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 Johnny Wright |
"Negotiate from the dealer cost up, not from the MSRP down."
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The MSRP and Dealer Cost
If you want to save money by negotiating, you should negotiate from the dealer cost up; not from the MSRP down. You just need to remember that the dealer cost is not the same as the factory invoice. |
Some dealerships refuse to haggle over the cost of a car. Once you make your opening offer you should never accept anything higher than that, as far as costs go. If the dealership that you go to doesn’t haggle, don’t sweat it, some other dealership will.
The reason some dealerships refuse to haggle is because they want to add extra fees to the MSRP Price. You will need to decide what kind of buyer you are in order to get a negotiating stance.
You do not want to set yourself up as a monthly paymentbuyer because that is a guaranteed way for you to pay more for the car than it's worth.Expect them to offer to take a little bit off of the MSRP. They will then ask you what you are looking to pay each month; this is where the extra money comes in. So don't negotiate from a monthly payment position at all.
Cash buyers are generally asked, “What are you willing to pay each month?” If they ask this:
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Tell them it doesn’t matter because you're looking for an even division on the cost of the car. You don't want to haggle over the monthly cost.
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Tell them that you want to haggle over the cost of the car, not the monthly payments. This is often used for cash buyers.
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Be alert for a finance manager trying to get you to report your payment method before you have decided upon purchasing the car. Don’t be sucked into the trap.
Remember that the method of payment doesn’t matter unless you have decided to actually buy the car. Finance managers ask so that they can do their 'homework' on how best to screw you over.
Nearly all dealers will offer to give you a better deal if you finance the car through them. You can be guaranteed that this will not be the case.
The worst thing that you could be is an "impulse buyer".
An impulse buyer is just another word for “victim.” Impulse buyers will get sucked into the “hot” car of the moment and get taken for as much as $10,000 or more over what a savvy buyer would pay. A dealer can see the impulse buyer coming from a mile away.
Dealers will try to get you to become an impulse buyer by approaching you about the “hot” car. Tell him that you are not interested because it will not be worth the money as next year's “hot” car will be out, making this year's "hot" car obsolete.
You don’t want to buy a car that is in demand because it is the easiest way for a dealership to mark up the prices. The MSRP always looks low, but it is the extras and monthly payments that will make you pay dearly. The hottest retro Mustang will sell like hotcakes to a bunch of impulse buyers willing to pay anything to have the newest Mustang on the block. Don't allow yourself to become one of the impulse buyers unless you are willing to pay thousands more than the car will be worth in a few months.
Remember the resale value of the car doesn’t change no matter how much money you bought the car for. It will still depreciate in value from the factory invoice at the same rate as others.
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