Car negotiation pricing ...help
September 5, 2018 3:10 PM   Subscribe

What is the best way to approach car pricing negotiation?

I'm looking to buy a new car. I know what make and model, I have the Truecar invoice and msrp on them and I wonder how to work with a salesperson to buy a new car. I want to make it so that the sales price is fair to me as well as them.
Do you arrange the price say somewhere between the MSRP and the invoice and then add the tax title license, destination etc. on there? Or say here is the price I want out the door (insert price between invoice and msrp)?

It's a Volkswagen Golf S I'm interested in. Can anyone relate their experience in how they approached this? I am in Phoenix AZ and it seems like we have a lot of dealerships that are quite aggressive and aren't the kindest to work with (at least I havent any yet), sorry if that offends anyone!
posted by gregjunior to Work & Money (17 answers total) 16 users marked this as a favorite
 
My strategy the past two new cars I've bought was to "build my own car" on the car company's website, then let the site solicit bids from nearby dealers. The offer comes from the "internet salesperson" at the dealership and is firm. In both cases, I ended up spending about $2K less than I expected and there was no haggling. I didn't even feel the need to take a shower afterwards!
posted by DrGail at 3:21 PM on September 5, 2018 [6 favorites]


I want to make it so that the sales price is fair to me as well as them.

There are many situations in life where fairness for both parties is an honorable goal. Negotiating with a car dealership is not one of them. They won't sell it to you for a price that isn't fair to them. Your goal should be to push down the price as much as possible. Get quotes from different dealers in the region, if applicable.

Here's a relevant This American Life episode: An FBI Hostage Negotiator Buys A Car
posted by qxntpqbbbqxl at 3:22 PM on September 5, 2018 [16 favorites]


The joy of knowing what make and model you want means you can do the negotiating entirely over email, I read about doing this on the toast and it worked quite well for me. First trust the dealerships to not offer you a price that’s unfair to them, they can watch out for themselves. Email the local dealers, tell them what car you want and with what features, and get price quotes. Then email the higher quote dealers telling them another lot has offered you the same vehicle for X less, would it be possible for them to lower their quote? And continue until one has offered lower then the rest will go. It’s great that you have the MSRP and turecar value already, you’ll know if someone offers you a price wildly out of line.

I was very firm that I would not negotiate over the phone, several called me and I always told them I was too busy to talk, hence my request through email. Also when they tried to upsell me at the dealership I remained unswayed.

This took me about a week with five dealers but I was able to get an excellent price on my car and I greatly enjoyed not having to do this in person at several lots.
posted by lepus at 4:02 PM on September 5, 2018 [12 favorites]


Misterben says never accept any price higher than the lowest price at the left of the TrueCar curve. He also agrees with the negotiating-with-multiple-dealers-over-email strategy and talking to the internet sales manager instead of a floor salesperson.
posted by matildaben at 4:06 PM on September 5, 2018 [1 favorite]


lepus's advice is spot-on. Figure out the car and trim level you want, e-mail the dealers, tell them that you plan to buy in the next X days, and ask for a firm "out the door" price. Ideally that should include a breakdown that shows the base cost of the car and their doc fee/registration fee/smelly-pine-tree-hanging-from-the-rearview-mirror fee to allow you to understand what you are buying. Tax, Title, & License fees are real, but politely insist that you don't want to buy any of the optional stuff like floor mats or rustproofing.

One thing that happened to us when we bought is that we got to a final price, and then when we went to the dealer they had added $200+ for some BS pinstripes that the dealer adds to every car when it comes in. They apologized for the misunderstanding but INSISTED that the pinstripes were an added cost that couldn't be avoided. We noped out of there and went back to the #2 dealer on our list. (The shady place was out of business a year later.)
posted by AgentRocket at 5:23 PM on September 5, 2018 [2 favorites]


If you can get past the dated website design, the program offered at Fighting Chance made me an empowered and in-control car buyer. The program guided me through the whole process and I drove my new car(s) away from the dealership(s) feeling like a rock star instead of feeling like a doormat. Easily worth 100x the cost ($35 or $40) for the Fighting Chance package.
posted by rekrap at 5:26 PM on September 5, 2018 [1 favorite]


In addition to the prior tips about negotiating an out the door price via email, if the dealership pulls any funny stuff with it when you go to make the purchase, walk out the door.
posted by Candleman at 5:31 PM on September 5, 2018


Costco has a car buying service. If they have the car you want, you get it for the price they set. In my case, it was lower than the lowest I could possibly have gotten on my own. I don't think you have to be a member to check it out, though probably do to actually use it.
posted by still_wears_a_hat at 5:33 PM on September 5, 2018 [1 favorite]


I have bought two cars this way - it is basically the internet technique but I am not averse to a phone conversation. A few things to begin with
1) you need to know what model and trim you want, and then what the standard spec for that car is aunless you have a real reason you want to buy something that is not commonly in inventory. Needing something unusual will cost you and in many ways. More than you think. I think you should determine which colors you absolutely won’t take.
2) you shouldnt approach dealers until there are 7 days or so left in the month. Because of how incentives to the dealer work you can get a better deal if the need to hit a volume target. Make clear you plan to take delivery by EOM.
3) you should be indifferent to cash/financing etc - I.e. if the dealer can get paid by the loan originator you should strive to capture that value. This will be opaque to you but will allow the dealer to be sharper on price.
4)You should build a spread sheet that does all of this math to make sure you aren’t being bullshitted. Sales guys want to sell you a payment, you want an all-in price. Tell them that. Some of them will ignore you. deal with that once you get bids. Have them give you all of the pricing details - car price delivered, down payment,, loan terms. Someone will try to screw with this. The good news is that you can use those guys as stalking horses later in the process ( as the are playing a different game)
5) email every dealership within a reasonable radius giving them all of this information. You’ll almost certainly get a bid in the far left hand curve in the true car data.
6) take that bid and send it back to all of the other bidders.
N) repeat until your successive iterations diminish to a level where it’s just not worth it. Or you only have one bid.
posted by JPD at 6:47 PM on September 5, 2018 [1 favorite]


Don't want to threadsit and I wont but I just wanted to follow up on the pricing.

Do you get the lowest price and then they add tax title license and their dealership bs (clear coating, tint) or are they giving you an out the door price?
posted by gregjunior at 6:54 PM on September 5, 2018


Always ask for out the door
posted by JPD at 7:02 PM on September 5, 2018 [4 favorites]


I liked this book when, as a spring chicken in my early twenties, I negotiated my first car purchase.. it's called "Don't Get Taken Every Time" and it's written by a fellow named Remar Sutton. Believe it or not, I found it in the library, browsing the stacks. It really demystified the whole process. There is a more recent edition than the '01 edition which I encountered then.. but I don't think the basics have changed. It's really more than a book about buying cars - it's a lot to do with negotiating in general, and that, I believe, is why it's so terrific. There is also a lot of practical advice about financing and so forth.

here it is - https://www.amazon.com/Dont-Get-Taken-Every-Time/dp/0141001496/ - for some reason the newer edition is pricier on amazon (and not that much newer.. '07?) but if you read through the reviews you'll see plenty of people have *recently* been helped by this gem. You can probably find it in your local library system.. or maybe there's another listing for it on amazon I overlooked at a better price.

I agree with above poster re: stop thinking about what's fair for the dealer. gross gross gross.. they DO NOT DESERVE that kind of regard. Dealers and car sales people are on average the slickest and slimiest of hard sellers and will trap you in a sweaty room and try to upsell you at every possible moment (say NO to any extended warranty BS they try to convince you you need, eg.) They will sell a car at a profit or they won't sell it, so don't worry about them where fairness is concerned. At all. not even a little. BLECH.

Other than "don't pass go, and buy that Remar Sutton book and read it," my other advice is don't be too attached, don't be in too much of a hurry (or if you are, don't let on), don't be afraid to take your SWEET slow time reading whatever fine print they put in front of you, and be willing to WALK OUT. Seriously, I walked out after hours in that dealership and, though I acted confident, I was afraid that I'd wasted the whole day and would have to start over negotiating a whole different vehicle from scratch at a different dealer, but low and behold, the salesman called me back about 20 minutes after I walked out and met my price. If you take up a lot of their time (which no amount of emailing is going to achieve) then they have something more invested in making the sale as well.

This thread is first I've heard of emailing as a way to negotiate a car.. I'll have to look into that more.. I would have thought such a tactic might risk flagging oneself as rather.. milk toast.. and thus not be the best idea. But.. I have not tried to buy a new car recently.

Also.. do you have to have a new one of these Golfs? Would a low-mileage 2016 one suffice, say? It will depreciate less driving it off the lot..

Anyway, TLDR.. I'm sure I would have done better if I had been older and male, but for a woman in my 20s, thanks to that book, I think I made out pretty well. Walk out. Don't worry about them.
posted by elgee at 7:03 PM on September 5, 2018 [2 favorites]


Disclaimer: I am a weirdo who really enjoyed the car buying process.
A year ago I bought a Honda HR-V for just over the Truecar "Exceptional" price. Honda dealers tend to be volume based and also get dealer incentives for financing, so you need to research how Volkswagen reimburses their dealers to understand what levers can be pulled.

Here are the strategies I used and I found effective.
Use Truecar to find the "exceptional price." Use a throwaway email.
Negotiate on out the door price, before financing.
Take that exceptional price, add in all the accessories, trim level, and color you want, then find out how much tax and title costs in your state. Subtract $100. This is your target price, and everything you negotiate on. You decide how much you're willing to go up from there (in my case I was willing to give an additional $300). You always want to clearly state and negotiate on out the door price, with these accessories and trim level and color(s), with all taxes and fees.
- Ignore the truecar buying service, which basically just sells your personal information to local dealers or gives you some silly coupon. This will not get you the best price.
- Use a throwaway email or you will get bombarded with dealers flooding your inbox.
- If you have good credit, consider offering up a willingness to take financing if the terms make sense and if it helps close the deal.

If you have the luxury of time and money, you can easily leverage those advantages to get the best price.
- By time, I mean being able to bide your time and wait for the right deal (in other words, you don't have to have this car RIGHT THIS SECOND).
* You're cool and collected and appear that way when you're negotiating. Knowing that you have the luxury of time and money is an impenetrable defense.
* You have the luxury to visit several dealers.
* You've already test drove the car previously so you don't need to hear their spiel while you're test driving.
* You're willing to wait until the end of the month, maybe even quarter if you aren't getting the price you want and they have you in their back pocket to try and make their numbers by the end of the month.

- By money, I mean being able to arrange your own financing beforehand, having good credit to taken on a small loan if needed, or being able to buy the car outright with cash.
* You take a lot of the complications out of negotiations and take away their tricks if you show up and let the salesperson know you've got all the finances worked out already and you're ready to buy today. No, I don't need to take financing from you, but if it can help us get to a better price, we can discuss those terms after we agree on a price.
* You show that you're serious in buying today and have the resources to do it. You repeatedly emphasize that this is the easiest and fastest sale they can make today because everything's prearranged.

Understand how the dealer makes money
I went into Honda dealers knowing that Honda will give huge incentive bonuses for the dealer if they sell a certain amount of cars every month, quarter, and year. What this means is that even if the dealer loses money selling you the individual car under what they paid for it, if that sale gets them closer or puts them over the quota number, they'll make a significant profit in the end due to the manufacturer bonus.

I also knew that Honda dealers somehow got incentives based on number of financing deals they signed - meaning that going in all cash wasn't always appealing to the dealers.


Here's what I did each week with notes on what I found effective and ineffective.
Week One: Emailed internet sales managers for local dealers. All of them gave me a quoted price well above my target exceptional price. Out of the lowest prices I received via email, I replied back with the remainder and asked that they beat the price. Dealers would either knock off $50 or so stop responding, but it still got me nowhere near my target price.

Week Two: I tried a separate strategy of visiting 4 dealers, getting names of salesmen, and asking for their best price, disclosing that I have the intention to simply buy from the dealer with the best price after this information gathering process. This wasn't effective because I observed Dealers would play the following game:
* They'd throw out a price, but be unwilling to write the number down as an official written quote and play the "this price is only good if you buy right now" game. (I usually called bullshit on this)
* They'd say how about you come back from another dealer with an official written quote and we'll be it by $100. I'd call bullshit on this too because of the previous experience, but I also would restate that this isn't what I'm asking for.
* They'd flat out refuse to give a price and would only negotiate if they were willing to play.

In each of these cases, I left them with a card with my name and number on it and asked them to send me a text if they were ready to make an exceptional deal. In each case they still asked for the price I was looking for and I'd simply reply demurrer and say look, i'm serious about buying, if you tell me your best otd number you can give me and it hits my target, I'll buy today. If not, I'm going to visit your competitors and go through the same process and also see if someone's willing to call me at the end of the month.

Week Three: I tried the internet negotiating game with more dealers to little avail. With the end of the month coming up, I start getting texts from 3 of the 4 dealers. They start throwing out numbers that are suddenly better than the internet prices and what they were willing to throw out when I meet in person. None of these still hit my target, so I text back to each of the offers that asking again if that's their best offer, inform them whether they're currently in the lead or not, but I'm still waiting on a few offers from others and plan to buy at the end of the month.

Near the end of the week, I get an increasing number of texts from one dealer. He's lowered the price on his own accord once more, and I'm starting to notice the other dealers aren't really reaching out anymore - after a few more friendly texts back and forth (and we're now two days before the end of the month), he insists on knowing my target price and I give it to him fully knowing that I'm willing to work with him within a few hundred dollars. He replies that he cannot do that price but was willing to work with me to get me very close to it.

In store, we meet and they ask whether I want a test drive. I don't, I've already done it. Get some bad coffee. A doughnut. I'm here, ready to buy, I have the money ready. They ask again what my target price is. I give it to them, and hold firm on it and repeat I'm ready to buy right now for that price. They throw out increasingly lower numbers and I'll creep upwards knowing that I've built in a $300 buffer. Finally we're pretty close, and I ask them what they need from me to hit my target price + $300.

They ask if I need financing. I say no, I don't need financing, but if it helps you, we can look at financing and if the terms make sense to me, we can do it. They immediately brighten up and say yes that will help us make the sale - at which point I ask for them to commit to the price if financing terms make sense.

Then they bring in the second negotiator, THE FINANCE GUY: I immediately asked for: 1) the interest rate, 2) the minimum term i need to keep before i pay off the loan in order for the dealer to get their incentive, and 3) the minimum i need to borrow. In this case, i qualified for Honda's incentive financing @ 0.8% which with inflation means they're losing money, so that turned out to be a win-win for the both of us. There was minimal haggling around this - YMMV depending on dealer and your credit quality.

So now I've agreed on an out the door price, the terms of the financing. It's written down. I think I'm in the clear. NO THERE'S PART THREE: UPSALE GUY is brought in and is super nice to me and now tries to sell me extended warranties and service contracts and clear coating and you just say NO NO NO NO NO NO NO NO to all of that.

.....and that's how I bought a car at the Truecar "exceptional" price. I have bought cars on behalf of a relative and a friend since then utilizing the same strategies and they both have been successful in getting exceptional prices. It felt like the salespeople usually recognized pretty quickly that I wasn't susceptible to the usual games they would play and that I was a serious buyer that wanted to make it work for the both of us quickly. Emphasizing that went a long way.
posted by Karaage at 7:05 PM on September 5, 2018 [11 favorites]


Please do not concern yourself with making the price "fair" for the dealer. There is no way short of armed robbery that you could get a car at a price that was unfair for the dealership. They have the knowledge, ability, and experience to refuse any deal that doesn't benefit them. They also have extensive practice at making you think they're doing you a favor, or that they're losing money, either by accounting tricks like or by some good acting skills, if you're at the dealership in person.
posted by mrgoldenbrown at 7:47 PM on September 5, 2018 [3 favorites]


Nithing don't worry about the dealer. Buying from a private party, that's another thing. But dealers are going to make out like bandits coming and going, and don't it let be from you.

Good advice on the websites above. My best recommendation: Never, ever, be so in love with a car you can't walk away. There's a million of them out there, and it never hurts to wait overnight to think about it.
posted by BlueHorse at 8:14 PM on September 5, 2018


Agree with all of Karaage's comment but this:

2) the minimum term i need to keep before i pay off the loan in order for the dealer to get their incentive

I just wanted to clarify that most (all?) dealer financing does not actually have a penalty for early payoff, so if you can get lower interest somewhere else, you CAN turn around and refinance out of the dealer financing (or pay it off entirely) as soon as you have the car.

Some people think that's a dick move because yeah they won't get their incentive. I say I am paying a higher price in that extra interest the longer I keep the loan and I am not particularly worried about anything else.
posted by rabbitrabbit at 11:34 AM on September 6, 2018 [1 favorite]


Adding to the negotiate entirely over email crowd. We bought a car a couple years ago using the method at Findthebestcarprice.com. That site looks and sounds sort of scammy, but just use the steps in the gray box at the right and you're good to go. Ended up with a brand new car that was $500 cheaper than a local dealership's quote for the previous year's model with 9k miles. Couldn't believe it worked so well, but it did.
posted by msbrauer at 1:44 PM on September 6, 2018


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