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Started By
Message
How much off of MSRP?
Posted on 11/1/12 at 1:06 pm
Posted on 11/1/12 at 1:06 pm
I'm close to buying the wife a new car. She's test-driven a few and has done all of the research and knows exactly which options she does and doesn't want. I've gotten pre-approved from my bank for 2.8%, and I've gotten the dealership to make an offer for her trade-in. All that is left is the price.
MSRP is $44,235. The standard discount that they offered right off the bat was $1,735, bringing the total to $42,500. Cars.com and Edmunds tells me that invoice for this exact vehicle is $41,200.
My problem is that I've never bought a car before so have no idea what sort of price I should be targeting. The ball is in my court, so what is a realistic number I should counter with?
And, which tactic should I use? A) Be up front and tell them what I'm willing to pay, never budge from that number, and walk out if they don't meet it; or B) low-ball them with a couple thousand under what I'm willing to pay, and trying to work them down to that magic number?
TIA
MSRP is $44,235. The standard discount that they offered right off the bat was $1,735, bringing the total to $42,500. Cars.com and Edmunds tells me that invoice for this exact vehicle is $41,200.
My problem is that I've never bought a car before so have no idea what sort of price I should be targeting. The ball is in my court, so what is a realistic number I should counter with?
And, which tactic should I use? A) Be up front and tell them what I'm willing to pay, never budge from that number, and walk out if they don't meet it; or B) low-ball them with a couple thousand under what I'm willing to pay, and trying to work them down to that magic number?
TIA
6
Posted on 11/1/12 at 1:13 pm to NaturalBeam
Call your local bank or credit union and get the factory invoice price. This is roughly what the dealer actually paid the manufacturer for the car. I generally aim to pay $300 or so above the invoice price. I've actually bought at invoice on two occasions as there are holdbacks(money built in for the dealer) that are not disclosed in the invoice price.
You should never pay anywhere close to MSRP.
Other factors to consider are title fees and financing charges. Understand that the dealer will only make a few dollars off the new car. Most new cars generate only a few hundred dollars in profit to the dealer. They really want her trade as thats where they make their big profits. You should avoid trading in at all costs as you will get hosed by the dealer. Get the trade-in cleaned up and on Craigslist asap.
You should never pay anywhere close to MSRP.
Other factors to consider are title fees and financing charges. Understand that the dealer will only make a few dollars off the new car. Most new cars generate only a few hundred dollars in profit to the dealer. They really want her trade as thats where they make their big profits. You should avoid trading in at all costs as you will get hosed by the dealer. Get the trade-in cleaned up and on Craigslist asap.
This post was edited on 11/1/12 at 1:15 pm
Posted on 11/1/12 at 1:19 pm to wiltznucs
Pardon the ignorance, but how would my bank know the factory invoice price?
Posted on 11/1/12 at 1:19 pm to wiltznucs
(no message)
This post was edited on 11/29/12 at 3:03 pm
Posted on 11/1/12 at 1:24 pm to NaturalBeam
quote:
Pardon the ignorance, but how would my bank know the factory invoice price?
It's public record and they have access to this info. In fact, many Credit Union's have the books available in the branch. It will list the car, the models and every imaginable feature with a price.
Remember, the bank is underwriting the loan and its in their interest to know what the car is actually worth. The bank is gambling on your ability to pay the note. How much the car is worth and your credit history is how they determined your interest rate.
The banks know exactly what the car was sold to the dealer for and how much it will be worth many miles and many years down the road. It will cost you nothing, just ask. If your bank has an autofinder service, they are the people to call first.
This post was edited on 11/1/12 at 1:25 pm
Posted on 11/1/12 at 1:30 pm to NaturalBeam
quote:
pre-approved from my bank for 2.8%
Just pay cash.
Posted on 11/1/12 at 1:32 pm to wiltznucs
Makes sense, much appreciated
Posted on 11/1/12 at 1:35 pm to KG6
quote:Yeah, the sales tax break I get on the trade-in was definitely something I was thinking of - also the fact that the wife's car would need a couple of new parts to it before I could sell it myself.
Trading in at the dealer can have significant benefits as far as your taxes are concerned. If you do choose to sell privately, see if the dealership will let you sell it through them so that you still get the tax break. I know most dealerships I've dealt with were willing to do this.
I don't mind the dealership making a little bit off of the trade-in if it will incentivize them to sell the new one at invoice.
Posted on 11/1/12 at 1:40 pm to NaturalBeam
quote:
How much off of MSRP?
Unless you are buying a premium, one of a kind vehicle with high demand, never negotiate off of MSRP.
You need to change your thought process.
quote:
I've gotten pre-approved from my bank for 2.8%
Shop around. 1.49 % was being offered last month on used vehicles from PenFed.
This post was edited on 11/1/12 at 1:44 pm
Posted on 11/1/12 at 1:42 pm to NaturalBeam
quote:
The ball is in my court, so what is a realistic number I should counter with?
Never counter with a number. Just simply state, "that's not good enough." If pressed, just state again, "I just know that's not good enough." "I'll let you know when I feel comfortable with a number that YOU present to me."
quote:
And, which tactic should I use? A) Be up front and tell them what I'm willing to pay, never budge from that number, and walk out if they don't meet it; or B) low-ball them with a couple thousand under what I'm willing to pay, and trying to work them down to that magic number?
Never offer a number. It is not your responsibility to do so. Your only responsibility is to decide whether or not the number they present to you makes sense.
quote:
I don't mind the dealership making a little bit off of the trade-in if it will incentivize them to sell the new one at invoice.
One transaction should have NOTHING to do with the other. They are independent transactions and should be treated as such, until you decide to do the in and out. Do not let them know you have a vehicle to trade in. Work on the price of the new vehicle first and then bring up the possibility of trading it in. If you mention the trade before you are happy with the price of the first vehicle, you are going to lose leverage.
This post was edited on 11/1/12 at 1:47 pm
Posted on 11/1/12 at 2:07 pm to NaturalBeam
Bought a car recently MSRP was $24,000 final sale price before trade was $17,900. Now I will tell you it was a 2012 model and I got a hell of a deal probably because they were trying to liquidate inventory.
Posted on 11/1/12 at 2:09 pm to Will Cover
quote:
One transaction should have NOTHING to do with the other. They are independent transactions and should be treated as such
This was the biggest pain in buying. The salesmen wants to talk about monthly payment and you have to stear the conversation towards final sale price of the vehicle. Negotiate financing and trade in seperately as well. It's tedious but worth it.
Posted on 11/1/12 at 2:14 pm to AngryBeavers
Yeah, I know MSRP is nothing more than a made-up number, but trying to get a gauge for what type of markdown I should shoot for.
I emailed my bank guy about the factory invoice price, but isn't that just going to be the same invoice price ($41,200) that I found on Edmunds and Cars.com?
I was offered $12k from the dealership for the trade-in, and the comparable vehicle on Craigslist/Autotrader/Cars.com seems to be around $15k. Taking into account the tax savings on trading in, the fact that the wife's car needs about $1k of repairs before I could sell it, and doing away with the hassle of selling it myself, $12k doesn't sound too bad to me.
I emailed my bank guy about the factory invoice price, but isn't that just going to be the same invoice price ($41,200) that I found on Edmunds and Cars.com?
I was offered $12k from the dealership for the trade-in, and the comparable vehicle on Craigslist/Autotrader/Cars.com seems to be around $15k. Taking into account the tax savings on trading in, the fact that the wife's car needs about $1k of repairs before I could sell it, and doing away with the hassle of selling it myself, $12k doesn't sound too bad to me.
Posted on 11/1/12 at 2:16 pm to NaturalBeam
1. Arm yourself with information. LINK / , LINK / , LINK and LINK are excellent sites to research the vehicle of your choice (Invoice vs. MSRP, manufacturer rebates, dealer holdback, etc.)
2. Never show emotion even when going for a test drive (do NOT provide dealer with your driver’s license). Instead, prior to your arrival at the dealership, make a copy of your driver’s license and furnish the dealer with the copy of your driver’s license.
3. Never show emotion when negotiating.
4. Never offer or accept the first price.
5. Start off negotiations by saying “that’s not good enough.”
6. Never offer a counter price.
7. Silence is golden. When in doubt, shut up and you will pay less.
8. Know what power you possess by being able to “walk away.”
9. Never negotiate off “MSRP.” The negotiation process should start from the DEALER COST (which is less than INVOICE) price or the WHOLESALE price if purchasing a USED vehicle.
10. Rebates can be deducted from INVOICE price and not MSRP as the dealership will lead you to believe.
11. Know the dealer’s “hold-back” price and what type of incentives that may be offered from the manufacturer or dealership.
12. Don’t discuss a trade-in until you’ve settled on a price for the car you’re buying – each transaction should be separate and not dependent upon one another.
13. Settle on the price of the vehicle you’re interested in before you bring up financing — don’t let the rate of a loan influence the price of the car.
14. Have your financing pre-approved before you walk into a dealership.
15. Extended warranties never make financial sense.
16. Be aware of “extra” charges such as administrative fees, handling charges, advertising fees, paint protection, VIN etching – simply do not pay these as these are deal breakers. And believe it or not, even “delivery” charges are negotiable.
17. Get the deal in writing. Full disclosure, in writing, of all fees pertaining to your vehicle purchase, such as destination, title, documentation, licensing and registration. If the dealer will not put it in writing, “walk away.”
18. The “If I” sales tactic. This is the last step in the sales negotiation process. Ex. If I decide to purchase the vehicle today, you have to include free window tinting. If I decide to take the red vehicle instead of the white vehicle, you have to include 5 free oil and tire rotation services. If I decide to purchase the vehicle today, you have to include floor mats at no additional cost. If done correctly, this will allow you to get another “service and/or product” that you normally would not have received and by this time, there is no way will the dealership allow you to “walk” because there is too much time invested between both parties. The dealership knows you are in a buying mode and doesn’t want to run the risk of you becoming a “be back” customer for another dealership since most people buy within 48 hours of stepping onto a dealership’s lot.
19. Put deposits on a “credit card” only. Do NOT pay with a check.
20. If you got a great deal, show your appreciation. Thank the dealer and be sure to send your friends to them when they go car shopping.
2. Never show emotion even when going for a test drive (do NOT provide dealer with your driver’s license). Instead, prior to your arrival at the dealership, make a copy of your driver’s license and furnish the dealer with the copy of your driver’s license.
3. Never show emotion when negotiating.
4. Never offer or accept the first price.
5. Start off negotiations by saying “that’s not good enough.”
6. Never offer a counter price.
7. Silence is golden. When in doubt, shut up and you will pay less.
8. Know what power you possess by being able to “walk away.”
9. Never negotiate off “MSRP.” The negotiation process should start from the DEALER COST (which is less than INVOICE) price or the WHOLESALE price if purchasing a USED vehicle.
10. Rebates can be deducted from INVOICE price and not MSRP as the dealership will lead you to believe.
11. Know the dealer’s “hold-back” price and what type of incentives that may be offered from the manufacturer or dealership.
12. Don’t discuss a trade-in until you’ve settled on a price for the car you’re buying – each transaction should be separate and not dependent upon one another.
13. Settle on the price of the vehicle you’re interested in before you bring up financing — don’t let the rate of a loan influence the price of the car.
14. Have your financing pre-approved before you walk into a dealership.
15. Extended warranties never make financial sense.
16. Be aware of “extra” charges such as administrative fees, handling charges, advertising fees, paint protection, VIN etching – simply do not pay these as these are deal breakers. And believe it or not, even “delivery” charges are negotiable.
17. Get the deal in writing. Full disclosure, in writing, of all fees pertaining to your vehicle purchase, such as destination, title, documentation, licensing and registration. If the dealer will not put it in writing, “walk away.”
18. The “If I” sales tactic. This is the last step in the sales negotiation process. Ex. If I decide to purchase the vehicle today, you have to include free window tinting. If I decide to take the red vehicle instead of the white vehicle, you have to include 5 free oil and tire rotation services. If I decide to purchase the vehicle today, you have to include floor mats at no additional cost. If done correctly, this will allow you to get another “service and/or product” that you normally would not have received and by this time, there is no way will the dealership allow you to “walk” because there is too much time invested between both parties. The dealership knows you are in a buying mode and doesn’t want to run the risk of you becoming a “be back” customer for another dealership since most people buy within 48 hours of stepping onto a dealership’s lot.
19. Put deposits on a “credit card” only. Do NOT pay with a check.
20. If you got a great deal, show your appreciation. Thank the dealer and be sure to send your friends to them when they go car shopping.
Posted on 11/1/12 at 2:17 pm to NaturalBeam
quote:
but isn't that just going to be the same invoice price ($41,200) that I found on Edmunds and Cars.com?
Could be, if so the MSRP should be much higher than $41,200...
Posted on 11/1/12 at 2:18 pm to NaturalBeam
Go to carmax and get a quote from them on your trade. I was able to use that as leverage for mine. Go to True.com and look at what other people paid for the car in your area. Shoot for the low end of that range.
Posted on 11/1/12 at 2:22 pm to Will Cover
I've seen you post that before, much thanks
I do have a question about #19 though - what is the advantage? While I would love to get the extra skymiles from the credit card, I've got a bonus check coming to me from work which I plan to use as the down payment. This check will be written from a trust account and can be made out directly to the dealership, thus it isn't income (I'm a 1099 employee) or a "bonus" to me, providing a nice income tax savings.
So obviously, I'd like to go that route depending on what your reasoning is.
I do have a question about #19 though - what is the advantage? While I would love to get the extra skymiles from the credit card, I've got a bonus check coming to me from work which I plan to use as the down payment. This check will be written from a trust account and can be made out directly to the dealership, thus it isn't income (I'm a 1099 employee) or a "bonus" to me, providing a nice income tax savings.
So obviously, I'd like to go that route depending on what your reasoning is.
Posted on 11/1/12 at 2:23 pm to wiltznucs
quote:Yeah, only a $3k markup on a $40k+ car with a few options in it never did sound quite right to me.
Could be, if so the MSRP should be much higher than $41,200...
Posted on 11/1/12 at 2:25 pm to NaturalBeam
quote:
19. Put deposits on a “credit card” only. Do NOT pay with a check.
quote:
I do have a question about #19 though - what is the advantage?
quote:
While I would love to get the extra skymiles from the credit card, I've got a bonus check coming to me from work which I plan to use as the down payment. This check will be written from a trust account and can be made out directly to the dealership, thus it isn't income (I'm a 1099 employee) or a "bonus" to me, providing a nice income tax savings.
If your vehicle needs to be ordered and the deal goes "bad," you'll have your credit card company to protect you. Pay for it with a check and you have no recourse.
Posted on 11/1/12 at 2:30 pm to Will Cover
Ahh gotcha. I suppose I could always buy it and then have the bonus check written out to my bank, which would still provide the income tax break for me.
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