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Car Buying Guide and Tips at Emergencybrake.com
Principle #1: Reseraching
Principle #2: Choosing a Car
Principle #3: Advanced Negotiation Tactics
Principle #4:
Principal #5:
Principle #6:
Principle #3:
Advanced Negotiation Tactics
It is critical to approach a car purchase with a clear and certain mindset. Do
not forget for one second, that you are the one with the money to spend. You
are the one in charge. While there are a few (very, very few) exceptions
to this rule, most used car dealerships have a minimum of $2000 to $3000
markup in the prices of their cars. Believe it. Some have as much as $6,000 to
$7,000 markup, depending on region and type of inventory. This is one of the
ways in which they are able to advertise “blowouts” and offer thousands of
dollars off. Knowing this is going to give you a good idea of where you will
start negotiations. Do not believe or trust any used car dealership or
salesperson that says that they do not negotiate. Almost everything in life is
negotiable, especially the prices of cars.
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If you are purchasing from a dealer, you will likely encounter (negotiate
with) several different people during the buying process. You walk into the
dealership a one-person army with the goal of conquering the enemy. That
may sound dramatic, but this is the attitude that it takes to save the most
money. In this case, your enemies are your salesperson, the sales manager,
and the finance manager. Throughout this guide I will strive to use the
word salesperson rather than salesman, not in an attempt to be
politically correct, but because there are plenty of gifted and cunning
women in the auto industry who will be completely happy to rip you off and
take your money. No matter how nice or feeble a salesperson seems or looks,
do not lose sight of the fact that their job is to get as much of your money
as possible.
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Besides stealing your money, a salesperson’s other job entails showing you
vehicles, explaining and comparing specifications and features of various
vehicles, and answering any questions you might have. I encourage you to ask
a lot of questions. Ask about horsepower and torque. Ask how a vehicle
compares to other brands in its class. Ask about the vehicle’s safety
rating. If it is a used vehicle, ask about the maintenance history and
whether or not it has ever been wrecked. Ask to your hearts content. Asking
questions not only gets you the information that you need, but more
importantly it tests the competency and integrity of the salesperson. A
good salesperson won’t necessarily have all the answers, but when they don’t
know an answer they will respond truthfully, and offer to find out for you.
If the salesperson lies to you, call them on it, but do it with out getting
angry or showing any emotion. Have your research ready to back you where
applicable. This can change the negotiations in your favor. If you begin
conflicting too much with a salesperson, ask for a new salesperson or come
back later and speak with someone else (this is also a good strategy you can
use just to shake them up a bit). However, in the grand scheme of a car
purchase, the salesperson has very little power over the price you pay.
They will go back and forth between you and the sales manager (or pretend
to), trying to work the deal out. One of the purposes for this, is by
making themselves an “agent” for the purchaser, the salesperson becomes a
good guy—on your side. This is never the case. The salesperson’s job is to
take as much of your money as they can. There is also a chance that instead
of taking your offer to the sales manager, the salesperson is getting coffee
or using the restroom only to come back and try to get more money out of
you. It is an old trick, and it does happen.
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Throughout the negotiating stage, it is really the sales manager you are
negotiating with, usually via your salesperson. It doesn’t happen every
time, but if the sales manager comes in to “close the deal,” than you know
you are on the right track because you have eliminated the middleman
(salesperson) and can deal directly with the decision maker. All of the
same negotiating tactics apply to the sales manager, but be more careful, as
the sales manger is usually more adept at negotiating than than is
salesperson.
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New
Car Price Negotiation—In
the age of technology, negotiating the price of a new vehicle is a much more
simple matter than it used to be. The internet allows the average buyer to
find the invoice price of a new vehicle, as well as other valuable
information. But there are some things you can do to save more money. The
price you pay for a new car will depend greatly on the models you are
looking at. For instance, when the Chrysler PT Cruiser came out, dealers
where able to charge well above the MSRP (Manufacturer’s Suggested Retail
Price) because the demand for the vehicle was so much higher than supply.
If a person would have offered at or near invoice for the car, they would
have been laughed or escorted right off the lot. This is why it is so
important do your research. When buying a new car, you are not only going
to want to check the internet for invoice prices and MSPRs, but you will
need to check with multiple dealers (we recommend at least 5) via
newspapers, the internet, or simple phone calls, to see what the market
price is for your area. If you elect to make phone calls, don’t give out
any information at this point, simply inquire about prices and any “special”
offers.
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Used
Car Price Negotiations—Negotiating
the price of a used car is a usually a total different experience than if
you were a purchasing a new car. This is the good stuff here; this is where
you get to stick it to the salesperson. Keeping in mind the other advice
and principles discussed in this guide, the following will prepare you for
what to expect and give you the secrets you need to get the best deal on any
vehicle.
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Often dealers will try and overwhelm or confuse the buyer by negotiating on
several points at once. A small mistake or overlooked detail can cost you
big, so avoid this at all costs. Negotiate one item at a time, starting
with price. A “tool” that dealers are known to use is the “four square.”
This is essentially a piece of paper divided into four sections that dealers
use to make an offer or counter-offer. In each of the respective boxes will
be the price, your estimated monthly payment, your down payment, and the
amount they give you for trade-in. As I said, fully negotiate each item one
at a time. In a best case scenario, you will sell your trade outright to a
private buyer, and apply that cash to your purchase, and you will have
secured your financing ahead of time. Doing this eliminates all of the
major negotiating points except for price. It is wise to negotiate price and
price alone before negotiating any other factors. Never negotiate
based on payment. Dealers know that most people are on some type of budget
and attempt to use this to their advantage. If they get you to commit to a
certain payment range, they could be gouging you on price, adding extras
such as credit life and disability insurance, gap insurance, extended
warranties, etc. They also could be increasing the interest rate to fatten
their own profits. Many auto lenders allow dealers to keep a certain amount
of points so know your credit and know what rates and terms different
lenders will give you. If you have done all of your research then you will
already be looking at a vehicle that will fit into your payment range. You
can use this finance rate calculator from Edmunds.com to assist you.
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You will have to decide for yourself where to start negotiations as far as
numbers go. You can decide upon this initial figure by keeping in mind
these things: the average prices you found elsewhere for the same or similar
vehicles, the fact that dealers have huge markup usually no less than $3,000
for an average vehicle, the book values, and the amount you are willing to
spend. We recommend stating at least $3,000 to $4,000 below the “asking”
price, but this can increase if your are looking at higher end used cars or
SUVs.
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If the dealer comes down in price once or twice, it might be wise for you
to give a little and offer a slightly larger amount. We recommend
$100-$250. Again, you will have to make the decision to do this or not, but
we do offer some advice on this. During negotiations, do not increase your
offer in big chunks like $500 or higher; this can cause you to leave money
on the table, so keep the increments small. Never offer more than you are
willing to pay. Before you engage in any negotiations, create a firm figure
in your mind and don’t go over this number. If you have done your research,
then this “top” figure will likely be realistic and fair. Only after you
exhaust all your options should you increase this figure.
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If you come to a point in the negotiations where you and the dealer are at
an impasse, and they are not knocking the price down enough, you might want
to get up to walk away. The sense of urgency in this action may cause the
salesman to make a better deal. This is one of the best things you can do
during the sale to save more money (See Principle #4).
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If you are financing through the dealership, during negotiations, you will
want to make it clear that you are not at all concerned with the monthly
payments, but that what you are concerned with is getting a fair interest
rate. Since you have done extensive research beforehand, you already know
what range of interest rates you qualify for based on your credit. Check
your credit ahead of time buy calling one of the three major credit bureaus,
going to your own bank, or checking it for free on our website. It is worth
saying again, unless you are buying a new car and the manufacturer has a
special unbelievably low rate (0%, 0.9%, etc.), then you should definitely
try to get your financing elsewhere. Dealers are known to hold points—a
bank buy’s your loan for a certain interest rate, and the dealer increases
the rate and keeps the profit.
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