Despite the fact that the world is emerging from a global recession, sometimes the need to buy a car shows up just when you least expect it. If that time has arrived for you, then maybe we should spend some time talking about what you need to do in order to successfully negotiate the purchase of your next car in 2010…
Three Phrases You Need To Know
Michael Royce has spent a lot of time researching how best to buy a car and he believes that you need to understand the difference between three different car buying terms before you first step foot inside of a car dealership:
- Sticker Price: this is a fake value – if the car dealership could sell the car to you for this price, then they’d be happy because this value represents a nice big profit margin for them. For you, all this value means is that you should be able to buy the car for much less than this value.
- Invoice Price: this is how much the car dealer paid the car manufacture for the new car. In theory, this value does not include any car dealership profit in it and so the car dealer will need to sell the car to you for more than this value. However, if the car manufacturer is offering rebates and other special offers, the car dealer may actually be buying the car for less than the invoice price.
- Wholesale price: for a used car, this is the price that the car dealer paid for it. If you look in used car pricing books, they will list both the wholesale price (what the dealer pays for the used car) and the retail price (what the dealer will try to sell the used car for).
Remember: It’s A Game
In order to get yourself into a proper mental state to negotiate to buy a car, you need to sit yourself down and remind yourself that you are getting ready to play a game – it’s a game with very high stakes, but it’s a game none the less.
The biggest challenge that you will face is the simple fact that in this game the other side of the table may be much better at it than you are. The car salesperson does this several times a day, every day. You might think that this gives them an insurmountable advantage over you; however, it doesn’t – most car salespersons are not that good at what they do.
Since many of them only know how to sell a car by following a script that the car dealership has provided them with, you have a fighting chance – if you change the way that the game is played, then you will have gained the upper hand in the negotiations.
Your Strongest Tactic: I Don’t Need This Deal
In sales negotiating one of the most powerful tools that we have is the ability to walk away from the deal. All too often when we are negotiating to buy a car, we forget that we have this option. We’ve spent a couple of hours at the car dealership, we’ve gotten to know the salesperson and maybe even their manager, we’ve filled out some paperwork, its really started to feel like we’re committed to doing a deal with these guys. However, that’s not the case.
The great thing about being a car buyer is that there are a lot of different places that you can buy your car from. You don’t need to complete the deal that you are working on – you can walk away at any time. The other side of the table knows this too and they will do almost anything to prevent you from leaving.
You need to clearly state that you don’t want to talk about monthly payments (that’s like dealing in “funny money”), instead you want to talk about the selling price of the car. Don’t be in a hurry or give the appearance of being desperate (even if you are!).
Make sure that you’ve done your research and know what a fair selling price for the car that you want is. For new cars it’s probably a couple of hundred dollars over the invoice price and for used cars it’s probably $400-$500 dollars over the wholesale price. Start your negotiations there and be prepared to leave if things don’t go the way you want them to.
What All Of This Means For You
Royce makes the good point that even if you do walk out of a negotiating session, leave on good terms. There’s no need to burn bridges – this is just a business deal after all, not a personal attack.
The next day call the dealership back up and see if they still want to deal. It can be amazing how seeing you walk out the door can motivate them to find ways to get closer to the price that you want to pay.
Always remember that buying a car is very much a game that you play every few years. You’ll never do it as many times as the other side of the table has done it, but if you use these suggestions, then you can make the deal work out in your favor…
What’s the one thing that you think that you must do before walking into a car dealership to negotiate to buy a car?
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What We’ll Be Talking About Next Time
Remember when every business used to view themselves as an island? This made life pretty simple for anyone doing sales negotiations – it was always us vs. them. Well, it sure looks like someone farther up the corporate ladder has been reading those business self-help books and they’ve decided that there is a better way to go about doing things: partnering…