddle with numbers and eventually come back with a price that probably isn't a very good deal for you. But there may be so much apparent effort in this performance that you'll be pressured into settling for that final number. Don't. To avoid this, make an informed and reasonable low offer, then wait for a counteroffer. Don't be afraid of silence. Conversely, don't be surprised if there's even a little drama.
Doing The Math
9. "Sure, I'll look at the numbers with you."
Perhaps quite early in your visit, the salesperson will most likely make an offer to "just go look at the numbers." Dealers do this when they sense you're undecided, but they want to be in the position of control. Getting you in the office makes it harder for you to back out. Wait until you can call the shots of what you want at what price.
The Haggle Factor
10. "I think you can do a lot better than that."
Never scold or accuse the salespeople. Be polite. Compliment them, and show respect. You'll never get the best price if you talk down to them. At least for the moment, you want them to be your friends. Let the scene play out, but leave when the deal's not good enough by quietly suggesting that the competition across town might be more willing to work with you.
