About To Step Into the Auto Dealership Belly of the Beast!
September 22, 2011 5:45 PM   Subscribe

What is set in stone in car negotiations?

I am about to go into a dealership and want to have my ducks lined up.
I've got information re: MSRP, Invoice price, Total dealers cost, etc.
I want everything standard with the possibility of one package (GPS, etc.) and a maintainance package. I am also going to lease the vehicle. If I stick to everything standard I am thinking there is not much to haggle about.

My question is are the packages negotiable and is the lease agreement negotiable? I will probably go through the brands leasing department.

Also, if one purchases through AAA or Costco are those numbers set. The on-line ads state "no-haggling" which I take to mean no negotiaition
posted by goalyeehah to Work & Money (11 answers total) 5 users marked this as a favorite
What is set in stone in car negotiations?

posted by mhoye at 5:57 PM on September 22, 2011

If you're going for a lease special, the terms (and sometimes even options) are often not negotiable, but otherwise pretty much everything is fair game.
posted by wierdo at 6:06 PM on September 22, 2011

Best answer: The MSRP is set in stone, but it's functionally irrelevant.

The other things that will be fixed is what packages the car has - if you're choosing from inventory, you're stuck with what is available. They can order/trade a car from another dealer, sometimes, but other than that, you pick from what they have.

Lease agreements themselves aren't negotiable, though you'll have some choice on terms (24/30/36 month) and mileage allowance and deposit/down payment.

So, there isn't a lot to negotiate. If you can get the price down, you'll save yourself some money. You're paying the difference between the price and the predicted residual, so you want that difference to be small. Some dealers aren't that willing to negotiate on a lease, but it's worth an effort.

Be sure to ask about any discounts (recent grad, military) or offers you can also use.

Make sure you read the paperwork closely - mistakes do happen.

At the end of the day, you should get a deal you are happy with. If you are unhappy for any reason, walk away. The world is full of cars, get one you like.
posted by Pogo_Fuzzybutt at 6:09 PM on September 22, 2011 [1 favorite]

Response by poster: So I negotiate price and then, after it is agreed, choose the packages I want.
posted by goalyeehah at 6:15 PM on September 22, 2011

I think the better way is to have in your brain an acceptable price for the car you want, including all of the package stuff. Never tell them what that price is, of course. The reason is that if they offer you a car with less than what you want, you can use that as a negotiation tool: "No GPS? No thanks ... unless you can lower the price down even lower."

When car dealers try to sell you cars, they try to sell you cars that are physically on the lot. These cars include packages already. Dealers don't want to have to add stuff or take stuff away from the cars on the lot, they want to sell you exactly what's already there. The good news is that you will likely find a car with the exact package you want. (If you don't, then move on to the next lot.)

The "no haggling" vis-a-vis Costco is total b.s. I've haggled on a Costco membership deal. They just start at a lower price than if you just walked on the lot, but that doesn't mean they bottom out at a lower price. It's a great sales pitch for the dealership: they can pretend that the price they give you is a super-awesome deal, and that you're only getting it because of your special status, and you should just take it because, wow, they would never lease a car for so little.

The nice thing about going through Costco is that the dealers should treat you extra nice; Costco throws dealers a lot of service, and if Costco hears that you had a bad experience at said dealer, then Costco can revoke that business. Keep that in mind, use it as a tool.
posted by jabberjaw at 6:29 PM on September 22, 2011

Best answer: No, you'll find the car you want first - with the features and whatnot you like. Take it for a drive, if you haven't already. Make sure you like it and are happy with it.

If you don't need the car right away, don't settle if they don't have one you like.

Once you have the car you like in mind, then you'll negotiate the price.

Whatever you do, don't mention what you want your monthly payment to be. It's a distraction. If they ask, just say "low". The only number you have control over if the starting price of the car, and you want that number lower.

One last thing - It is important to keep in mind that above all else you should be happy with the deal. The actual numbers aren't that important as long as you are happy with it. My sister got a coach purse at 50% off and thought it was a steal. I thought it was a ripoff at any price.

If for any reason you are unhappy, even a little, walk away. If you are uneasy, or unsure, let it sit overnight. Don't get fixated on that one car, no matter what they say. They'll make more, I promise.
posted by Pogo_Fuzzybutt at 6:37 PM on September 22, 2011 [1 favorite]

I bought a used car yesterday. Before I test drove it, the dealer said 'this is the special internet price, we've already lowered it and it's not negotiable.'. After my mechanic inspected the car, I returned with my list of the car's minor issues a negotiated a big hunk off of his price.

Make your first offer low, but not insultingly low. But lower than you'd think they'd ever sell the car for. Then you can start working towards the price you actually have in mind.
posted by gnutron at 7:55 PM on September 22, 2011

What is not negotiable is the dealer's invoice price on the car. The dealer will sell it to you only if they can get more from you than what they paid for the car. How much more is up for debate; in my very limited experience it is often around $1k on a new car. Note that different dealers will have different invoice prices on the same cars.
posted by craven_morhead at 8:39 AM on September 23, 2011

Beware of the additional charges that dealerships like to add. They will try and charge you up to 2% for advertising costs, sometimes called a dealership participation fee, or dealer prep. They'll try to charge you anywhere up to $250.00 for paperwork. When I buy I tell them I will only pay the required state fees for title and plates. I won't pay them to arrange financing, or provide "documents" related to the sale. ( In other words they want to charge you for the receipt.) Beware that they will try to hide these charges in the financed price of the car. FYI The delivery charges from the factory are never negotiable, base your negotiating on the car itself and add the delivery charges.

Dealers make their money in other ways than just the sale price of the car. Aside from the fees mentioned above they get all kinds of kickbacks. They get kickbacks from the manufacturer based on their total sales volume for the month, which is why it is best to buy close to the end of the month. They get kickbacks on the financing or lease. Don't fall for the old "the interest rate is higher because your credit is not the best". Go to a local credit union and give them a hypothetical and see what rate they come up with. ( I know you are leasing, but buyers should always do this)
posted by Gungho at 9:12 AM on September 23, 2011

What is not negotiable is the dealer's invoice price on the car. The dealer will sell it to you only if they can get more from you than what they paid for the car. How much more is up for debate; in my very limited experience it is often around $1k on a new car. Note that different dealers will have different invoice prices on the same cars.
posted by craven_morhead at 11:39 AM on September 23 [+] [!]

This is due to the individual dealer's sales volume. Remember the dealer invoice is a moving target. If a dealer sells just one more car this month to make or exceed quota they could save hundreds on EVERY car they sold that month.
posted by Gungho at 9:14 AM on September 23, 2011

Best answer: I'm a former car salesman and I've answered plenty of similar questions in the past. Check my posting history too but I think the most relevant post is here.

Don't talk about the price until the price is the only thing holding you back. It sounds like you're buying a new car so things are much simpler for. Things can be different in other areas of the country but my advice would be to offer the invoice price + $100. Make sure your MSRP matches the MSRP on the car you're going to buy so you're sure you have the right numbers.

I'd also mention that any survey that gets mails to you will be returned with the highest scores possible. They use "top box scoring" and ask you to rate different parts of your experience from 0 to 5 but marking a 1 - 4 counts the same as a 0 and those scores often form the basis of the salesperson's bonus (which will be most of their earnings) and dealer's bonus from the manufacturer.

The only thing really set in stone is way the car is made. There are some "options" that come on every car. The cars I sold always came with floormats even though it was technically an option. You also may find that you have to have some other option package before you can get others. IE you might not be able to get GPS on a car without having a convenience package or something, it varies a lot by make and model.

Lastly, since you're looking at a lease, get ready for some different jargon:

Cap cost (or capital cost) = Purchase price
Cap cost reduction = Down payment
Money factor = Interest rate (though they aren't calculated the same way so you can't compare apples to apples

Make sure its the right car, then focus on the price, then the terms of the lease. Follow that and don't talk about one until you're done the step before it. Everything is negotiable don't be afraid to show that you're committed to buying a car.

Note that different dealers will have different invoice prices on the same cars.

No they don't.

IF you're near the end of the month and IF the dealer happens to be really close to the next bonus level you MIGHT be able to get them to sell you the car for less than invoice but it won't be far below invoice and it really isn't worth the hassle to try and get them drop the price that far. The salesperson also gets screwed especially hard when this happens.
posted by VTX at 10:55 AM on September 23, 2011 [3 favorites]

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