Buying new car, need help knowing how to negotiate?
By Cars & Motorcycles on Apr 27, 2009 with Comments 2
#2 in the oven asked: >My husband got a new job and starts next week. He just finished school and will drive an hour each way to work so we need to get a car. Can we buy possibly before he has job? I have a job but not great credit. It has been improving but this time last year score was around 625. Does financing come into play when you negotiate the deal, or is that an afterthought? Also, price new is $15,300 and they are offering cash back $750, we have a car to sell/trade probably $1250 sell or $800 trade.
How much can we expect them to take off sticker? What is needed to take to dealership to get credit? What are some good methods of negotiation? I have only negotiated used cars and I am sure there is a difference. Vehicle is a 2007 Toyota Corolla if that helps.
Filed Under: Buying New Car
About the Author:
It may be best to wait until your husband has been working for 6 months or more, but then again, I don’t know what criteria Toyota finance is using these days..you might be fine.
As far as the negotiations. look this car up on carsdirect.com…it is deeply discounted right now, because the body style has been replaced for 2008. You should be getting this around 13,500.
The financing and the price go together when making a deal. If they get you to agree to outrageous interest rate, then that gives them more room to come down on price. You want to negotiate the price first, and then do not just go with the interest rate they say they can get you. It is actually much better to negotiate a deal when you already have a loan secured. You let the dealer think you will be financing with them, don’t tell them you already have financing..if they ask if you will need financing, you say possibly or maybe. Don’t tell them you already have it. Let them think that they will be able to make more money off of you in financing, that way they will be more apt to come off the price.
Or you can just purchase through carsdirect.com or similiar one price place, no negotiations.
Cash back is just another term for High Interest loan. Never take cash back, just use the “cash back” to reduce the price of the car.
You have a lot of variables and present the dealer with a lot of opportunities to make money off of you. The price of the car you are buying, the trade in value and the financing can all be negotiated and the dealer will work all 3 of these together to make max profit. They may give you what you want for your trade, $1250.00, this makesyou feel all warm and fuzzy, so you are easier to agree to higher price or interest rate. They are really not giving you 1250.00 for your trade. They probably put 600.00 into your trade, but can easily tell you they put 1250.00 into it. They will make up the difference in the price of the car you are buying. So you could pay 14000 for the car and get 1250.00 for your trade, or you could get 600 for your trade and pay 14650 for the car. It is the same thing, but giving more for your trade will make you feel like they are treating you ‘special’. So while you are feeling all confident about being treated fairly, the dealer goes and finds you an 8% loan, but comes in and tells you the best they can do is 16%. Trust me, this is how it works. In this case, they would have 8% of interest to deal with. So if you get them to take 2% off and agree to 14% loan, you are still paying them 6% for nothing. That 6% is pure profit for the dealer, because you loan is actually only 8%, but the dealer is charging you another 6% just for finding you a loan. They will make you feel all the while like they are giving in and giving you a great deal. Get financing first, then if they can beat what you have, you can go with them…as long as you don’t agree to any of the gimmicks..like stainproofing the carpets and the paint for 500 bucks (rip off) or extended warranties (rip off), etc.. basically anything extra that the dealer gets you to go for will have an incredible profit margin on it. Stay away.
Good luck.
Here is the best resource for car buying negotiations. Scroll down and read all the chapters on this site before going to the dealership. You will feel more than just confident to talk about it.
On the same page, you will find 4 Scenario Loan Spreadsheet. Download it and try to play with it before going to the dealership. This site has possibly the best negotiation tips which are specific to car buying.
Remember ..never pay anything more than $300 below invoice. Don’t even talk about MSRP there. Tell the guy that you are gonna be talking to 2 max people in that dealership place only ..1 person at a time.
Give a 45 mins time frame..if it doesn’t work out, leave the place. As simple as that.
Be good at the math you are working out on the spreadsheet.
Just to let you know, I recently bought a Nissan Altima 3.5SL $1100 below invoice price. It’s not surprising at all…that is how the deals are made. Never talk to one single dealer and buy it from them. Go shopping around at least 4 places and low ball them to reach the lowest possible price. It’s fair in this car buying game. If the guy tries to be rude, kick his ass right there and leave the place. You will find ample dealers.
Rest will be fine. All the best with your experience!!