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4 tips
to save a bundle on your next new car purchase
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by:
Prashant Desai
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Many of us have been at the car
dealership and have been drained by a salesperson during price
negotiations for the purchase of a new car. Most people give in too
easily or do not negotiate at all to avoid the dreadful act. This only
means more money in the car dealers’ pocket, while you are out of
several thousand dollars! Yes, they make that much in profit per car.
This
article unveils the dealer’s selling tactics and how you can get around
them. But before we dive into the new car buying tips, we need to
understand what makes up the dealer’s profits.
In addition to
the MSRP (manufacturer suggested retail price), which is the dealer’s
cost for the car plus an additional 20-25% profit, a dealer also gets
financial incentives from the manufacturer when a new car is sold. This
is called Holdback.
Depending on the car, dealers can make
hundreds on each car through holdbacks. Dealers also get additional
incentives and bonuses on selling a car before the end of the month
and/or quarter.
A shrewd dealer can make several thousand on a
new car even by selling it at invoice price. This is how new car buying
can become tricky for the consumer.
Ready to learn how not to
put a dent in your wallet on your next car purchase? Here are four tips
to get you started. Each one is a dealer tactic to watch out for.
1. The Guilt Trip
As
you may have noticed, every desk in a dealership has photos of the
salesperson’s family, instead of photos of cars. Midway in the
negotiation, the sales person will bring them up and make it look like
his little commission check can hardly pay for his daughters college
and little Bradley’s braces.
A seasoned salesperson will soon
have you feeling guilty for driving the price down and hurting his
commission. Watch out not to fall for this tactic, since you already
know about holdbacks and incentive programs from manufacturers.
2. Wearing You Down
Come
prepared to spend half a day at the dealership or pay whatever the
dealer asks for. Car Dealers are trained to delay and tire you out to
the point where you give in and accept their price just to get out of
there.
After you make your offer, sales people typically claim
they would have to run it by their manager. You may then have to
re-start negotiating with the manager, who is also a seasoned
salesperson. This dance goes on for a while until you give in.
Remember,
there are multiple dealerships in a city, so they need you more than
you need them. Demand to speak to the manager after a certain time
period or threaten to leave.
Because you are devoting a lot of
time to bargain with the dealer, they know you are a serious buyer, so
they will not let you leave. The earlier you can speak with the
manager, the faster you can leave.
3. The Test Drive
We
all enjoy a good test drive and look forward to it. Although it is
essential to test drive a car before you buy it, remember to not show
your absolute love for the car to the salesperson. Their goal is to get
you emotionally attached to the car, so it becomes a must have for you.
I have learned it the hard way.
To hide your emotional tears
from the salesperson, mention the features of a competing car in the
same class, like the new shape, light, leg room, resale value etc. This
will make the salesperson a little vulnerable.
4. Monthly Payments
This
one is to confuse you. Dealers will start talking about monthly
payments rather than the total price of the car. They will start by
asking how much you are willing to pay per month and how much of a down
payment you are willing to pay. Since people don’t want to look like
they cannot afford a certain car, they will usually give a higher
number. Big Mistake!
You have left little room for negotiation
when this happens. Always steer the conversation to the total price of
the car and do NOT mention any trade-ins at this point. Only after the
total price of the vehicle is completely negotiated then talk about
interest, monthly payment and trade-ins.
General Rule;
As
a general rule, remember to only focus and negotiate on the Total Price
of the vehicle. Everything else is pretty much the car dealer’s trough.
If the above new car buying tips seem like a lot of hassle, yet
you still want to get the best price in town, there are some websites
that do this for you. www.AutoAuctionBids.com for example is a great
website for this because you can collect price quotes from multiple
local dealers for a particular car as well as its competing car models
(like Honda Accord, Toyota Camry and Ford Taurus) and compare them.
The
website then allows you to send back the lowest quotes received for
each car make to all participating dealers in your area through the
website itself.
Dealers view this price and continue to submit
new lower prices over a 3 day period. By putting local car dealers in
such a price competition allows you to avoid the dreadful face to face
negotiation and yet gets you the lowest price in town for up to 3
competing car makes.
The best part about AutoAuctionBids.com
is that it is absolutely free for you and there is no obligation to buy
after the new car auction is over.
About the Author
Prashant Desai, author of various consumer tips
articles and
industry expert for AutoAuctionBids.com. Email him at
p_desai@autoauctionbids.com to sign up for e-Newsletter and visit
www.autoauctionbids.com for more information.
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