Car Negotiation Guide

by Calum Coburn

You wouldn't play poker against a guy called "Vegas", so don't negotiate with a black belt car dealer unprepared. Read this used and new car negotiating guide before setting foot on the dealer's lot.

It's sad how most people think they've negotiated a good deal from used car dealers. The biting reality is that over 90% are ripped off. So don't walk into the car lot until you've read this guide, or your hard earned cash may turn you into yet another dealer victim.

car salesman You spend your days (and likely nights) studying or working, saving up enough cash to buy a car. The danger is that Used Car Dealers have stacked the cards in their favour. You're walking into the dealers showroom without preparing properly is like walking onto a tennis court to play against a pro. It's time someone levelled the playing field.

This guide gives you the inside track and exposes the hidden tricks dealers use to line their pockets with your cash. Fortunately, unlike the tennis example (where you're going to get thumped), preparation can turn the tables and save you hundreds or thousands of dollars on your next car - not to mention earn you free extras. We don't cover car negotiations in our negotiation skills training courses, but as many clients have asked for car negotiation advice, we decided to share this article.

Step 1: Choosing the Right Car

Before you go tearing out to the dealerships, put on the brakes, sit down and figure out what kind of vehicle you need. Forget about what you want. Yes, we must admit, this doesn't come naturally to most of us. Bear with us; you'll be playing into the dealers hands if you don't do this first. Think about what is going to suit you best. There are 4 things you need to keep in mind when choosing the right vehicle:

  1. Lifestyle: The car you're going to drive will need to suit your lifestyle. Your needs will be based on whether you are single, married, have children or are planning a family in the near future.
  2. Location: Are you rooted close to the downtown, nestled in suburbia or tucked away in the rural wilds? You also need to think about what kind of commute you take to work and give some thought to weather and road conditions.
  3. Hobbies: What do you do away from the job or college? Party a lot and need to play designated driver? Are you a hermit, seldom venturing away from the nest? Or do you like to race up muddy trails or slog your way up an icy mountain road to find that perfect virgin track of powder?
  4. Income: Yes, there's no escaping the budget challenge. We will come through on our promise to save you money, which means you can afford more. Your might fantasise about owning that rugged Hummer, racy Jag, or classic muscle car. Stop for a moment and ask yourself: Is it really worth working for the car loan company to meet payments? What can you really afford to pay? Writing this figure down now, will go a long way to preventing the dealer from talking you into paying more.

Vehicle Choices which car

There are a dizzying variety of makes and models to choose from. These include the coupe, sedan, hatchback, station wagon, SUV, truck, crossover vehicle or hybrid vehicle. The best advice is not to initially limit yourself to just one make or model. Your well intending friends or family may advise you otherwise - sdon't listen! Availability can restrict your ability to negotiate a better price with the dealership. If for some reason you can't negotiate a good deal on one vehicle, you can always negotiate your next best option. Keep your options open. Yes, this does mean that you need to do some research on your favourite types of vehicles.

Who do you Believe?

So who's reviews do you believe? Not the manufacturers. They have a vested interest to be overly favourable or for lying through omission. 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.

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 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 trunk or boot space.

DO NOT buy after test driving. Go home and do more research first.

Step 2: Researching Pricescar keys money

Want to show the dealer that you understand his 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. Many dealer salesmen will point to the sticker price helplessly and claim it as their sale price. Don't walk away from salespeople who do this - run!.

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 in negotiation as your zone of possible agreement.

So whilst you're aiming for the dealers Invoice Price, he's gunning for the Sticker Price - this is normal and is known in negotiation as each side's Aspiration Bases.

How do you uncover the Invoice Price?

Your best source is through the internet. Many US car buying sites list their invoice price, unfortunately Australian sites don't. The better sites also offer several buying tools. These tools will automatically calculate option/packages and add them to the total cost of the invoice price.

Dealer Holdback Priceused cars

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. The holdback price adds to the dealership's profit. So if you were skillful enough to negotiate the dealer down to their Invoice Price, they would still be making a sliver of profit..

In reality, trying to negotiate below the invoice price, leaving the dealer with their holdback price is highly unlikely. Use the holdback price when negotiating. Ask the dealer what their holdback price or percentage is. This will prevent the dealer from claiming that selling near invoice price will prevent him from sending his kids to college.

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. How do you know whether your car carries some dealer cash? Some car web sites keep track.

How do you find the car you want?

Once you've decided on the make and model, next you need to decide what else you want from the car. This includes the colour, packages, options, and offerings.

Some car manufacturer sites also alllow you to search the available inventories on their dealer's lots from the comfort of your home.

A Friend in Need

car shopping bagSince 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 take 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.

Is Time on your side?

The availability of the ideal vehicle is not something we should assume to be automatic. Dealerships can only store so many variations of vehicles. Salespeople can search for your ideal car with other dealerships. Or they can make arrangements to get a special order direct from the manufacturer. This process will likely require some patience and time.

Negotiation Tip: Power
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 you can get a better deal elsewhere. There is no greater source of negotiation power than having a strong fall back offer.

However, if you can't wait and must have that car, you can still get a good deal. Remember that for every day a vehicle sits on the dealers lot, costs the dealer money. The dealer is being charged interest on every vehicle sitting unsold on their lot.

Negotiation Tip: Flexibility
The more flexible you can be, the greater your options. The greater your options, the better a deal you'll strike. So consider several variations of the same make and model. As a buyer you will have less leverage negotiating the price if you are inflexible about the options and packages you want.

Final word on timing comes from the great suggestions coming through from diggers and other social media collaborators: Sales people are usually targetted on meeting monthly goals. These poor guys and gals earn or lose bonuses (often sizable bonuses) based on little more than the timing of that last car at the end of the month. You're out of luck if they've already made their quota. You're in luck if they are 1 car away. Bonus quotas are usually measured in terms of revenue, and not so much on profit. So provided they make the deal, it doesn't matter much to them whether they make a profit on your car. Your car will pay handsomely for profit from all the other cars they sold in the month. Yes, this is a gamble. Yes it's worth sniffing out the salesman to see if you can catch a whiff of desperation.

Play it Cool

On the other hand, if you know a particular dealership has the ideal car, play it cool. Don't show emotion to the salesperson. One strategy to consider is to begin by talking about a vehicle that has options and packages you know the dealer doesn't have in their inventory. Let them think you want the vehicle right now, and you can't wait for them to search and source it. Then reluctatntly give them an opportunity to present an alternative (which happens to be the car you really want). Of course if you're going to be making a compromise, then the salesman should meet you part way. How? By lowering their price or throwing in extras for free.

Loose Lips Lose Money

Veteran dealers are trained to size you up, ask you questions, and squeeze all the information they can in order to get you to say "Yes". So be careful. If you're the loose lipped type, then practice being the one to ask the questions. Just because they ask a question doesn't mean you are obligated to answer. Remember that no matter how charming and friendly the dealer may appear to be, it's more important to save money than make a friend of the dealer.

Steps to take before Negotiating Price

Luckily for you, there is a lot of fierce competition between car dealers. Not every dealer will ask for the same price.

  1. The first step then is to either email or phone the dealerships and ask the salesmen to give a price for the type of vehicle you want to buy. This allows you to compare the price differences without the hovering presence and pressure of the salesperson.
  2. Once you've found the best priced deal, make an appointment with the dealer. Salespeople are very familiar with the usual assortment of tyre kickers or just looking types, who breeze through their lots. An appointment tells the salesperson you are serious and in a deep buying cycle mode. When you meet with the salesperson, you can simply tell them what you are prepared to pay. Having done your homework, your market price knowledge puts you in the driver's seat.
  3. Trading in a used vehicle: One of the first questions every salesperson will ask is whether you are planning to trade in your used vehicle.

One obvious advantages to you of trading in your used vehicle, is so you can unload it without the hassle of advertising and selling privately.

The disadvantage is you will almost always receive less money from the dealership. The reason? When a dealership is looking at your trade-in, they are calculating the value of the used vehicle based on the wholesale value of the used vehicle. The dealer's wholesale valuation of the vehicle is always less than what you might receive for the actual market value (the price you could get if you sold it privately). There can be a significant difference between the wholesale value and the actual market value of a used vehicle. If you think the dealer is giving you a good deal on your trade-in, beware! It's not unheard of for a dealer to inflate your trade-in value just to close the deal - IF you've not shaved their margins.

Trade-in sales gambit

One of the most common gambits that a salesperson will try is to slightly raise the wholesale value on your used vehicle (usually after talking to the manager "to see what they can do for you"). Look out. They will be making up the loss in another area. For example, by increasing the interest rate on the financing or by trying to flog extra options at a premium.

Negotiation Tip: Power of Options
If you've got the time to invest into getting the best deal on your trade-in vehicle, then go to a number of dealerships. Have each quote you on how much they are prepared to pay for your trade-in. Let each dealer know that the price of your trade-in will be a strong factor in your choosing a dealership. Ask the other dealerships if they would be prepared to match or beat your best price.

Don't let any salesperson change the price they originally quoted or claw back extras. Either leave the dealership, call their manager, or call them up on their tactic.

Negotiation Essentials Summary

  • Ignore the sticker price (the most the dealership expects). The negotiating zone is anything above the invoice price, but much less than the sticker price. You should also deduct the holdback price from the invoice price. This gives you the actual cost the dealer pays to the manufacturer. The bargaining zone is anything above this price. You can put pressure on the dealer by making an opening offer on or near this price.
  • 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.
  • A hard hitting approach you may wish to consider is to come right out and tell the salesperson, you know what they are making on each vehicle (provided you've done your homework first). This puts them on the backfoot and tells them that you are to be taken seriously.
  • When you are ready to turn down a dealers offer, make them a final offer. Strengthen your position first by confidently stating that any other counter offer is unacceptable. Tell the salesperson that they should "Take it or leave it". Be careful to leave the door open for them to come back to you later. Tell them to call you if they can do a better deal. You may be pleasantly surprised.

Don't forget the Safety Options

Too many people lose their lives and loved ones every year on our roads. So please ask questions about the safety options. This can be yet another weapon in your armoury in levering the price downwards. Not every make and model has the same safety features. These include:

  • Driver and passenger airbags
  • Traction control
  • Antilock brakes
  • SIPS (Side-Impact Protection System)

Financing a new vehicle

If you have the full purchase price stashed away in your bank account, then skip ahead to "Signing the papers". There are 3 options to finance a new vehicle:

1. Cold Hard Cash

Having an abundance of disposable income on hand is the ideal situation. The reason? You won't have to dole out a bunch of extra money for interest, nor worry about factoring monthly payments into your budget. More importantly, by having cash to offer you have the flexibility to negotiate a better price (thanks for the great feedback diggers, please keep it coming!). Your advantage is in being able to choose whether you want to use your cash to do a deal without delay, or whether you can save more by keeping your cach and taking advantage of the dealers strong relationship with financing companies. Flexibility is too often underestimated in negotiation. The salesperson won't necessarily be more eager to negotiate with you to close the sale right away. So be careful to gauge whether the dealer is more keen for you to use financing or cash, and play it to your advantage. Don't play your cards too soon.

2. Obtain financing through the dealership

One of the two major lures used by many dealerships to draw you into their net is to offer:

  • Zero percent financing, or
  • Very attractive rebates.

Both of these are hooks and can catch the unwary off guard - they're not always what they seem. Zero percent financing will only be approved for individuals with a top of the line credit rating. If your credit rating is anything less than best, expect to pay a higher interest rate on a financed vehicle.

Rebates are another hook. By accepting the rebate now, you will have to accept financing terms using higher interest rates.
Manufacturer Financing Programs
Did you know that some manufacturers offer subsidised low interest financing programs through the dealership? These programs are expensive for the car manufacturers. They will in many instances offer a cash incentive to potential buyers who do NOT take up their low financing. Even though a dealership may be offering a lower interest rate than a lending institution, you may be eligible for a dealership cash incentive rebate which you might otherwise not receive. This puts extra cash back in your pocket.

3. Lending Institution.

The third option is to go through a known lender such as a bank or credit union. Find out from them, whether you can pre-qualify in advance for a loan, what their interest rate will be, and the period of time or term.

Insuranceinsurance form

Every new car buyer should be aware that cost of insurance can vary significantly. Not only will the cost vary from region to region but also on the make and model of the vehicle you are purchasing. When purchasing a new vehicle and your monthly budget is a crucial factor, scope out several companies on the internet. The last thing you want is to deflate your excellent deal on the car by not being able to afford the insurance.

Signing the papers

Even though you've negotiated the price, don't stop being vigilant. Don't blindly sign the papers they spread out for your eager pen. A clever dealer will still try to add to their profit margin, by talking you into last minute extra features. The most common ploys they might try on you include:

  • Additional but overpriced insurance
  • Extended warranties (A perennial favourite)
  • Rust proofing or undercoating (Already comes with the vehicle - also usually grossly overpriced. You can annually rust proof your vehicle at shops that specialise in this, at a much lower cost)
  • Paint and/or fabric protection
  • Anti auto theft plans

Turn these down with a simple "No thanks".

Extra Charges

Be sure that you can tell the legitimate charges from the illegitimate charges.

Legitimate charges include:

  • Sales Tax: known by a variety of names depending on the country or region where you are closing the deal.
  • Applicable state/federal/provincial/territorial registration fees.
  • Legally required and variable documentation fees.
  • Factory delivery charges. Of course if it's already on their lot, then dig your heels in and negotiate.

Depending on the country where you transact the deal, other charges which might be added onto the overall cost of the vehicle include:

  • Air conditioning tax
  • Luxury tax
  • Petrol or gas guzzling tax

Many or all of these extra costs may already be included in the initial price quoted by the car dealer. As this may not always be the case, it's best that you ask these negotiation questions early.

Illegitimate Charges

Less scrupulous dealerships may also try to slide across costs that are not legitimate. You should vehemently refuse to pay. These prices include:

  • Administrative Fees
  • Handling Charges
  • Advertising Fees
  • Additional Dealer Mark-up

Always refuse to pay these extra fees. Consider them absolute deal breakers. Advise the sales person clearly and directly that the deal is off if they don't sweep these charges off of the table. Walk away if necessary.

Read and ask Questions

As you review the paperwork for your new vehicle, trade-in ownership transfer, and new vehicle registration - make sure that you understand what you are signing. Read all these papers carefully. Do not simply accept the dealers' explanation. If there is anything you don't understand - ask questions.

Final Vehicle Inspection

Always do a final last minute and detailed inspection of the vehicle before accepting the keys from the salesperson. Scan the vehicle from various angles and look for scratches, dents, discolouration, or anything else which mars the exterior. Common signs of wear and tear can be seen on the top of the shift stick / gear stick and pedals. If these are worn, then ask more questions about the real mileage. Also look out for any fluid leaks and scan the interior one last time.

Happy Trails!

happy drivingWhen you boil it all down, buying a car doesn't have to be a mine field. By doing your homework and research beforehand you can easily negotiate a better price on your purchase. Now that you know the gambits many salespeople typically try, you are better equipped to counter these gambits to your advantage. Most importantly, with proper preparation you will turn the tables on the dealers. Theirs is a competitive environment, and so long as you can take your time, you should be the one calling the shots. We hope that you get a great deal, and enjoy driving safely.

 

Negotiation Lingo:

Price Ranges: In negotiation, the maximum price the dealership (seller) hopes to get is known as the aspiration price. The minimum amount the dealership is prepared to accept is called their reservation price. As a buyer you also have your own price range where you are prepared to bargain. The overlap where you and the dealership will do the deal, is known as the bargaining zone. In this range you will agree upon a price.
Positional Negotiation Tactics: When you're unlikely to do business with the same dealer again, and you don't have a reputation to hold up in the car market - then it stands to your advantage to use negotiation tactics. We would not recommend your using positional negotiation tactics in your professional business negotiations.

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0 of 1 people found the following comment useful:

Let's all go out and earn some "free extras". - 2014 Aug 7
Commentator: Calvin Williams (United States - Colorado)

"I've worked in the automotive industry for 16 years. I've watched the income of our hard working men in women steadily decline every year as the internet becomes a bigger part of how people shop. Where besides a car dealership, do people expect to receive a service and not compensate the person providing it?
I worked about 65 hours a week last month. Most with most of that being glued to a computer sending price quotes to customers who were stroking 5 other salesmen from other stores, right along with me. I ran back and forth across a few acres of cars in the rain or hot sun. I had days I left my house at 7 AM and was still working a deal (for below invoice on a $65K piece of inventory) at 10:30 at night. I sold 15 cars which isn't too shabby. All this for about $3700 gross income. I do have an education and am very good at what I do by the way. How was your month? Did you have to battle with your clients to just get paid for your services? You tell me, am I leading you to believe I'm over worked and underpaid?
Eventually all the good people in the car business will figure out that it just isn't worth it anymore. You'll be left buying a car from some schmo making $10 an hour regardless if you buy the car or not. You should apply"

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2 of 5 people found the following comment useful:

Can they charge dealer fees twice???? - 2013 Apr 16
Commentator: Gen (United States - Florida)

"I just bought a 2004 civic and within a week it was returned due to oil pump seal leak.
They tried to repair it and it still leaked, tried again to repair it and we decided that we did NOT want the car and looked for another newer car from same dealer.
Now they are transferring the down payment we gave for the civic over to the newer car. My question is this.

We already paid $699 dealer fees for the civic. Now they are doing a new contract
And in their fees I see a $699 dealer fee in the total. Can they legally add the $699 again ???
We are getting one car from them !"

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1 of 3 people found the following comment useful:

SF - 2013 Apr 16
Commentator: Sam (United States - Colorado)

" Dealers are now ripping customers off when customers start haggling prices, when the customer insists that the price get lowered to a point where they cannot get a profit they immediately ask the service guy to go in the car and change some expensive original part for a generic part so they can make money. People think they are smart but in reality they are stupid enough to think that dealers will sell you for a price that they cannot afford."

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10 of 13 people found the following comment useful:

you are a hack! - 2013 Jan 14
Commentator: john moore (United States - Wisconsin)

"anyone whom self professed salesperson says this fear the cheat type info is probably short term or dishonest and we are glad to be rid of them. true professionals dont have issues. find reputable dealers dont play lying games. mixed messages will waste your time and get you the wrong vehicle.a quality salesperson will help you make the correct choice. use internet price sites as research. use more than one many give different prices. dont treat human beings poorly,it belittles all partys involved. find dealers with high satisfaction scores. you will get the best service.remember buying a vehicle is not a game.professionals dont act foolish. niether should you. in this economy many jobless people have found careers in sales. that doesnt make them cheats and liars. "

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12 of 29 people found the following comment useful:

good advice but........ - 2012 Nov 18
Commentator: Just a random car sa (Australia - New South Wales)

"I stumble across this website and i find it is useful but NO mention of loyalty. Think it about, if the salesman spend few hours showing you the car and taking you for test drive and giving you a good price and then you took his price to shop against another dealer. The other dealer beat it by $500 and they get the deal just simply doing so with just a phone call or spending just half an hour with you?? Have you ever wonder nowadays people integrity had gone out of windows? Have you ever realize what happens to people's common courtesy gone to?? This website's advice is useful but it is teaching people to treat everything as business dealings without personal emotion. It is teaching people to take salesman's time and effort for granted. Yes, it is their job but they have other opportunity to sell a car if you are not prepare to buy from them while you request service from them when other people are in the showroom ready to buy a car. Sometime a salesman need to work hard to come up with a good deal like getting their managers to agreed of a certain price or getting the valuer to pay more for your trade in and you simply take their offer to someone else to hand over your purchase to them without giving the original dealer a chance"

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22 of 63 people found the following comment useful:

I'm a rip off merchant? Hahaha - 2012 Aug 17
Commentator: Michael (Australia - Victoria)

"I sell cars for a living and these articles are always the same. I love how when we sell a car for what it is advertised for is some how ripping someone off. If that's the case, I get ripped off ever time I buy fuel, milk, apples, socks, t-shirts, shoes, hats, soap, chocolate, pens, paper etc etc etc

Question for the author of this article, how do you do your research to write these articles? Have you sold cars for a living or do you just take a guess? Seems like you're ripping off your readers to me as you're just wasting their time by reading this and not giving enough information to get the best deal or avoid being ripped off. If anyone wants to know the best way to buy a car, it's pretty simple. Work out your budget and STICK TO IT. Remember all cars pretty much drive the same, so don't be too picky unless you have a favourite car, in which this will make buying it even easier. Don't play dealers against each other, you will be found out and this will ensure you do not get the best possible customer service for future purchases. Be honest. Same with us sales guys, when you lie, all trust and respect go out the window. If you are not willing to buy today no matter what, tell us. If we ask the reason why, tell us. This way you won't waste your time or ours. We are here to help you buy a car, not sell you one. There are more important things in life to worry about than buying a damn car, get on with it and move on. Any questions? Feel free to ask and get a frank answer. I've been selling cars for years and sell 90% at sticker price and my customers thank me for it and keep coming back and referring their family. I must be evil and ripping them off? Far from it..."

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21 of 24 people found the following comment useful:

THE ONE THING YOU MUST DO - 2012 Aug 11
Commentator: Astute Aussie Buyer (Australia - Queensland)

"The one thing, but possibly hardest thing when your excited and in the moment, is once you have what you in that moment consider a great deal, WALK AWAY. Tell the person you are dealing with you need to sleep on it/talk to your hubby/wife about it/consider the other offers you have against this etc. Then GO HOME, calm down, and do research on what you are about to sign onto. Think hard about how happy you are going to be in 1 or 2 years. THIS MUST BE DONE AWAY FROM THE CAR YARD. Was this really the car you wanted? Does the deal look good compared to what you can find on the internet? Worse comes to worse, the dealer says deposit now or someone else might buy it. BIG DEAL - so you find another car and deal that suits. Anyone who does not walk away before signing to get out of that moment to think clearly is going to pay for it."

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6 of 35 people found the following comment useful:

poor civil servants - 2012 Aug 10
Commentator: paul warwick (Canada)

"Salesman have to feed there families too and they don't get money handed to them like teachers policeman and fireman.
They expect everything for nothing and nobody else should make a dollar."

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22 of 32 people found the following comment useful:

Car Negotiations - 2012 Mar 24
Commentator: Carter (United States - Illinois)

"This article has a few good points, but wasn't researched very well. With the internet available to everyone who wants it and information on every vehicles pricing available, the days of having insane amounts of mark up are over with. I just recently joined the sales force and am doing ok. I have almost always been in the top 3 salesman at my dealership and am currently in number 1 for the year. Whoever said that we sell 10 cars a week is full of bs. Unless you work in a very large city, you will never see those numbers on a regular basis. On a GOOD week we will sell 2-3 cars. Commission for a salesman on a brand new car is almost always a "mini" which is $100. About half of the cars you sell will be new. On an decent average month you will sell around 10 cars. If half of those are new, you are looking at $500 for half of the cars you've sold that month. Used cars average out between $300-400 commission depending on the car. If we average that out to 350, you are looking at $1750. Add in the $500 from the new car sales and you are at $2250/mo. We are not out to screw anyone. I love my customers and would do anything to help them out. Car sales depend on repeat customers, if you screw them they won't come back......"

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19 of 21 people found the following comment useful:

Brian must work in the biz - 2012 Mar 4
Commentator: Sean (United States - Missouri)

"Brian the dealer wont try and rape you? LOL… The most important fact in buying a car is doing research. Yes the dealers need to make money but you can find the same car on different lots for varying amounts. The ones with lower amounts are the ones who are actually trying to move cars and make money at the same time. The ones with the higher prices are in it to screw you. "

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31 of 40 people found the following comment useful:

Don't listen to the CAR DEALERS commenting here - 2012 Feb 15
Commentator: Beth (United States - Illinois)

"This article is grade A+++. Brian, one of the sales people or maybe even a car dealer himself is telling you that this information is bad advice. That's like the devil telling you that it's bad advice to go to pray to God. Of course he's going to say that! He's the devil people! So, listen to this article and beware! Car dealerships and car sales people live solely off of YOUR MONEY and the profit they make off of you. I know. I used to be a car sales person and got out of the shady business because it's so corrupt! BEWARE and take this article to heart! Thank you for exposing these people and writing this article!"

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21 of 55 people found the following comment useful:

Dealer Hold Back - 2011 Dec 12
Commentator: Brian (United States - Ohio)

"While knowing about the dealer holdback price, it is absolutely not fair in anyway to ask for it or negotiate with it. Dealer holdback isnt a hidden amount of profit, it is used for advertising and getting the car ready to sell you. While you are trying to negotiate the delaer down, remember that as long as you are fair with them, they will be fair with you. There is an amount every dealer needs to make on a car just to keep the dealership going. If everyone negotiated past the point of invoice on a new car, a dealer wont be around long. So Be fair, be firm, dont try to rape the dealer, he wont try to rape you."

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33 of 37 people found the following comment useful:

lesson learned - 2011 Nov 5
Commentator: Josh E (United States - Wisconsin)

"to the car dealers: I TRIED BEING NICE.

I was looking at a 2011 Challenger. I was completely honest with him; I told him I can afford the vehicle, that I liked it and that the car seemed like a reasonable fit for me. I also explained that it is my first time buying a car (true, but I also read online some about "how to negotiate for a car"). I really just wanted to cut the BS and do a transaction like honest human beings.

He said he would give me the best price he could. He "talked to the manager" and came back, looked me straight in the eye, and said the best he can do is take $100 off the sticker price. I said, "Really, that is the best offer you can make?" He said, "Yes."

NEXT TIME: hardball.

PS: these tips are grade A"

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14 of 17 people found the following comment useful:

Works for us every time. - 2011 Oct 26
Commentator: T (United States - Washington)

"My husband was able to buy a mustang three years ago for 3k under what the dealer asked for it simply by having cash in hand, and the guts to walk away and come back. (7k as opposed to their desired 10)

Yesterday, I negotiated up over 1.5k for my trade in, and down about a grand on the new vehicle by using the following tactics-

I was ready to write a check for payment in full, so I had a very firm bottom line. I wasn't going to spend more than I had budgeted.

I did my research, and knew what my car as well as theirs was currently going for. I told them of this.

I brought up a negative review on google regarding their financial department.

I made phone calls regarding a vehicle I was interested in as well as this one at a different dealership.

I walked out only dropping 4.5k out of pocket for a car that's valued at about 8k, for a total 'sale price' of 8.5k all taxes/fees/what not included. They had originally been asking 10k, no taxes/fees/whatnot. The mustang has exhaust problems, the ABS light on, and a lot of cosmetic damage, so they're probably not making as much money as they like on this exchange. I'm pretty sure my husband redlined it at some point...

Not as awesome as my hubby, but still feel accomplished."

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16 of 23 people found the following comment useful:

Comparing Car Dealerships to Macy's - 2011 Aug 26
Commentator: In the market (United States - California)

""Where else does a customer walk into a store and insist on paying only invoice - ever tried it at Macy's?"

At Macy's, the price that *everyone* pays is advertised. At Car Dealerships, the price changes from individual to individual. That's why people feel like they are being taken advantage of (do you dealers honestly claim that if you wouldn't charge an unsuspecting buyer $100 more if you could?)"

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17 of 23 people found the following comment useful:

delivery charge - 2011 Aug 25
Commentator: Ben Charles (United States - Ohio)

"never pay the delivery fee for a new car.
they don't pay your way to get to the dealer.
you DONT have to pay it. I bought 2 cars in the last 2 years & may have gotten robbed elsewhere but I didn't pay the delivery charge of $750 per car..."

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7 of 11 people found the following comment useful:

very helpful - 2011 Aug 25
Commentator: Rosanna (United States - Nebraska)

"This was very insightful! I am going to be much better prepared to deal with pushy car salesmen now!"

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12 of 16 people found the following comment useful:

Useful - 2011 Jul 11
Commentator: Tiffany (United States - South Carolina)

"Very useful information"

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12 of 16 people found the following comment useful:

Very Useful - 2011 Jun 10
Commentator: Bex (United Kingdom - Cheshire)

"Very good information, thanks."

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15 of 23 people found the following comment useful:

Interesting - 2011 Jun 8
Commentator: GK (United States - California)

"there's always more than one way to get what you want. Check this out if you want another approach
http://wp.me/P1uhKF-2w"

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33 of 56 people found the following comment useful:

Look at it from both sides...Part 1 - 2011 Apr 1
Commentator: The Car Salesmen (United States - California)

"I know that this is an old post, but after reading it there are a few things that people do not seem to understand. You see, I am a car salesman and I agree that there are many schemes that are used to screw the consumer out of thier money. However, these schemes are NOT controlled by the sales person unless they themselves own the car lot. We all have sales managers that have all the numbers, invoices, and interest rates at their fingertips. So it's the managers that really do the screwing and NOT the sales people. While there are sales people that are really good at their job and can ask the right questions to get a better understanding of what the customer wants, most sales people have to pry hard and long to get any real information from the customer until the buying process has already started. This makes the sales process twice as hard as it needs to be. If you simply tell the sales person what you are willing to pay (AND NOTHING OVER) you will always (at least from me) get an honest answer as to whether or not the car will work for you. You as the consumer can also try telling the truth once in a while yourselves. Dont tell a sales person youre interested in anything if you are not. "

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26 of 49 people found the following comment useful:

What The....? - 2010 Sep 13
Commentator: Waiting for the whin (Australia - South Australia)

"Please read this and then come and buy a car from me... Some points in this are a given in that they are common sense things everyone should do when buying a car, or virtually anything for that matter. What this article doesn't state is regarding used cars, the money that goes into the car to go through a workshop or panel shop if needed etc... It doesn't state that dealers don't actually own these cars until after a certain amount of days, and then when those days are up the dealer has to pay them out, which is not easy for a dealership, even a big dealership!.
There ARE rip off merchants out there that get a traded car give a wash and put it on the yard, but the majority actually put the cars through a workshop to get the car up standard (These are good dealerships).
The average car salesman should make more than $40k a year! don't let anyone say otherwise because they wouldn't have a job if that's all the business they can drum up, BUT the average profit on a used car is around 9%, which if you look at a grocery store or computer store the average mark up is in excess of 35%+ then you cant really whinge.
Do Your Homework
Be flexible
Don't listen to tools and be talked out of a car if it's a good deal
BUY AT THE END OF THE MONTH"

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22 of 50 people found the following comment useful:

under paid? - 2010 Jul 30
Commentator: AC (United States - Louisiana)

"@S.G, you talk about how you work 6 days/50-60 hours a week, equaling $10-12 an hour/$40k a yr. I'm in the military and during exercises, I have worked 7 days/84 hours a week for 3 months straight(1 hour lunch breaks), $6-7 dollars/hour. I fix bombers that are 50 years old through the scorching hot days of summer and the coldest nights of winter.

Do you salesmen, really think you are overWORKed and underpaid? I hate my job, but I signed a contract, it was my decision. Although, I don't like my job, I'm sure there are more jobs that are much worse than mine that pays lower.

If you TRULY think you are overworked and underpaid, you have the option to quit. Finding another job shouldn't be tough, since there just so~ many jobs out there that pays over $10-12/hour for less work than what you do, right? Right."

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5 of 18 people found the following comment useful:

Salesmans POV - 2010 Jul 29
Commentator: Motz (Australia - Western Australia)

"im a salesman, and have been selling for 5 years, i take the punt that 85% are un-educated and dont have the internet.
What you have put up is okay but at the end of the day its the dealership that offers service and warranty to the customers. if they like and trust you they will spend more and buy from you. i do the same when i go shopping."

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73 of 89 people found the following comment useful:

Amused by dealers posting - 2010 Jun 22
Commentator: G.A.D. (United States - Massachusetts)

"To the dealers complaining about customers "wasting your time" when following the tips listed: TOUGH LUCK. IT'S YOUR JOB.

1: When I walk onto the lot I get 3 people hounding me, followed by them showing me options which exceed the budget I stated or lack the prerequisites also stated. You waste your own time by trying to sell me on something you were initially told I don't want.

2: You want the highest price possible. We want the lowest. You knew this is how it works when you got hired. If you don't like it then find a new line of work.

3: It's YOUR FAULT this is even necessary. When you expect $16,000 for a car but ask $20,000 you create the necessity for strong-armed negotiations. If you asked a legit price, you'd save us both time.

4: If you think it isn't absolutely necessary for a person to go home and think over their options then you ARE A SCAM ARTIST. People must always review options in a comfortable environment before any major decision, including car purchases.

5: If customers getting low prices means you can't put food on the table, then turn down the customers offer or find a better paying job. We aren't forcing your hand. If you accept the offer then it was WITHOUT QUESTION a fair one. Don't whine."

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17 of 29 people found the following comment useful:

Feel So Sorry For Car Salesmen! :( - 2010 May 15
Commentator: K (United States - Colorado)

"OMG all these reviews talking about poor poor car salesmen. Trust me we all feel REALLY sorry for you. Theives also have families to support but don't seem to try to justify ripping people off like this! I am sure people are going to go buy a car with the car salesmans family's well being in mind over their own. Give me a break. Yes, the car industry is poor right now so they should be willing to negotiate a low profit rather than none at all. As for Macy's- you poor saps that pay retail are just stupid. You may not call it a scam but it is...90% of items at Macy's go on sale for AT LEAST 25% off and patient folks can purchase clearance items at close to cost. If you are content paying retail at a department store...you go right ahead and pay more for a car b/c you pity the salesperson that pretends to be your best friend."

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20 of 54 people found the following comment useful:

whats the point?? - 2010 May 3
Commentator: under paid and over (United States - Washington)

"first, i can appreciate your enthusiasm to want to help the uneducated consumer. second, the info that you wrote would be very helpful in buying a new or used car.....especially if the customer wanted to get the least amount of help and deal with the most unfriendly salesmen. amazing. you actually have made the process much much more difficult then it needs to be or should be. i would agree with the idea of figuring out what your needs and wants are in a vehicle first before you venture out to a dealership, tick off salesmen for wasting his valuable time, and then have a bad taste in your mouth from then on. jk. it will only help a salemen to show you what you want. trust me they dont want to spend 5 hours with someone and show them 10 cars and have them go home to think about it. also know your budget. that way the salesmen will only show you cars that will work into your budget. most importantly, salesmen are humans too. they have feelings and famlies. the word PROFIT is not a swear word...remember. if you really want a good deal just go to a dealership with a good attitude and be happy and excited. remember you are getting a new vehicle not getting ten teeth pulled. i pray for you jerks....."

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12 of 14 people found the following comment useful:

Getting Others To Help You - 2010 Feb 11
Commentator: James (United States - California)

"In my experience... it's pretty hard to make sure that I get the lowest price possible because dealers always have more negotiating experience than I do. If you are one of those people who doesn't have the time to waste on visiting dealer after dealer, you should check out Carsala. They have pro negotiators who will do it for you.
"

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13 of 13 people found the following comment useful:

Delivery times - 2010 Jan 13
Commentator: Cameron (Australia - Australian Capital Territory)

"For new car purchases, make sure you put in dealer delivery times into the negotiation and if you can include a "delivered before" date. I have been waiting weeks after when the vehicle was promised. I could have easily privately sold instead of trading in and my late model car (my10) is getting older faster."

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11 of 72 people found the following comment useful:

Usless Junk - 2009 Nov 2
Commentator: 15 year in the Business. (United States - Massachusetts)

"I would eat you alive or show you the door. Negotiating tips like these make it harder to buy the car you truley like and will be happy with. TO most people a new car is a status symbol, looks and extention of their personalilies.

THe internet is a good source of info, But the internet never deliveried a car to any of my customers or purchased their trades.

See if Vehix.com will print you a check!!!!!!"

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12 of 30 people found the following comment useful:

you all have some truth - 2009 Jul 12
Commentator: M.C. wier proud car salesman ret. (United States - Florida)

"the article was relitively good and had some good info, however, an auto dealership and the salsmen or women, are as different as a box of super large crayons, in the way they sell cars and why. Yes the bottom line, as with any other business, or job, is to make a large enough profit to stay in business counting all the expenses involved. In the case of new car dealers you are talking investments, and therefore payments of millions of dollars to stay in business, a full page ad in any sizeable city news paper is 10s of thousands of dollars not to mention TV and radio.
as for the sales men I was one of the best in the world (top %5 5 yrs, and top 2% world wide in a 35 yr. carear) am I living in a palace in the bahamas, no im living on social security like many others. there is no retirement pay in the auto business, they have to make it while they can, and what I haven't seen here is the fact that most car people like foot ball players burn out in 3 to 5 yrs, Are there preditory dealers and sales people? Yes there are, but the truth is none of last very long"

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26 of 59 people found the following comment useful:

We don't make as much as you think... - 2009 May 5
Commentator: S.G. (United States - Florida)

"The average car salesmen, work 50-60 hours a week, 6 days a week. The average car salesmen makes under $40,000.00 a year. If you break that down, it is a 10-12 dollar an hour job. Some might say that is not bad, however you do not know what goes on behind the scenes. With the amount of brain damage you go through each day in the car business, it is the hardest money you can ever make. Picture this, you standing outside waiting for a customer to pull up (who hates you before they even know your name,) They spend on average 2-3 hours with you, driving different vehicles, running around the lot, presenting the vehicles and then they ask for a brochure. You did not get paid a single dime, and it's not over! Now you have to go to your sales manager, tell them the customer wants a brochure, then the managers scrutinize you "what did you do wrong?, Why won't they buy today? Did you do this? Did you say that? Than we have the walk of shame bringing the manager over to the customer, putting yourself and the customer in an uncomfortable position, all for 10-12 dollars an hour... And in regards to a comment posted on here, the average car salesmen only sells 2-3 cars per week. NOT 10!!!! "

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28 of 42 people found the following comment useful:

Numbers game - 2009 Mar 10
Commentator: Derek Louey (Australia - South Australia)

"This figures tallies well with another link I saw on the web:

http://au.answers.yahoo.com/question/index?qid=20080426144050AA1hM4H

RRP is about 8-12% over the invoice price.

There is plenty enough profit (without other charges) to look after everybody.

For a 20K car the profit would be about $2500.

Half ($1250) can cover the customer costs and half ($1250) pays for the dealer's costs.

With this the customer can have his 12 month rego and insurance fees paid for.

The dealer gives half his share ($625) to the manufacturer (3% holdback price or 'pack'). The other half ($625) gets split between the salesman and his company.

The company keeps three-quarters ($470) and the salesman gets one quarter for his commission ($155).

If the salesman sells 10 cars per week then his weekly income is $1550. Over one year that amounts to 70-80K.

I don't think anybody has to worry that the salesman is going hungry."

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5 of 12 people found the following comment useful:

good advice - 2009 Feb 20
Commentator: dr rao (Australia - Victoria)

"thank u"

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37 of 74 people found the following comment useful:

Put yourself in our shoes - 2009 Jan 10
Commentator: Kewl1973 (United States - Missouri)

"I would love to read a truly well researched article on how to get the best deal at the dealership. This article neglects to mention the salesperson. The salesperson is the one that spends their time and energy getting to know what you are looking to buy. It's the salesperson that suffers when the customer insist on invoice pricing. Where else does a customer walk into a store and insist on paying only invoice - ever tried it at Macy's? Their true invoice price for that $60 blouse is about $2-$6 but no one ever questions that or calls it a scam. Yes I am a car salesperson. Do I expect my customers to pay full MSRP? NO But I would like to continue in a feild I enjoy and be able to take care of my family. My personal philosphy on how to get the best deal is: 1 Inform me of what you require in a car. 2. Let me know of budget restraints up front- so I don't put you in a car too high for your budget and disappoint both of us. 3. Do not demand a 'best price' or theaten me with going elsewhere, by doing this you have just assured me that I am personally not going to make any money on the deal and that you are wasting both my time and yours. 4.Remeber negotiating is expected - rudeness is not. 5. Just be nice. "

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15 of 21 people found the following comment useful:

Never negotiate face-to-face! - 2008 Dec 5
Commentator: Ethan Matthews (United States - Florida)

"Do your research on line, there are a lot of great resources (autotrader.com, cars.com, kbb.com). Sites like these can get you the invoice pricing. From there visit a site like priceanddrive.com and place a price a little lower than invoice. The dealerships actually compete against each other. I agree with the other comments. Always talk in terms of out the door pricing."

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31 of 40 people found the following comment useful:

Drive out Price - 2007 Apr 19
Commentator: John (United States - Texas)

"I find it much easier to compare dealerships by demanding the drive out price. THis way there are no hidden fees or charges. I can then compare apples to apples.

I normally figure out the car a I want and email all dealerships in 200 miles for drive out price. I saved 2k on my last car for driving 3 hours. Thats $660 an hour. "

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9 of 21 people found the following comment useful:

Timing - 2007 Apr 19
Commentator: Luke Hallard (United Kingdom - Bromley)

"To put additional pressure on the dealer, try to time your purchase in the last few days prior to their submission of figures for the current sales quarter. This timing can vary, but is consistent between dealers of a particular manufacturer. Call around prior to detailed negotiation, it can be a question the dealer will be happy to answer."

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17 of 29 people found the following comment useful:

Financing Tricks - 2007 Apr 19
Commentator: Mark (United States - California)

"A lot of car dealerships will focus on a monthly payment, rather than the purchase price. So, for example, if you say you want to pay $300 a month, they will gladly do that - but perhaps for 72 months.

Make sure you understand what you are willing to pay and exactly what the payments will end up being and for how long."

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21 of 58 people found the following comment useful:

Not all dealerships are out to rip you off - 2007 Apr 19
Commentator: Jonathan - The Import Warehous (United States - Colorado)

"Anyone who is seriously looking for a used car need only go to a brokerage or dealership where there is a "one price" policy. I work for a brokerage selling "off lease" vehicles and we don't negotiate on price 1 cent. Cars are a marketable good, like apartments and gasoline. A good dealer will research the specific market you are buying the car in and price the car he is selling competitively for that market. Not all dealers charge dealer handling fees or filing fees. NEVER BUY NEW!"

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44 of 56 people found the following comment useful:

Don't Dance with da Dangerous Dealers - 2007 Apr 14
Commentator: Steve Franklin (United States - California)

"Got ripped off by a dealer on my first set of wheels. Wish I'd read this first. Thing was he seemed so friendly - guess that it was shallow charm. So the hard knocks school of negotiation slapped me with a bill of $750 (the overcharge)."

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