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All Contents © 2020The Kiplinger Washington Editors
By David Muhlbaum, Senior Online Editor
| Originally published March 2015
Most of us know that there are certain things you’re supposed to do and not do when buying a car, but it can still be a struggle to put those principles into words. For the most part, car-buying remains a tough negotiation. And you’re at a disadvantage: The sales representative does deals every day, and you don’t. He knows what to say; you don’t.
Here are six lines you’re likely to hear from the friendly car salesperson—with our suggested responses, which will keep the conversation going the way you want and lead to the best price you can get.
Your answer? "Thanks, I may consider that. But that’s separate from how we’re going to price the new car."
You’ve probably been told not to discuss the value of a trade-in before you settle on a price for the new purchase, but that won’t stop the sales rep from trying. If you've done your research, you'll know what your car’s potential value is. Don't be lured in by a high offer by the sales rep: He might be willing to exceed your trade-in's book value, knowing he can make up for that on the purchase price of your new ride.
Your answer? "Let me see the invoice, please."
Legitimate fees are listed on the factory invoice, which the dealer should always share with you. Verifying that the fees on your dealer's bill of sale are also on the invoice shows you're paying attention. It’s not the end of the story, however. Some fees inhabit a gray area—you'll likely have to pay them, but you might be able to negotiate. An example is the so-called document fee. Some states, such as California, regulate this fee, setting it at a flat $80. Most don't regulate them at all, and they can run several hundred dollars. In these states, find out what other lots charge; the dealer may reduce its fee to match the local competition. The auto site Edmunds has published a great guide to these fees.
But whatever you do, don't pay to have the dealer pull plastic off your new car, see if it has oil in it or perform other mundane acts—vehicle-preparation fees, these are often called. The clothing store doesn't charge you to take the jacket off the hanger, right?
Your answer? “We can talk about that later. I want to focus on the price you can get me on the car."
The sales rep is not offering you credit counseling here. He wants to sell you a more expensive car, by extending the loan term and lowering your monthly payments, or by switching to a lease. That could add hundreds or thousands of dollars in lifetime interest charges.
Don’t go to the dealership until you have lined up backup financing at your bank or, even better, your credit union. You'll be in the driver's seat during negotiations. But once you have a settled price, see what your dealer might have to offer for financing. It might be able to offer you rates that are quite low, if you have good credit. And leasing may be the right path for you, too: Just keep your eye on the total cost, not the lower monthly payment.
Your answer? This one's simple: "No, thank you."
You are going to be offered all kinds of products and services in your dealership's financing and insurance office. Mud flaps, rust-proofing and paint sealants make the dealer a lot of money, but you can get them for less—often much less—elsewhere. Look at a catalog such as AutoSport for accessories or your local detailing shop if you want your paint sealed. So hold your ground at the dealership.
Your answer? "We're going to settle on a price and get it in writing before any cars move."
If your salesperson (let’s call him Chuck) doesn't have exactly what you want, Chuck may be willing to look around for a car that more precisely matches what you're looking for from another dealership, then have that car delivered to his location. Dealer B gets a car in exchange from Chuck’s dealership, either now or later. It's called a dealer swap or trade, and is only available with new cars.
So, what’s the problem? It costs money to flatbed or drive new cars back and forth. You might end up eating some of that cost if you stick with Chuck. In theory, you really should have located the vehicle in the color you want at dealership B and negotiated there.
Understand that Chuck may want a deposit or even an agreement that you're going to buy the car coming in from dealer B.
Your answer? “Actually we’re not yet at the fair price I expect to pay.”
The point here isn't $4,000—it could be $400 or $14,000. The problem is that the dealer is negotiating from the sticker price down. We're often tethered to the first piece of information we hear, a phenomenon known as the anchoring bias. In this case, the sales rep wants to take that sticker, inflated with all kinds of fees, and offer you a bargain relative to it.
If you've done your research, you can beat dealers at their own game by dropping your own anchor initially. With car-buying, the key is finding the real cost of the vehicle to the dealer before you start negotiating. Services such as TrueCar.com provide incredible detail on what cars are being sold for in your area. Bring a printout from the service you've used to find the dealer cost, so the salesperson knows you're not blowing smoke.