Here’s what you need to know about car dealers; when they say “hello,” they're lying.
Hey we're just kidding. Kind of. Some of our best friends are car dealers. Salt of the earth they are. But they're out to make a buck. Just like the rest of us. So let's talk a bit before you storm in there all full of piss and vinegar.
Thing No. 1 Know the dealer invoice.
This is what the dealer pays the manufacturer for the car. It is
readily available on the window (aka sticker price) or on the
Internet, invoicedealers.com. Anything you pay above this is
profit. But, not the only profit by a long shot – like options,
warranties and financing. Quite different from the MSRP
(manufacturers suggested retail price.) Both are available at edmunds.com and kbb.com.
Thing No. 2 Familiarize yourself with the “packages”
They bundle options together. If you know what the bundles are
you’ll avoid the part where you become discombobulated when he springs
the news on you that the moon roof you want only comes with the leather
interior.
Thing No. 3 Do not pay more than sticker. ($100-$200 over for a particularly hot car.)
If you are suddenly feeling sorry for your little dealer friend and
fear that your karmic bank account is in jeopardy, don’t. The
little ratfink is getting what’s called a “holdback” incentive from the
manufacturer likely equivalent to 3 percent of retail. This is
supposed to cover interest costs (since he doesn’t actually “own” the
car, he’s financing it) but the bottom line is, he could easily be
getting an additional several hundred to a few thousand dollar kickback
on the car. Now, he will never negotiate on “holdback” He won’t
go there so you don’t either. However, it’s all mixed up together
in a little shell game of sorts but, the point is, you can feel free to
laugh hysterically at his puppy dog eyes when he cries that he’s not
making any money. Now, if you’re talking about some super-hot car that
they can’t keep on the lot, forget it. You're SOL. It’s a
supply and demand situation. Look for “average sale price” on the
car websites.
Thing No. 4 Find out if the dealer is getting any additional incentives.
This is called “trunk money.” You can find this out @
http://www.checkbook.org. Or, buy a seven day pass at automotivenews.com
($10). This is a trade rag but you don’t have to prove that
you’re in the industry. Finally, you can go to www.cardeals.com and pay
$7 for the latest report (issued every Wednesday) indicating current incentives that manufacturers are offering dealers.
Thing No. 5 A rebate is not always real.
Sometimes, rebates are anticipated by the dealer for a few weeks,
sometimes they are announced by the factory out of the blue.
Sometimes they last for months, sometimes only for a few days.
Sometimes a rebate is nothing more than a re-packaged incentive that
has already been in place.
Thing No. 6 Find out how many “days supply” of the car are in the pipeline.
If there is 180-day supply, they are screwed and you’re sitting
pretty. If there’s a 17-day supply, they’re looking a little
better than you. Color factors in here too. You have more
negotiating room if you’re willing to let go of the hottest
color. In general, rich people used to like black, then, they
liked silver, now they’re all about pewter. He might not give you
a penny off the pewter (because it’s difficult to find in the dealer
inventory) but will negotiate on black, which is easier for him to get
his mitts on.
Thing No. 7 Shop for financing elsewhere.
Sometimes, even if you tell them you are not interested in financing,
they will ask you to fill out a credit application anyway because this
is where some of the big money is for the dealer. Don’t. Once you
figure out what kind of financing can be had elsewhere you can lay that
on him and see if he can do better but do beware; once you fill out
that credit app, you are applying for credit – better to let him know
your credit score and find out what kind of terms he can offer.
You might even do better to go to the manufacturing financing directly
(GMAC, Ford Credit et al) because the dealer usually will add a point
or two for his commission. Sadly, sometimes, the finance rate and the
incentive (e.g. rebate) are co-dependent meaning, you can either get 0%
financing or a $2000 rebate. This is going to require some math
on your part. Math-phobes need not panic. Go to bankrate.com or banksite.com or consumerreports.org These
guys have lots of handy-dandy tools that make it easy for you to figure
out your end cost including calculators that let you compare the rebate
to financing rate.
Thing No. 8 Shop for extended warranties elsewhere.
Same goes for extended warranties – shop for them @ smartwarranty.com or warrantydirect.com.
Thing No. 9 Don’t go in assuming cash, lease or finance.
Each deal at any given time changes what the right choice is. If
you were going to pay cash but can get three years at 0% financing,
you’ll do better to take the free loan. Let the deal drive the
terms not the other way around.
Thing No. 10 Use all the dirty tricks.
• Go in just before closing
• Carry a folder stuffed with Internet research
from www.edmunds.com (or your screenplay – he won’t know the
difference.)
• Bring a “quarterback” Girls, do bring the boyfriend
or daddy figure especially if he really is prone to posture his
masculinity. He’s the bad cop and there is no good cop.
Guys, bring the wife. Same dynamic.
• Don’t tell them you have a trade-in until you’re happy with the price.
• Leave. Be clear that you are leaving because you
can’t settle on price. He might try to play it cool but even if he
does, screw him. What do you care who you buy it from?
Thing No. 11 Don’t fall for their dirty tricks.
Do not, we repeat, do not engage in any discussion about “what you want
to pay per month for this car.” That is a big open door for them
to shift down payment, terms, interest rate and God knows what to make
a killing off you while hitting your “emotional number.”
Thing No. 12 Get a Buyer's Order
This formal dealership document should include your personal
information, the car's make, model, package, additional options and the
price. It will be signed by the manager and often will indicate a
"good 'til" date. Pack this baby in your folder when you visit
competing dealerships – it’s a BS killer.
Thing No. 13 Go to 3-5 dealerships.
Including a small one if possible. They’re under less pressure to screw you and you’ll often get a cleaner deal.
Thing No. 14 Don’t order a car.
Yeah, he’ll order you a car if you really insist but that is delayed
gratification for him. He’d rather “sell-down” his inventory or
even do a “dealer trade” which means he’ll dig deeper into his profit
to make the sale today. If he finds you the car at another
dealer, you’ll pay a fee to have it transferred. It shouldn’t
have more mileage on it than the trip when it arrives.
Thing No. 15 Buy this year’s model when next year’s is just about to come out or has come out.
This is an oldie but a goodie. Your resale value will take a hit
but if you plan to keep the car for awhile (by then your resale value
will be crap anyway) these guys are under A LOT of pressure to
“sell-down” the previous inventory i.e. get it the hell off the lot if
for no other reason than space.
Now, when you say "hello", you’ll be saying, “pity the fool that messes with me.”