Price Negotiating is a major obstacle for many used car buyers, so make sure you are prepared. |
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When it's time for price negotiating, keep this in mind: they have one car to sell you, and you have many to choose
from. You need to be the one in control and make sure they know that if you are not satisfied with the car AND the
price, then you will take your business elsewhere. Up until The Auto Evaluator, consumers would go into the
negotiations empty-handed. Now, you will be armed with a checklist of possible items which you will bring to their
attention when they want to receive full price for the vehicle. Even if the list came up green in every category, price
negotiations are often still possible.
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First off, determining whether or not you're getting a good deal should be based on the checklist results as
well as your research, rather than by how much the seller / dealership is willing to reduce the sales price! If you
get caught up in the price, then sometimes you might lose sight of the vehicle you really want, and settle for one you think is
a deal thats too good to pass up. Keep this in mind: you will purchase the vehicle once, but your ownership can last for
years. This is why we have developed The Auto Evaluator around the concept of making an educated purchasing
decision based on facts, rather than opinions. By taking this approach, it will help you to focus more on the vehicle you are
looking to purchase and its condition before you even begin price negotiating
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Always refer to your checklists for answers.
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When you have made your decision on which car you want to purchase, you may choose to enter price negotiations
over the final selling price. If so, refer to your Auto Evaluator check lists. Did they come up all green? If not, use that as
your stronghold and tell the seller that either they fix the problems on your lists or they give you a discounted price, or
both. If they were all green, it will show them that you are aware of the vehicle's quality and if you offer between 3% - 7%
less than their asking price, they should consider it. The best way to negotiate is to use the same technique top sales
associates use on a daily basis to get a commitment from their customers. Use the phrase "If you'll reduce the price to
(your price), I will take the vehicle home today!" If there is an item the vehicle needs, such as tires, you can also let
them know that if they fix the item that you will take delivery. Be sure you have every intention of purchasing if he/she is
able to meet your objective! |
| New Car Price Negotiating |
When it comes to new cars, there is a slightly different approach that should be used. First of all, with the introduction
of the Internet, it's possible for consumers like yourself to find the dealer invoice price as well as dealer incentives.
Dealerships will need to make some sort of profit and although there are websites which try telling consumers to negotiate
holdback, this kind of practice will typically lead to a negative experience and will rarely work to your benefit. It is
possible however, to negotiate dealer incentives. These are different from consumer rebates because these incentives are
paid directly to the dealership instead of being applied to your purchase price.
Another great tool you can use is getting Internet Quotes from local dealerships. This technique is realitivly new and
can sometimes lead to great savings. Since dealers want a chance to earn your business, you can often get a lower price
through emailing the sales department. The approach which dealerships take towards these leads has been changing over
the last couple years. They are now being trained not to give exact prices over the internet for the simple fact that you
can't buy a car over the internet. Until you are willing to actually come into the dealership, you are only a prospect. Once
you are sitting in the Sales Associates office, you are now a customer. Some dealerships can receive hundreds of internet
leads a month, many of which are not even potential customers. If you choose to get internet quotes, don't be
discouraged if the dealerships give you the 'run around'. Instead, use it as a way of getting to know the dealership as well
as the sales consultant by asking vehicle questions, such as options, colors, and if they are expecting additional vehicles
anytime soon. By doing this, it can help you build a relationship with the consultant, which can make your buying
experience a smoother one.
Here are some common phrases used at New Car Dealerships:
Frontend Profit: This figure is what most sales consultants commission is based on. It is
calculated by taking any profit above the invoice less any applicable fees.
Backend Profit: This is the amount of money the dealership receives from holdback, stair-step programs,
quarterly bonuses, and dealer incentives. Some dealerships help supplement sales consultants by giving them additional commission if they help achieve a quarterly unit bonus.
Dealer Invoice: This is the price the dealership is charged for a specific vehicle. This price can vary from vehicle to vehicle as well as from each dealer.
There are additional funds which the dealers receive after the sale is complete, namely holdback, however for all practical purposes, this is the bottom line for the dealer.
Dealer Holdback: This is the amount of backend profit a dealership will receive once the sale is complete.
Although this is profit for the dealer, this is not typically negotiable and its purpose is to help keep the dealership operating.
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If they are unable to meet your price, they will either let you know that they can't do it, or sometimes give you a
counter offer. Which ever the case, the decision to proceed at this point will be up to you. If you still feel the price is too
high based on your research, then you might want to give it some time to see if you can either find a vehicle better suited
for you, or for the seller / dealership to lower the price. Once you have agreed on a price, then it's time to proceed to the
'Closing the Sale' if buying from a Private seller, and 'Dealer Worksheet' if buying from a Dealer.
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