Car-Buying Negotiations
January 30, 2013 7:53 AM   Subscribe

I love my car. It is reliable, trustworthy, and it has carried me safely through at least one rather hairy situation. Best of all, it was cheap. When I touch the dashboard, I remember the thrill of the negotiation process, and even the salesman's sweaty palm as we shook hands on a price thousands of dollars lower than what my friend paid for the exact same model.

Nevertheless, it's time to upgrade to a new car. Since it's been eight years since I last purchased an automobile, my bargaining skills in that area are rusty. (I negotiate pricing at work all the time, but that typically involves transactions in the millions, which is a totally different animal.) It's really important for me to get a good deal on this car, since (for better or worse) a lot of the emotional joy of owning it will come from knowing that I got a better price than most other people could have.

What's the best way to instantaneously determine whether you are getting a good price on a car? What is the best way to get a good price? In the past, it used to be that shopping online meant you were effectively paying "retail price" and so the only way to get a good deal was to go to a dealership and negotiate in person. Is that still the case?

Potentially significant data points:
1) I will be buying a brand new car, not used.
2) I believe in always getting the maximum warranty.
3) It will be a hybrid with a very good safety rating (most likely a Subaru, but not necessarily).
4) I can make full payment upfront.
5) I would like to "pimp it out" a little (in a classy way) in terms of getting accessories like heated seats, remote starter, etc.)
6) I have no strong preference for which car I get, as long as points 1, 2, and 3 are met.

What is the best way to go about this, maximizing my leverage in order to secure the best price?
posted by wolfdreams01 to Shopping (20 answers total) 24 users marked this as a favorite
There was an interesting podcast on Planet Money about how a hostage negotiator bought a car, which might have ideas for you.
posted by jeather at 7:56 AM on January 30, 2013 [16 favorites]

I don't believe Subaru sells any hybrids in the US. You can probably negotiate a deal on the price of the car by agreeing to buy an extended warranty. They try really hard to sell these, so if you agree up front to buy one in exchange for a lower price on the car, that might work. Otherwise, be prepared to walk out of the dealer without buying, and make dealers compete with one another on price. This is easier over email.
posted by tylerkaraszewski at 8:01 AM on January 30, 2013 [1 favorite] has a price by area calculator -- you plug in your area, car make and model and options, and it shows what others in your area (and nationwide) have paid, what the factory cost is, and what the MSRP is. When buying my car, I printed out the report from a website like this and took it in to negotiate with. I could easily say "this is what I should be paying for this car" and they had to come down to something in that range or I wouldn't buy. I got around 3 grand taken off the listed price.

Two things here -- know what you should be paying and pull that card, and be willing to walk away if it's more than you want to pay.
posted by DoubleLune at 8:03 AM on January 30, 2013 [1 favorite]

What's the best way to instantaneously determine whether you are getting a good price on a car?
Look at your budget, decide how much you are willing to pay. and then find a dealer who will sell you the car you want at the price you want. If the dealer tries to negotiate you off the price, leave and find another dealer.

I spent the better part of a year working security as one of New Jersey's largest auto megadealers and got to spend a lot of time with the salespeople and their managers. It was this experience that led me to decide to only buy cars from no-haggle dealers.

No one beats the dealership in negotiations. They may allow you to think that you beat them, but you didn't.
posted by DWRoelands at 8:05 AM on January 30, 2013 [7 favorites]

I believe in always getting the maximum warranty.

You should know that extended warranties are HUGE profit makers for dealerships.
posted by Fleebnork at 8:06 AM on January 30, 2013 [2 favorites]

Response by poster: Look at your budget, decide how much you are willing to pay. and then find a dealer who will sell you the car you want at the price you want. If the dealer tries to negotiate you off the price, leave and find another dealer.

Not to threadsit, but this isn't about what I can afford. I can afford quite a lot. It's about the emotional satisfaction of optimizing value and getting a good deal.

No one beats the dealership in negotiations. They may allow you to think that you beat them, but you didn't.

Except that I totally did, and I know this for a fact, since I stretched out negotiations long enough for the salesperson to need the restroom and (while he was away) went through his desk drawer to check out the records of previous sales in order to determine how far I could push him. (As a speedreader with a semi-eidetic memory, I can do this VERY quickly - effectively it's almost like photographing documents.) Furthermore my friend bought the exact same model and make of car and paid $3000 more.

The trouble is that this one a one-time trick that won't work anymore. Even if I manage to get another salesperson with a weak bladder, we have long since passed the age of paper records, and his computer would be password-protected.
posted by wolfdreams01 at 8:16 AM on January 30, 2013 [1 favorite]

I feel like I got a very good deal on the only car I have ever purchased new. I've discussed the process here. Basically, do what you can to start a bidding war between competing dealerships. The easiest way to do this is to wait until you know exactly what you want, and then get the dealerships to submit bids for that specific car. Once someone is in first place, tell #2 and #3 where they stand and ask if they can do better (without divulging the price they need to beat, if you can). After a few rounds, a couple of the dealers I was working with bowed out because I was getting my car for less than they could get it for. This only works if the car you are buying is popular enough to be sitting on a few dealerships' lots; if they have to order the car they're going to be less willing to deal.
posted by craven_morhead at 8:22 AM on January 30, 2013 [1 favorite]

Here's what my husband did. He found the model of car he wanted, found out what the dealer paid for it (not the same as invoice price)*, decided what he wanted to pay, and emailed the sales managers of dealerships within a certain mile radius saying, "This is the car I want, this is how much I want to pay for it. You in?" This works really well for previous model cars, as they want to get those off the lot and will sometimes take a loss (a small loss, but a loss nonetheless).

Doing that got us a car not only several thousand dollars under dealer price (which is considerably lower than invoice price) but he was also able to get it a bit lower by being willing to take whatever color they had on the lot at the time.

*I think he used Kelly Blue Book but I can't remember.
posted by cooker girl at 8:25 AM on January 30, 2013 [2 favorites]

Go at the end of the month/quarter/year--hopefully on a rainy day--armed with the knowledge of what you want and what you want to pay. With any luck, you may catch someone trying to build their book for the period who needs to make a sale.

his desk drawer to check out the records of previous sales in order to determine how far I could push him.

Glad you got a good deal and all, but that's stunningly inappropriate.
posted by Admiral Haddock at 8:27 AM on January 30, 2013 [34 favorites]

As you obviously want a price that makes you feel good more than anything else.

Do a bunch of research online and figure what others in your area paid for the same make and model as what you want. Basically any of the sites mentioned by others in here do that, that gives you the same information as the info you saw on the guys desk last time without the risk of getting kicked out of the dealership.

Now you have a place to start. Figure out a price range that makes you feel like you got a bargain and stick to that. Be willing to walk away or to play a couple of dealerships off against each other you may have to do a bit of leg work. Know what you want, and also sometimes if they can't go down on price you can get them to throw in extras like better paint etc so be aware you can haggle over more details than just the money.

Oh and be polite and civil and don't let it become some sort of macho competition. The idea is both parties "compromise" to find a middle ground not that you grind the other side into dust so leave yourself some wiggle room with your first offer to come up a little. Showing willingness to actually haggle instead of demanding deals can play in your favour.
posted by wwax at 8:35 AM on January 30, 2013

Mod note: Folks, answer the question please. OP, don't threadsit.
posted by jessamyn (staff) at 8:39 AM on January 30, 2013

You should know that extended warranties are HUGE profit makers for dealerships.

True. But you CAN buy an extended warranty directly from the company if you like. You will save a quite a bunch of money that way.

I had a couple of tricks when I bought my car. But I had all kinds of goofy stuff going on.

1. I was offered $1000 MORE than what my trade-in was worth, and that was with the Check Engine light blinking like Christmas (and what I knew was $4,000 worth of repairs that were needed to get it to shut off.)

2. I went on Sunday when the football team was playing. I was alone in the dealership with the youngest sales guy in the history of sales guys. If you can buy your new car on Super Bowl Sunday....DUDE!

3. I went at the end of the month. They have a sales quota and are more incented to deal at the end of the month.

4. I bought a new car that was already one model year old. (What did I care?)

5. I came in with the VIN number and said, "I'd like to buy this exact car please."

6. I knew what I should pay, and that's what I paid.

I'm still driving that car 8 years later. My grandfather said that a deal was good when it was a "fair and equitable profit for all." I'm very happy with my purchase and with the price I paid for it.
posted by Ruthless Bunny at 8:45 AM on January 30, 2013 [1 favorite]

Just so you know, many dealership offices/negotiation rooms have cameras in them so the salesmen can spy on you when they go "check that price with their manager", etc. He might very well have known that you looked through his desk. Or, you might not be so lucky if you try it again, as it is easy to get caught. I suggest reading MeFi recommended Don't Get Taken Every Time for a great inside look at dealerships and how to negotiate the best possible price (that's where I learned the little tidbit about the spy cams).
posted by imalaowai at 8:47 AM on January 30, 2013 [4 favorites]

If you know the car you want, research the price however you want). Call every dealer in your willing driving distance and say that you are setting up a competitive quote for the car (fully specified) and you need the "off the lot" price and would you mind faxing me the quote by end of day xxxx, because if you are the lowest, I will show up and buy that car.

For my last two car purchases, I've done this at the end of the quarter because end of the month is for lightweights. Surprisingly enough, every dealer has hit within $200 of each other.

If you feel like you want to win this battle (and trust me, I understand, in horsetrading with a dealer on a used car, I got bumped to the dealership owner since I was completely manhandling the junior salesman and he ran with his tail between his legs, and I kick myself for how I handled the owner). I've found it more satisfying to end-run their typical battle format (customer comes in, customer negotiates, customer loses) and replace it (price researched, competitive bid, no negotiation). In fact, at one dealership, when I got sent to the sales manager office (the guy that tries to sell you add-on crap), he looked over the price tried half heartedly to sell me Scotch Guard and then said, "look, you're the worst kind of customer. You come in on the last day of the quarter. You're paying cash. You're not going to give on anything. Fine. Let's not waste each other's time. I have a lot more to close out." That, my friend, was the sweetest victory: one of their most experienced salespersons gave up.
posted by plinth at 9:11 AM on January 30, 2013

I stretched out negotiations long enough for the salesperson to need the restroom and (while he was away) went through his desk drawer

You mentioned that you negotiate million-dollar deals as part of your job. you may want to consider how you would react if someone violated your space to get a better deal.

You may also want to consider why you think it's okay to do it to someone else, or why you think this is acceptable behavior.

In any event:

1. Decide what you want to pay before you hit the door.
2. Tell the salesman that this is what you want to pay.
3. Either he matches your price or you leave.
posted by DWRoelands at 9:46 AM on January 30, 2013 [2 favorites]

I bought my current car new, online. I let the dealers bid against each other. I had my financing all lined up and pre-approved. The dealer I chose was 45 minutes away. All the options were specified, the price was set. I had it in writing (email and fax).

When I showed up to sign the papers and take delivery of my car, sitting right out front was the car I'd ordered except with a manual rather than automatic transmission. The salesperson tried to pretend this was an entirely predictable error (but not theirs) since no way could they ever possibly under any circumstances sell me the car I specified for the price they specified. Furthermore, they didn't have the car I specified on the lot. I'd have to take this one.

I know this is when I should have walked out, but I didn't. I was determined to have the car they had promised, and pissed about having to drive so far for nothing, so I tried another tactic (which I am not entirely proud of, but it worked, maybe because I am a woman).

I showed them the paperwork. I told them to find me the car we had agreed on, even if they had to get it from another dealer, and while I waited I would be outside on their lot informing every other potential customer I could find about how they were trying to cheat me. I said this on the showroom floor in a loud voice.

Long story short, it took half an hour, but I got the car I wanted for the price I wanted, along with some extras. They were in such a hurry to get me out of there they forgot to ask for the down payment (I sent it in later), and they threw the extras in for nothing.
posted by caryatid at 10:01 AM on January 30, 2013

The key to the puzzle is the "holdback". Everybody knows what the invoice price of the car is, thanks to the internet. Most manufacturers incorporate into that a percentage of the price that gets returned back to the dealership automatically. It varies from brand to brand, but can range from 3 to 7 percent.

Dealers treat the holdback as sacred. This is the money that pays to finance the car from the manufacturer before it sells, and keeps the lights on and the shitty free coffee flowing. Anything over invoice is just dealing on how much profit they get to make. They've got to be desperate to move the car to tap into the holdback cash to make a deal, because then they seriously do start to "lose money" by selling the car.

My favorite way to buy a car and know I got a good enough price is to get the factory's "friends and family" plan. My company offers this for several car manufacturers, but there are other ways to get it. Most recently with Ford, you get the car for 0.4% under invoice + administration fee + doc fee. With Ford's X-Plan, they limit the doc fee to something like $100. So many apparent good deals get undermined because while they cut the price of the car down during negotiation, they pile it back on with doc fees, which aren't limited in many states. This is not the same as the title fee, and is not a state-mandated cost.

Also, an "extended warranty" is actually just an expensive insurance policy, deductibles and all.
posted by hwyengr at 10:06 AM on January 30, 2013

Be willing to walk away. Be prepared with as much information as possible. Ask lots of people for dealer recommendations; they vary a lot. Dealers make a lot of money selling financing, so you may not want to reveal that you are paying cash. Ask for a price, and tell them you'll negotiate the terms after the price is established. When buying cars, I try to be straightforward, and have walked away from deals that did not suit me. Then I get a call with a better deal.
posted by theora55 at 10:44 AM on January 30, 2013

I recently helped my parent buy a car and the 6-8 dealers I dealt with were all aware of the email and fax all the area dealers to get the best deal via bidding war plan, and not a single one of them bit. It's as though they had made a deal with one another to not do that.

With lots of research, our own financing, and buying at the end of the month (when sales deadlines are looming) we did well. Also, dealing with the fleet manager usually also helps - for whatever reason, they often have more wiggle room.
posted by quince at 2:19 PM on January 30, 2013

Two things you can use to arm yourself with key data about the car you want:

Consumer Reports - Car Pricing Service (paid service) - Sample report

CarWoo - Get dealers to bid on your business while keeping your info private from them.
posted by thewildgreen at 11:54 AM on January 31, 2013

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