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How to negotiate the purchase of a new car.

February 15th, 2009 at 05:47 am

I just wrote a more detailed explanation of ways to negotiate a good price on a car.
You can find it on my web page:

http://www.on-my-way-up.com

Let me know what your thoughts are, and whether I was clear or not.

Thanks for your opinions.

Chico

3 Responses to “How to negotiate the purchase of a new car.”

  1. swanson719 Says:

    I don't think it's financially wise to buy a brand new car to begin with. Aside from that, you don't really describe anything new in negotiating the purchase of a car. Everyone basically knows how to do this - bartering at its basics. Meaning, if you walk out of the car lot because you didn't get the deal you wanted, and then come back a few days later with a better offer on the exact same vehicle from a competing dealer, you're going to get the dealers into a bidding war with each other, which only favors you. You'll cut their margin down to almost nothing because they don't want to be undersold more than they want to make money. They have a reputation to protect of being the cheapest dealership, and if you go around telling your friends you got your car cheaper somewhere else, word of mouth steals business away. By giving you a deeper discount, you bring in business instead of driving it somewhere else. And instead of looking at the dealer interest rates as a way to save money, look at how much you would save if you had saved up and paid 90% down in cash, then financed the other 10% over 6 months. Not only are you earning interest off the money market account you have the $15 - $30K in, but now you're not paying interest either. You save that 2.9% interest, and probably make 3.5% on the money market account, giving you an effectual return of 6.4% because you saved instead of financed. That stack of hundreds will save you money on top of the competing dealers too. So you could walk out with a brand new Matrix for only a few hundred over dealer invoice, and if you play your cards right, by financing that 10% for however long the dealership wants, get it in the deal that they pay your interest for the first 6 months or give you the equivalent as an additional discount. Then on the 7th month, you pay off the balance, it hits your credit report as an early pay-off, and you saved yourself from ever paying interest.

  2. monkeymama Says:

    I personally like the "1 at this price" deals in the newspaper. We have bought 2 used cars in that manner and we actually were able to negotiate the last one down a tad.

    Anyway, the thing about those is that you don't get to pick every option you would ever want. A small price to pay for a good deal. We take what we can get. Having always bought VERY used cars we aren't used to asking for extra features or picking colors. But they always seem to be automatics with all power (you have to be careful - sometimes those cars don't have power door locks or stuff like that. Though one the other hand, could be worth saving a few bucks).

    I see some awesome deals in the paper on new cars and I am eyeing those for next round. I admit the new cars may be harder to snatch (they may go quick). But with the used cars they seemed to be cars they were happy to move. (I heard those were teasers to bring you in but frankly they just gave us the cars and didn't try to sell us anything. LEast obnoxious car dealer experience ever. I used to dread going to the dealership). Also, there doesn't seem to be a rush for those cars (used). They are always there even if you go at 8pm - no one else buys those cars it seems.

    We may be disappointed trying the same tactic with a new car, but it is an idea. (If it doesn't pan out I think we'll just think the "barely used" for significantly less).

    Along the same lines, always ask if they have a brand new car in last year's model. I have 2 friends who got substantial discounts on new cars because they were "last year's models" and they were trying to clear them out. I thought we did good but they paid about the same as us for brand new cars!!!!!

  3. whitestripe Says:

    i really don't think i would ever buy a brand new car. sure, you get a warranty and all that (which is only valid if you get services done at the dealership - at huge price hikes) but as soon as you drive it off the floor the value decreases sometimes up to 30%, or more in a lot of cases. say you're buying a car for $20k, that's $6k you just gave away. for me, that's 300 hours of work. what for? so i can pick a colour and some extra features, and so no one has ever driven my car before. big woop.

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