Tips on Purchasing a Car from a Dealer
1. DO NOT Focus on Monthly Payments Only
2. Know about the difference between MSRP and invoice price. MSRP is what manufacturers suggest as the retail price. Invoice is what the dealer pays to the manufacturer. As an example, if MSRP or sticker price is 25000 and Invoice Price is 20000, you can negotiate a price between that.
3. Suppose for example you offered 21,300 and the dealer accepted. Great. You only paid 1300 above the invoice price, and 3700 off MSRP, BUT, don't celebrate too much yet. Dealers don't make money here. They know that. They will allow you celebrate here, knowing that that they will get you later.
NOTE: Never take the 0% interest rate from the deal. That would be at MSRP. Better to get a low price and get 2-3% from bank.
Never negotiate from MSRP down. Negotiate from invoice price up.
Always KNOW your principal amount you want, your rate and monthly payment. See below. DON"T JUST FOCUS ON MONTHLY PAYMENT.
4. This is where the fun begins. They will try to keep you, pretend they have to speak with a finance director etc to up sell you. Always:
a. Get your OWN PRE-APPROVAL from a Credit Union before going to a dealer. It does not pull credit to pre-approve. Walk with pre-approval letter
b. Get a sense what you rate will be from the bank or CU before going to the dealer..
c. Know in your head, work on a spreadsheet or download the AutoNegotiator App on your phone to know EXACTLY what you loan payment is without ANY Add-ons
5. Tell the Dealer to pull credit and SEND the application to YOUR Credit Union FIRST and find the rate. They can optionally send to other financial institutions to see if they can match or get a better rate
6. The Finance person WILL NOT tell you what is the rate or the price WITHOUT add ons. All they want to do is add a bunch of stuff and HIDE IT in the Monthly payment
7. As an example, if you know you offered 21,300; then with Title + Doc + taxes, you may roughly have a final amount before addons as 25,500.00. KNOW THAT NUMBER
8. In Auto Negotiator, Put 25,500 as price, and put your downpayment and the rate the dealer said you got from your CU or lower... Say that is 2.5%. Assume your downpayment is 8000.00. Assume 54 months or 4.5 years. Your monthly payment is 342.98.
9. As mentioned before, The Finance person WILL NOT tell you what is the rate or the price WITHOUT add ons. All they want to do is add a bunch of stuff and HIDE IT in the Monthly payment.
So instead of presenting 342.98, here is what they will do.
They will sell you on warranty (for certified cars). They will add on Gap insurance. They will add on Key Fob replacement. They will add on Fabric or leather restoration or fix.
They will present three monthly payment options, for example 1.) 460.00 2.) 430.00 and 3.) 400.00
Then they will PRETEND that is your true monthly payment. NO IT IS NOT.
Your true monthly payment is 342.98.
So if you took where not aware of this and choose option 1, for 460, you are paying 460 less 342.98=117.02 above the loan payment. So the question you have to ask yourself, do you really want to pay 117.02 x 54 months = 6,319.08 OVER the life of the low just for warranty, key fobs etc?
That is WHERE THEY WILL GET YOU. You celebrate negotiating down to 21,300 in car price, but the GOT YOU for $6,319.08 in the back end. Sneaky eh??
10. So be aware. Be conscious. KNOW ALL YOUR NUMBERS.. If you want the warranty put the DEALER on hold and call a warranty firm from the dealer (look on google) and get a quote from them and negotiate. They dealer will get scared.
11. Let's say I WANT the Warranty and found out in the open market it costs 2500 and NOT $6,319.08. Tell them you would only pay 2500/54 = 46.30 per month ONTO of your loan payment for this. And throw in 4 years of FREE oil changes :-)
Your FINAL monthly payment is 342.98+46.30 = 389.28. Much better than 460.00 or 430.00 or 400.00
Now THAT's a negotiation.
Comments
Post a Comment