NEGOTIATE WITH CAR DEALERS

Dealers assume that car buyers don't have a clue about negotiating a car deal. We are here to prove them wrong and to help put you on level playing ground when it comes to negotiating buying a car. It's sad how most people think they've negotiated a good deal from used or new car dealers. The reality is that over 90% are ripped off.

Negotiating buying a car can save you hundreds or even thousands of dollars -- it only takes a little time investment. Learn the lingo and the rules, collect the documents you'll need to present and line up financing and after-market items on your own and it will pay huge dividends when you are negotiating with a car dealer -- and on the back end. So let's get started and when you finish your homework, you'll know how to negotiate with a car dealer like a pro. Walking into the dealers’ showroom without preparing properly is like walking onto a footy field to play against pros.

1. Know What You Want:

The first step in knowing how to negotiate with a car dealer effectively is to know exactly what you want. Be specific with exterior/interior colour, and options that you want. Checkout auto reviews and car sites carplus.com.au to help figure out exactly what kind of car you would like. Also, be specific with the terms you want, the length of the loan or lease, the mileage on the lease, the amount of the down payment, etc. Then, when in the process of negotiating buying a car, you can give up a few non-essential must-haves to get the price you want. Other factors you need to keep in mind when choosing the right vehicle are: Lifestyle, Location, Hobbies and most importantly Income.

2. Do Your Research:

Before negotiating for a car deal, compile as much information as you can get your hands on regarding your new or used car. Know exactly what the dealer invoice price is, how much "holdback" they will get, if there are any incentives or rebates available to you, a list of all dealers that have the car, a pre-approved loan, etc. The more research you do, the more informed you will be and informed car buyers get what they want at their price more often than uninformed car buyers. Look for independent reviews. If you have a head for numbers, then start remembering the key specifications so that you can compare each choice more effectively.

3. Price Game:

Some of these phrases are only relevant to new cars. Learn a few phrases and confidently drop them into the conversation:

• Sticker Price: The sticker price is the price the manufacturer sets for the retail value of the vehicle. It's called the sticker price because it's traditionally been written on the piece of paper you see stuck to the car's window. The sticker price is attached to the vehicle when the car leaves the factory. Never pay the sticker price! Only fools pay the sticker price.

• Invoice Price: The invoice price is what the dealer pays the manufacturer. The invoice price is where you want to aim your sights. The dealer is in business to make a profit. So the negotiated price you should pay will normally be somewhere between the invoice price and the sticker price. This is known as your zone of possible agreement.

• Dealer Holdback Price: The Dealer Holdback Price is the amount the dealer receives from the manufacturer on every vehicle they sell. The holdback price is usually in the neighbourhood of 3% of the Sticker Price. This is important to remember because the dealer holdback price effectively lowers the dealer's cost below the Invoice Price and adds to his profit. So if you were good enough to negotiate the dealer down to their Invoice Price, they would still be making a slight profit.

• Dealer Incentives: Also known as Dealer Cash. Some car manufacturers will offer the dealership "hidden" cash rebate incentives on new vehicles. The purpose is to promote certain makes and models.

4. Take a Test Drive:

There's only one way to know for sure whether you've found your dream machine. Get behind the wheel and take the car for a spin. The Test Drive will give you the best feel for the vehicle's performance and whether it meets your expectations and needs. Beware of dealers who won't let you drive because of "liability issues". See how the vehicle rides on both city streets and if possible, on the highway. Equally important is to check through the vehicle. Test the seats, knobs, buttons, seating capacity and comfort, and boot space. DO NOT buy after test driving. Go home and do more research first.

5. Rehearse:

If you rehearse before you sit down to negotiate with a car dealer, you will be more comfortable and natural in your approach. By rehearsing, you will have time to figure out how the sales manager will respond and you'll have an appropriate response to each objection. Create a list of objections that you will probably hear from the dealer and a list of your responses. The more you practice, the less likely you will appear nervous and unprepared.

6. Be a Good Listener:

The problem salespeople have the most in negotiating with a car buyer is they are so determined to get their point across that they stop listening. Salespeople and sales managers give away their power when they talk more than they listen. You should use this yourself...LISTEN to what is being said. If you are listening, you will be able to see the problems and act accordingly. Remember: We were given one mouth, but two ears.

7. Aim Low:

One of the key things to know about how to negotiate with a car dealer successfully is that you should never be afraid to make an offer too low. Don't be afraid to offer their dead cost or LESS to the dealer. It is a lot easier to work up to their number then it is for them to work down to your number. You are not going to insult the salesman or the manager if you show them the information you have and know about how their business works...knowledge is power. They'll actually respect you and treat you better, which can only help when negotiating buying a car.

8. Take a friend:

Since cars are not the cheapest investment, you want to make sure you're thinking with your head and not your heart when the moment of choice arrives. So if you are the type of person who has in the past been swayed by a salesman into buying something you didn't need, or paid over the odds, then we suggest you tag along a friend who is cool headed. Best you talk with your friend before the final "yes" decision. If either you or your friend are not comfortable, walk out of the dealership and take your time to think through the reasons. Often we get a gut feel that is hard to explain, but proves its value only in hindsight.

9. The more the better:

If you have the option of negotiating with several dealerships, do so. Call or visit each dealership and ask them if they have a certain make and model. Limit your preferences and only share your "must haves". Ask them to call you back about the availability of the vehicle. If you discover that several dealerships have your make and model in stock, you're in luck. You will now have the walk-away leverage necessary to negotiate a better deal. Remember these dealerships are in competition. If one dealership is not prepared to make you a better offer, simply tell them you can get a better deal elsewhere. There is no greater source of negotiation power than having a strong fall back offer.

10. Don't EVER Make the First Move:

Anyone who knows how to negotiate a car deal knows that you MUST let the dealer put together the first offer. In the car business there is a saying and it is true...the first person to talk, loses. Remember that you have all the power in these negotiations - you can get up and walk away at any point in time. The sales manager has everything to lose, you don't have to buy from him; you can go anywhere and negotiate with any car dealer. Make the dealer convince you to buy from them. Make them work for the sale.

11. Be Patient with the Car Buying Negotiations:

In all negotiations you have to be patient. The dealer is not going to give you what you want on the first go around. If they do, get up and walk away because you haven't researched enough and you probably missed some incentive or rebate. This is a game, kind of like chess. A game of chess is not won in one move. If the process isn't going the way you want it to go, leave and come back to try again.

12. Create a Positive Mood:

Smiling will put everyone involved in the car buying negotiations at ease. Present your offer with a confident smile. Salespeople will not take it personally if you do this in a friendly manner. People that don't know how to negotiate with a car dealer often come in with an attitude of "I will not get screwed," and they end up getting screwed. By creating a positive and friendly communication, everyone will be easier to deal with. Even if your price isn't reached, you can leave and then come back and the salesman will remember you as a nice customer and not as a difficult one. You get a lot more bees with honey than you do with vinegar. Be positive and smile, it's contagious. Also don’t show emotions to the dealer.

13. Be Prepared to Walk Away:

Always know you can get up and walk out of the car buying negotiations at any time. This is vitally important, because there is a good chance you will have to do this. As soon as you get two feet from the door, you will be surprised at how quickly the numbers will come tumbling down. If the salesperson doesn't chase after you, you probably were at a good deal. Keep in mind the more time a salesperson has invested in you, the harder he will work to get to your price. The sales manager will do the same thing - get him involved early. A key part of how to negotiate with a car dealer is to remember that pleasing all parties is important. This is a game and the salespeople want to win that commission every bit as badly as you want to score that car at your price.

14. YOU HAVE ALL THE POWER:

This is the most important thing to remember in how to negotiate with a car dealer. The sales manager HAS to sell these cars, but you don't have to buy them - which means you have the upper hand. Don't let emotions get in the way. The salespeople are trained to push your emotions to get you to buy. Remove your emotional ties to the car before you go. Approach the dealer with this attitude: If it doesn't work we can always try again in six months - I really don't need the car right now. In negotiating buying a car, the dealer has almost no power. They have to rely on you to give your money to them. You hold the purse strings and the power; use it to your advantage.

15. Final Steps:

Having done your homework and after receiving several quotes from the dealerships, take your lowest quote. Call the other dealerships. Simply explain that you are prepared to buy from them if they are prepared to better your lowest quote. When all dealers push back, you know you've found the best deal.