HomeOpinionHow to get the most out of Price Negotiating

How to get the most out of Price Negotiating

Price Negotiating is a major obstacle for many used car buyers, so make sure you are prepared.

When it’s time for price negotiating, keep this in mind: they have one car to sell you, and you have many to choose from. You need to be the one in control and make sure they know that if you are not satisfied with the car and the price, then you will take your business elsewhere. Up until online VIN decoders, consumers would go into the negotiations empty-handed. Now, you will be armed with a checklist of possible items which you will bring to their attention when they want to receive full price for the car. Even if the list came up green in every category, price negotiations are often still possible.

First off, determining whether or not you’re getting a good deal should be based on the checklist results as well as your research, rather than by how much the seller / dealership is willing to reduce the sales price! If you get caught up in the price, then sometimes you might lose sight of the car you really want, and settle for one you think is a deal thats too good to pass up. Keep this in mind: you will purchase the car once, but your ownership can last for years. By checking vehicle history before you even begin price negotiating, it will help you to focus more on the vehicle you are looking to purchase and its condition.

When you have made your decision on which car you want to purchase, you may choose to enter price negotiations over the final selling price. If so, refer to your vehicle history data. Did it come up all green? If not, use that as your stronghold and tell the seller that either they fix the problems on your lists or they give you a discounted price, or both. If vehicle history report were all green, it will show them that you are aware of the car’s quality and if you offer between 3% – 7% less than their asking price, they should consider it. The best way to negotiate is to use the same technique top sales associates use on a daily basis to get a commitment from their customers. Use the phrase “If you’ll reduce the price to (your price), I will take the vehicle home today!” If there is an item the car needs, such as tires, you can also let them know that if they fix the item that you will take delivery. Be sure you have every intention of purchasing if he/she is able to meet your objective!

New Car Price Negotiating

When it comes to new cars, there is a slightly different approach that should be used. First of all, with the introduction of the Internet, it’s possible for consumers like yourself to find the dealer invoice price as well as dealer incentives. Dealerships will need to make some sort of profit and although there are websites which try telling consumers to negotiate holdback, this kind of practice will typically lead to a negative experience and will rarely work to your benefit. It is possible however, to negotiate dealer incentives. These are different from consumer rebates because these incentives are paid directly to the dealership instead of being applied to your purchase price.

Another great tool you can use is getting Internet Quotes from local dealerships. This technique is realitivly new and can sometimes lead to great savings. Since dealers want a chance to earn your business, you can often get a lower price through emailing the sales department. The approach which dealerships take towards these leads has been changing over the last couple years. They are now being trained not to give exact prices over the internet for the simple fact that you can’t buy a car over the internet. Until you are willing to actually come into the dealership, you are only a prospect. Once you are sitting in the Sales Associates office, you are now a customer. Some dealerships can receive hundreds of internet leads a month, many of which are not even potential customers. If you choose to get internet quotes, don’t be discouraged if the dealerships give you the ‘run around’. Instead, use it as a way of getting to know the dealership as well as the sales consultant by asking vehicle questions, such as options, colors, and if they are expecting additional vehicles anytime soon. By doing this, it can help you build a relationship with the consultant, which can make your buying experience a smoother one.

Here are some common phrases used at new car dealerships:

  • Frontend Profit: This figure is what most sales consultants commission is based on. It is calculated by taking any profit above the invoice less any applicable fees.
  • Backend Profit: This is the amount of money the dealership receives from holdback, stair-step programs, quarterly bonuses, and dealer incentives. Some dealerships help supplement sales consultants by giving them additional commission if they help achieve a quarterly unit bonus.
  • Dealer Invoice: This is the price the dealership is charged for a specific vehicle. This price can vary from vehicle to vehicle as well as from each dealer. There are additional funds which the dealers receive after the sale is complete, namely holdback, however for all practical purposes, this is the bottom line for the dealer.
  • Dealer Holdback: This is the amount of backend profit a dealership will receive once the sale is complete. Although this is profit for the dealer, this is not typically negotiable and its purpose is to help keep the dealership operating.

If they are unable to meet your price, they will either let you know that they can’t do it, or sometimes give you a counter offer. Which ever the case, the decision to proceed at this point will be up to you. If you still feel the price is too high based on your research, then you might want to give it some time to see if you can either find a vehicle better suited for you, or for the seller / dealership to lower the price. Once you have agreed on a price, then it’s time to proceed to the ‘Closing the Sale’ if buying from a Private seller, and ‘Dealer Worksheet’ if buying from a Dealer.



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