Buying a car from the dealership isn’t the largest purchase of your life, it may just be the second largest. Therefore it is important to know that you’re getting the best deal you can so you don’t get taken for a ride and you don’t get buyer’s remorse by thinking you could have had a better deal.
Nick Murray, YouTuber that runs “The Most Pointless Channel On YouTube”, just gave a ton of really great advice on maximizing the amount of discount you can get while buying a new car. This was the process he used for purchasing his Porsche 911 Carrera 4S, and when you’re buying a car with a larger sticker price, the process of getting a higher discount becomes more and more important. In the video he dissected the buying experience into two segments: 1) The Sales Process and 2) The After Sales Process.
But before you even step foot in the dealer there are some key themes you need to understand and those are that Knowledge is Power and that being Easy Customer goes a long way. Being an easy customer means that you spend as little time with the dealership and the car salesman as you can. Just walk in the door with the intent on making a very specific deal, present the critical car information in an organized fashion, and complete the transaction. You are not there to establish relationships with anyone, you are just there to complete a deal. You also have to remember that you should not be rude or unprofessional throughout this entire transaction.
With that said here are the primary points that we’ve learned so you can remember it for the next time you buy a car.
Before You Go To The Dealer:
- Research EXACTLY what you want and how much you want to pay for it. With the availability of the internet you should already know the information about your car. Do not go to the dealer to investigate what these items should cost. Instead research in online articles and forums and see what other people are paying for your exact car.
- Research how much DISCOUNT people are normally getting for each specific type of car and where those deals typically occur. Accumulate that data and understand what you can get realistically and understand a good starting point for negotiations. If you have dealer contacts, ask them directly on what you can expect for your specific make and model.
- Make A Spreadsheet listing out exactly what type of car you want, what options and features you desire, the dealer fees and taxes you incur, as well as the discount that you expect to get out of the deal. In this spreadsheet you need to list every item one by one, along with its product code and price, and listed in the order of the car’s configurator. It’s critical that the accounting is accurate so there is no confusion or pricing games that can be had when you’re at the dealership. This step will prepare you in properly pricing out a car that you want, or something similar that’s already on the lot.
The Sales Process:
- Remember to be an Easy Customer. This is where you have to realize that Time Is Money. You need to remember that the more time the salesman is spending on you, the less time they spend on helping other customers. If you help them with an easy sale so they can make more money from other people, perhaps they’re more willing to give you a better deal than if you’re someone they have to spend more time on.
- You should expect higher discounts on cars sitting on the lot. Those cars are on the dealer’s books and are costing them money everyday it stays unsold. If you’re lucky enough to find a car that fits you on the lot, you’re helping the dealer increase their turnover and you should be rewarded as such.
- More discounts can be had with cars loaded with options. The reason is that while the dealer only makes a specific amount on the base car they make a lot more money on the options that they sell. This is the “cream of their sale” because options have much higher margins. So while they’re making a lot more money on those options, you should also expect a higher discount as a result of buying them.
- Present your deal. This is the part where you present the spreadsheet that you’ve prepared. The information has to be organized so the dealer can easily key in those features in their configurator and the pricing should match up. When the information is clear and organized you’re helping the dealer complete the deal in a quicker time, once again making you an easy customer.
- NEGOTIATE. Within the spreadsheet that you’ve presented should be a discount that you had intended on getting from the dealer. This is where your negotiation skills will come in handy. They may quickly recoil and say “There’s no way we can get you that discount,” but you have to realize that this is all a little song and dance they play and that you shouldn’t back down. You’ve researched your way up to this point and provided them with a reasonable transaction, it’s really up to them to get to your discount level and not the other way around. If you’re lucky you’ll get the deal, and if not you can always hand them the piece of paper with your specifications and walk away until they’re ready for your deal. If you’re afraid of walking away just remember there are other dealers willing to sell you a car.
The After Sales Process:
This is where the finance manager tries to make more money out of you after the salesman is done with their task. It’s important to realize that there are a lot more variables at this stage where you may lose more money than you’re prepared for. The most important one is How Are You Paying For It? and the best tip for this similar to the tips above:
- Know before you go. Regardless of whether you pay in cash, making payments, or leasing the car is to make sure you’re prepared and that you know what you think you should be paying for your payment methods. You can request from the dealer those lease agreement documents or expected interest rates that you can get
- Avoid trading in a car at all costs. This may not be a reasonable tip for most people as they require the trade in value of their existing car to help pay for the next one. Regardless, trade-ins add another layer of complexity in the pricing games with the dealer. If you think you had a great deal in getting a massive discount on the sale of the new car, they may just make up for it in a terrible trade-in value. They may also remind you of the benefit of reduced taxes on the sale of the new car with a trade-in. The important factor here is if you have to go through with a trade-in you should negotiate all of this up front at the point of purchase. If you can avoid trade-ins altogether selling the car privately will usually net you more money in the end.
- Know your options. We’re talking about the options that dealers can tack on such as Wheel & Tire Insurance, special coating like Clear Bra, extended warranty, etc. This is a great trick by the dealers to help improve their bottom line and just like all the other tips before this, you need to come informed with knowledge on what you should expect to pay. You should ask ahead “What options are you going to offer me when I buy the car?” and you should also know the price you pay when you get it elsewhere from a third party provider. Ultimately, when you decide to go with those specific options you negotiate pricing once again.
Just always remember to be an Easy Customer and make the transaction as easy as possible for the dealer, so they can continue making money from other people. Here’s Mr. Murray’s discussion on getting that strong discount:
(Source: Nick Murray)
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