New Car Buying Tips & Advice
Buying a new car is a big decision, but it doesn’t have to be a difficult one. The average person will buy 10-12 cars in their lifetime. Preparing yourself and doing your homework is the key to being able to make the important decisions with total confidence. Once you’ve decided on the car you will buy or lease, you will need to be able to determine what is a good price. This is where it can get very tricky.
M.S.R.P. – The Manufacturer’s Suggested Retail Price, commonly known as the List price or window sticker, is the price set by the manufacturer. This is typically the price that the new car dealer would like you to pay. Although the overwhelming majority of new cars are sold at less than the M.S.R.P., some dealers will hold out for this price on a very hot-selling vehicle that is in high demand and limited supply.
Dealer invoice price – Every manufacturer sends an invoice to the dealer for their vehicles as soon as they are delivered to the dealer. The dealer will typically pay for the vehicle via a prearranged line of credit. Commonly, the dealer will start paying interest charges from the first day onwards.
Hold Back – Most manufacturers help subsidize the interest charges and marketing/advertising that a dealer incurs by paying the dealer a holdback amount, after the vehicle has been sold. This amount typically ranges from 2.0% to 2.5% of the invoice amount. Dealers will rarely consider this when negotiating a new car deal
Maximum dealer margin/profit – The difference between the M.S.R.P. and the dealer invoice price is the maximum dealer margin/profit that the dealer has to work with when negotiating a deal.
Dealer and buyer goals – The dealer’s goal is to negotiate a deal as close to M.S.R.P. as possible and the buyer’s (your) goal is to negotiate a deal as close as possible to the dealer invoice price.
Actual dealer margin/profit – The amount over the dealer invoice price that is finally negotiated between the dealer and the buyer (you), is the dealer’s actual dealer profit/margin, before sales and overhead expenses.
Dealer overhead and bottom line profit – From the actual dealer profit/margin amount the dealer has to cover the sales rep and sales manager’s salaries, commissions and bonuses. The remainder goes to the dealership to cover all other expenses, with the final balance representing the actual net profit to the dealership.
Factory-to-consumer incentives – In an effort to stimulate sales, many manufacturers will offer incentives to the consumer (you). These incentives are commonly advertised in the media and can consist of low rate financing/leasing rates, such as 0%, cash rebates, such as $2,000, or a combination of both. If a manufacturer is offering you 0% or $2,000 cash, the emphasis is on OR; which means that you cannot get 0% financing and $2,000. You have to decide between the two. In some cases, you can combine the 0% and $2,000, but not very often.
Factory-to-dealer incentives – Commonly referred to as hidden rebates. Internally these non-advertised dealer incentives can be known as marketing credits, trading dollars, factory cash, dealer cash, dealer bonuses, invoice credits, etc. Many manufacturers will use them as additional stimulus for the dealer to sell more vehicles. In some cases, the manufacturer may not want to advertise that they are offering incentives to avoid tarnishing their image, where others will use these incentives to encourage dealers to carry more inventory and thus sell more vehicles. Most dealers will factor in these factory to dealer incentives when negotiating a deal. Effectively this may allow the buyer (you) to buy/lease a new vehicle for less than the dealer invoice price.
things car dealership customers want to know
Today’s car dealers have fully focused on the task of trying to close sales as well as obtaining new prospects. This sometimes results in neglecting relationships they have with their existing customers.
In addition, customers are now more demanding, especially in the automotive industry. The nature and costs of these products make them harder to sell, therefore, deeper, updated and special techniques and tactics are required to be able to identify the kind of customers car dealers are doing business with, and enable them to make the best offer to customers.
ideas to keep the lines of communication open with customers:
Notify customers when their warranties are about to expire
Remind customers when it is time to carry out a scheduled maintenance
Send customers every product and service promotional campaign launched by the car dealership
Suggest some helpful tips regarding the car’s maintenance
Send special sales promotions during the vacation season
Consumers will highly appreciate these kinds of actions, and every act of communication from the dealer will increase customer loyalty to your car dealership. If you can prevent their car from breaking down or if you can help a customer save money, they will feel pampered and this in turn will secure their loyalty. In time, this will result in more sales for your dealership.
You can offer additional benefits to your customer with just a little marketing effort by using a system designed to facilitate it. In this way you will be able to ensure your customers continually prefer you over your rivals.
What Are Some Good Tactics To Use To Lower The Price Of A Car While Negotiating With A Car Sales Person?
My short list of negotiating tactics:
1. Don’t negotiate. Tell the salesperson and sales manager that you’ll sign the paperwork the minute they hit your target figure. Politely decline any counter-offers, give them your phone number, and leave. If the price you’ve proposed is within the realm of possibility, they’ll call you at some point.
2. Follow-up on Saturday or Sunday nights an hour before closing time. Call and ask to speak with the salesperson or manager you’ve spoken to before. Remind them you’re a buyer when they meet your figure, but that they shouldn’t waste your time if they won’t. If your offer is possible, the opportunity to do one more deal before the end of the day might compel them to work with you … especially if the dealership is having a bad weekend.
3. Follow-up on the last day of the month. Again, salespeople and managers are often under pressure to find one more deal before the month ends. A deal that didn’t make sense on the 25th might make sense on the 31st if the month hasn’t met expectations.
4. Follow-up on days that have had terrible weather. A major snowstorm, a day of wind and rain, etc. can dramatically affect car sales. Call and remind the salesperson or manager that you’re happy to come down when they meet your offer. Again, the fact that they’re not selling cars might get them to bend in your favor.
5. Rinse, wash, and repeat. Do the same process concurrently with a couple of other dealers in your area. Make sure they have the car you want, and then give them their mission.
6. Know what a car is worth. If you’re buying a new car, Edmunds.com and TrueCar.com provide “true market” estimates that are reasonably accurate. If you’re buying a used car, KBB.com is a great resource, as it will tell you both retail value and wholesale (aka trade-in) value.
Essential Things You Should Keep in Your Car
Some of us keep absolutely nothing in our car trunks, while others have enough packed to live in their cars for weeks. Somewhere in between is this list of thirty things we think every car owner should always have on hand.
You can buy packaged emergency safety kits, like this one from AAA, which includes a booster cable, flashlight, first aid kit, and many other items, but the DIY approach is more satisfying and you probably already have many of these items lying around. It’s not just about emergencies or safety, either. Below I’ve separated the checklists by category.
There’s nothing like breaking down at the side of the road and realizing the spare tire in your trunk has a flat from the last time it happened.
(True story.) To keep you up and running, keep these in your trunk:
Spare tire (in good condition), along with a tire jack and tire iron, because without them or someone else to help you, the spare tire is useless. Here’s how to change a tire, in case you need a refresher. Also, if your wheels require a special security key, make sure that’s always in your car too.
Tire inflater and sealer, like the Fix-a-Flat, which can plug a leak (and help you avoid using the above tools) just enough to get you to the auto shop.
Jumper cables, because dead batteries happen to the best of us. We’ve got a crash course on how to jump-start a car, but you should familiarize yourself with your engine just in case things are a little different. Alternatively, you can pack an emergency battery booster so you don’t have to rely on a Good Samaritan coming along.
Your car’s manual, which should be in the glove compartment already.
Tire pressure gauge: As our sister site Jalopnik points out: “checking tire pressure on a regular basis can improve handling, increase fuel economy, promote tire longevity, and even save lives.”
Duct tape and WD-40. Seriously, check out these 10 heroic duct tape car repairs.
Car repair information. A business card for your auto repair shop, the number for AAA (if you’re a member), and car insurance claim forms should also be stored in your glove compartment.
You might already have an emergency go bag or kit set up. If you spend a lot of time in your car and it’s always nearby when you’re home, you could just keep that kit in your trunk—or create a second, perhaps lighter version.
How to negotiate when buying a car
Anyone can and should haggle when buying a vehicle. In fact, 64% of those who tried to negotiate when buying a car were successful, with just 16% of those failing to bag a discount, according to Money Advice Service research. So read our tips for negotiating car prices.
How to haggle for a new car
Make sure you’ve worked out what you can afford and have done plenty of research into the car you’re planning to buy – including the list price.
What to do in advance
Make sure you know the car’s list price. Look at the manufacturer’s website, or car websites such or What Car? Or check the new car listings at the back of weekly motoring magazines such as Auto Express.
Know the critical features suiting your needs. Don’t get talked into a lower specification because it is cheaper – instead, aim to get the model you really want at a discount.
Check online for rival dealers in your area to see if any of them are offering deals on the same car. This can be a good bargaining tool.
If you’re part-exchanging your current car, make sure you know what it’s worth. The more you can get for it, the less hard you’ll have to haggle on the rest of your deal. You can get a free valuation quickly and easily on sites such in new window or a more detailed valuation if you pay a fee.
Always test drive the car. Remember to try it up hills, in traffic and out on the open road. If possible, compare it with lower and higher specifications of the same car.
When talking to the salesperson
Be friendly and polite, but never let the salesperson know your top limit.
If you’re a cash buyer, don’t tell the salesperson this straight away. Dealers make bigger profits on finance deals, so let them bargain the car’s price on this basis. You can then decline the finance deal later in the process.
Start off by stating an amount lower than what you’re actually prepared to pay – you can then gradually increase it if necessary.
When you make an offer, don’t speak again until the salesperson replies.
Be as positive as possible about your aims. For example, don’t say “Can I have a discount?” Instead, ask “How much discount will you give me?”
Some negotiators start by saying they’re not prepared to pay the price advertised, but remember they ARE there to do a deal!
If you’re struggling to get a discount but you want the car, offer to close the deal there and then if you can both agree a price.
Don’t be afraid to walk out if the dealer isn’t prepared to negotiate or move much on the price.