Pretending your credit rating is worse than it is:
Before you go to the dealership check your credit rating. One way car dealers rip you off is by pretending your credit is worse than it actually is, thereby justifying hitting you with a higher interest rate than you need to be paying. If you know your credit rating is higher than you’re quoted hit back, hard. It’s not uncommon for dealers to get you financing at one rate and then charge you a full percentage point higher. They pocket the difference.
Inflating your loan size:
Most car shoppers are focused on how big their monthly payment is, not on the total amount they will be borrowing. Car salesmen know this and use that misplaced focus to bloat the size of your loan with upsells and unnecessary options. Stay focused on the total amount you’re borrowing, not what you will pay monthly.
Good cop/bad cop:
The salesman will try to get you to reveal the price you want to pay for the car. Then he’ll say, “Let me go check with my sales manager.” He already knows the price range the car can be sold for, so if your price is in that range he’s got you in the bag. Don’t be the first to quote a price.
Know what your trade-in is worth:
This is another critical bit of information to have before walking onto the car lot. Why? Because the salesman knows how much you don’t want to sell your old car yourself, and will devalue your old car accordingly and build in a nice profit (for himself) on it. Refuse to discuss the trade-in until you are happy with the purchase price.
99% pure car dealer profit:
Extended warranties on new cars are almost always unnecessary because just about all the moving parts that could break are covered by the manufacturer’s warranty. Be aware of the reliability record of the cars you’re interested in, as well as the details of the warranties on each. Avoid extended warranties, no matter how tempting they are. They only make sense on a car with a bad reliability record and you shouldn’t be buying one of them!
You never see rebates on the best cars, do you? Often a car dealer will tell you that a car is a great deal because it comes with a rebate. Don’t be taken in — rebates are offered by manufacturers to boost sales on cars that aren’t selling well. Negotiate the best price you can with the dealer, and do not let rebates be included in that process.
Also, once you’ve negotiated a great deal insist that the rebates are deducted from the sale price. Otherwise you’ll pay taxes and interest on the rebate.
Dealers will do anything to get you a monthly payment that fits in your budget because they are aware that most Americans are really focused on what a car will cost them each month and little else. So, they’ll extend the life of your loan to six years, or tell you you have to come up with a down payment you don’t have.
Tell the salesman you won’t discuss monthly payments until you’ve come to an agreement on vehicle sale price
Digital odometers are supposed to prevent odometer rollbacks but all they do is make it harder to determine if an odometer has been messed with. Hard to believe? A study by CarFax showed 89,000 tampered cars hitting the Canadian resale market annually. Your only defense: buy from reputable dealers only.
Dealers will draw you out, figure out your biggest concern, and give you a solution to that by nudging all the other numbers upward. He can play with vehicle sales price, monthly payments, down payments and trade-in. Stay focused on purchase price, total loan amount and length, and monthly payments. If you let them distract you you’ll lose. If they start talking fast just make them slow down and start over.
Some additional charges are essential but most can be eliminated or negotiated down. And anything they offer you after purchase price has been agreed on should be refused.
How to negotiate with car salesmen:
Negotiating is like dancing. There’s a rhythm in what you say and when you say it, and the end game is to create leverage for yourself while deconstructing the other guy’s attempts at making the same for himself.
Car dealers want you to buy a car from them, right then and there. For them it’s all about making a sale in that moment.
You want, or you should want, to make the best deal for yourself that you possibly can because you will live with the outcome for a long time. So whenever the salesman tries to speed things up, whether by talking too fast or throwing lots of information at you that can’t be absorbed quickly, just hold up your hand and tell him you won’t be rushed and if he can’t respect that you are leaving.
Don’t be pushed into telling the salesman how much you want to pay per month, or what you want to pay for the car.
Do your research before going into the dealership and you will know what the car should sell for. Don’t let the salesman know that you know this.
Never commit to a firm price you can’t live with. If you tell the salesman the highest monthly payment you can do is $550 rest assured that he will do his best to make sure you end up doing exactly that.
No matter what price the dealer offers you flinch and tell him he has to do better than that!
Always think about where you want to end up, and never lose sight of that goal. It’s the salesman’s job to distract you with dreams and whistles. It’s your job to ignore everything he says until he gives you what you want. Remember, he wants to sell you a car. That’s the emotion he’s feeling, so play on it. Tell him you are ready to give him what he wants, if only he can give you what you want. Hook him and reel him in, and don’t feel bad in the least because that’s what he’s trying to do to you.
Many negotiators believe that the first person to speak loses, but if no one speaks there’s no negotiation and no deal. Don’t be afraid to speak first. Just keep focused on your goal, which is to get the best deal you can.
So perhaps you begin the dance by saying, “What have you priced this car at right now?” That statement is communicating a few subtle things. It establishes that the price is not set in stone, but set by the dealership, and therefore the dealer can change it. It also creates an opportunity for them to throw out a price lower than what you are expecting, and lets you know where to position yourself in relation to their price.
It also states that you know prices change over time, and it lets them know that you know these things and won’t be easy to fleece. Opening the negotiation this way creates the impression of firmness and lets the salesman know you intend to get what you want, not give them what they want.
If the salesman tries to pressure or intimidate refuse to deal with them. Find someone else you can work with, and don’t be shy about saying that. Getting the best car deal is the right thing for you, and when you try to achieve that you feel powerful. Use that power to your advantage.