First You Deal, Then You Wheel
What's really going on?
Knowing how dealers work the customer can help you negotiate a better deal on a car. It also helps to understand their goal: to sell or lease a vehicle at the highest possible profit. That's understood by everyone involved because that's the business they're in.
You have to be clear on your bottom line as well. If it's to get the best lease or purchase price that the market will bear, you and the dealer will stay on opposite ends of the table. Understanding the dynamics of a dealership will help you move the dealer closer to accepting your offer.
If during negotiations you tend to be distracted by compliments or negative tactics, learn how to be ready and how to stay steady.
It's not over until the cash register rings
Imagine you've just negotiated the purchase price of an SUV at Happydale Motors. Now it's time to meet with Kelly Diamond, the finance manager, a highly attractive, polite and articulate specimen who is poised, well dressed, and smells like a million dollars. Try to remember that this manager will make a commission on everything sold! That includes the loan, the lease, the insurance, under-coatings and over-coatings, extended warranties, larger tires, special packages, and add-ons like monogrammed floor mats. In short, it's the manager's job to get you out the door with goods and services that will make the dealer rich. And there's nothing wrong with the manager trying to do that!
During this part of the negotiation, beware of "monthly specials" on moon roofs and CD players! The dealers get those installed at local shop, just as you would. You can pay the dealer $600 for that CD player or go directly to the local stereo barn and get the same unit for $300, including installation.
Always remember, finance folks are well-trained negotiators. It's your job to know what their job is. That means everything is negotiable, right down to the interest on your loan. Incidentally, it's advisable to pre-qualify with your credit union or bank prior to this meeting, so you have the evidence that you can cut a better deal than they're offering you.
Above all else, keep your cool!
It's probably a good idea to not be in too much of a hurry when you want to buy or lease a vehicle. This takes your anxiety out of the negotiation and helps you resist the pressure to cut the deal quickly. Sales folks believe, and rightly so, that if they don't get you to commit to the deal right then and right there, they'll lose you to another dealer.
Take the puppy home!
It's not unusual for them to offer you the car over the weekend – to try it out – or to deliver it to your front door for a test drive, without any obligation. There's nothing wrong with that; it's actually a great sales technique called "take the puppy home." Once you've driven the new car to the grocery store a few times and your neighbors have gawked at it and admired your style and taste, it's tough to take it back. Simply put, you've developed a crush on your car.
The best time to buy is now – or later
Armed with the right data and attitude, anytime is the best time to buy a car, though industry experts like Mike Royce, a former car dealer who joined the consumer movement, will argue that the last weekend of the end of the month is the best. That's when salespeople and dealerships have to face a quickly closing window of time to make or exceed their quotas for the month. These quotas are tied to bonuses, which the companies pay to the best performers.
Factory-to-consumer rebates are not part of the deal! They are the manufacturer's incentive to get you to buy their cars, which are probably clogging their lots due to sluggish sales. You apply the rebate toward the cost reduction of the vehicle after you've negotiated the lowest price.
Always negotiate from the dealer's invoice up (you can obtain this number from most Internet Car Dealers), never down from the manufacturer's suggested retail price sticker on the car's window! This is a technique that gives you a psychological edge and starts out from the bottom line rather than from an imaginary "suggested retail price." A form of negotiating that is acceptable in dealer culture, it is seldom practiced by any but the most seasoned buyers.
Be helpful to the salespeople and never hostile! Impress upon them that you understand what their job is! This will put you in control of the negotiation and diffuse the tension (yours, most likely).
Don't be alarmed if the boss is brought in on the deal! Be flattered! Having to double-team you with a good cop/bad cop approach is a sign that you're a slippery eel that can't be easily nailed down. Again, they're mandated to use these steps by the big boss and will see you as a formidable sales challenge. Stay calm and have fun!
Dealerships are highly charged, competitive environments, often populated by anxious buyers with puzzled and agonized looks on their faces. The buyers are in that condition because they don't have your attitude or your data. Always "read" your sales environment and the people in it when you negotiate, and don't forget: you can always walk away!