Originally Posted by
CHA-LEE
I am yet to experience a "No Haggle" dealership not end up haggling on the price when pushed. "No Haggle" is 100% in the favor of the dealership and the excuse of "I don't want to waste time negotiating" isn't valid when you are buying a $25K - $50K vehicle. That is a shit ton of money and a significant financial decision that will impact your budget for many years to come. Investing a few hours of your time to ensure that you get the best deal is well worth your time.
I have purchased many vehicles from dealerships over the years and below is my minimum strategy before even walking through the front door....
(1) Secure financing with your own bank ahead of time. Getting pre-approved for a specific dollar amount and interest rate gives you leverage at the negotiating table when at the dealership. Also know your credit score and what the current average auto loan rates are for that given score. If the dealership can offer better financing options than what you bank can great. If they can't, you have a valid fallback that won't get you gouged at the dealership. Also understand that loan terms and interest rates are different for New and Used vehicles. Its best to get pre-approved for the "Worst Case" scenario of vehicle you are looking at when it comes to cost and age.
(2) If you are trading in a vehicle, know what the NADA value is of it. Don't rely on KBB values as its usually higher than NADA and all of the dealerships use NADA values for trades because the values are lower. Understand the Retail, Private Property, and Trade In values of your vehicle. Dealers will hammer on the Trade In value trying to get the best deal for them but you can try to meet them in the middle by pushing for a price between the Private Property and Trade In value. Also accept the fact that if they are trying to gouge you on the Trade In value you may need to pass on trading the vehicle in and put in the effort to sell it on your own.
(3) Know the feature set and value of the vehicle you are looking to buy. For used, knowing how much the Retail, Private Property, and Trade In value of the vehicle. The Dealer will push to sell the vehicle at the Retail value along with trying to pump up the price because of aftermarket "upgrades". Realize that when this used vehicle was traded in, all aftermarket upgrades are given ZERO value add to the trade in price. They are not paying more for the vehicle during the trade in, so you shouldn't pay more when purchasing it. When I buy used vehicles I refuse to pay full Retail pricing. You can usually negotiate the price down in between the Retail and Private Property value. For New vehicles, the majority of your negotiating power comes down to the incentives the dealership or manufacture have at the time. Push for all of the incentives you can get and also ask if different or better incentives will be coming soon. Beyond the Manufacture incentives there is very little wiggle room in price haggling on new vehicles. Dealerships make the bulk of their money on new car sales on the back end by jacking up interest rates, selling warranties, or other crap you don't need.
(4) Negotiate ONLY the total vehicle price that also includes taxes and whatever bullshit fee's they attempt to slip into the deal. In the end the total vehicle price is the only thing that really matters. They will attempt to suck you into deciding on a vehicle or price of vehicle based on the monthly payment which can be manipulated in a manor that isn't in your best interest. Once you have negotiated the total price to your desired number, then you can discuss financing terms, fee's and everything else. Question all Fee's or built in upgrades and force them to justify each one. Refuse to pay unreasonable fee's/upgrades on bullshit items. Many dealers will try to sell you security upgrades like wheel lock nuts, alarms, or crap like that which are all way over priced. If they don't want to remove the Fee/upgrade from the price then demand that the feature be removed from the car. Also understand that the trade in value of your current vehicle has a significant impact to the taxable value on the new vehicle. You need to understand what the final numbers look like with and without the trade in verses the taxes owed. If your trade in has a significant amount of equity it may make more sense to take advantage of the sales tax savings by trading it in, verses selling it yourself and getting more for it but it ultimately being less than the additional tax you had to pay on the new vehicle. For example, lets say that your trade in is worth $10K and your local tax rate is 7%. This represents $700 in tax savings on the purchased vehicle. If you sell it on your own you would need to sell it for at least $10,700 to break even verses using it as a trade in on your new vehicle.
(5) Dealers are counting on customers becoming emotionally attached to the vehicle they want to buy and or the competitive process of negotiating the deal. Their sales tactics enforce this emotional attachment or competition and pray on it when the negotiation process starts. Its best to go into the process with zero emotion or attachment to the vehicle or negotiation process. Treat it no different than buying a can of soup in the grocery store. The soup is either something priced correctly and you find value in buying, or its not and you don't buy it. This also means that you are willing to walk out the door at any point during the process with zero emotional attachment. If the deal isn't good, they are trying bullshit tactics, or simply wasting your time, tell them you are done and calmly walk out the door. There will always be another vehicle at a different dealership that will suit your needs. Its also good to set the negotiation expectations up front and stick to your convictions. For example, I will tell the sales guy "I am willing to do 3 rounds of price negotiations, after that I am done and will hit the door". Then as each round of negotiation happens I remind them that they only have X rounds left so they better make it count.
(6) Extended Warranties or Financing features (Term, APR, GAP, etc) are where dealers make the bulk of their money on the back end of the deal. Most of the time dealers will pitch the extended warranties in a manner that makes it seem like you MUST buy some level of extended warranty. You absolutely do NOT have to purchase an Extended Warranty if you don't want to. If yo do purchase an extended warranty fully understand the coverage, limitations, and additional expenses associated with it like Co-pays, exempt items, and things like that. From my experience most Extended Warranties are not worth their cost in the long run. You would be better served by saving an extra $50 - $100 each month to go towards unplanned vehicle failures. At least that way if you don't have any failures you still have the $$$ to spend on whatever you want. The Financing terms should already be known before you start the financing process. Double check the term, APR, bank info and look for any extra things they may have slipped in there. For example, GAP insurance is only needed if you have rolled over an extensive amount of negative equity into the new auto loan. If you haven't rolled any negative equity into the new loan there is zero reason to have GAP insurance.
(7) Understand that negotiation processes can and will fail. When I am in the market for buying a vehicle my negotiation success rate is probably 50%. This means that 50% of the time the end result of the negotiated deal doesn't meet my needs and I walk away from the deal. Does this cause wasted time? Absolutely. But this wasted time is dramatically minimized when you come into the process with the above items understood and conveyed to the salesman. My negotiation process has also never lasted more than 30 minutes because I don't allow it to. If they want to screw around or play games, I walk. There is always another vehicle at a different dealership to restart the negotiation process on. If the existing dealership really wants your business they will make it happen.
Reply With Quote
