That Dreaded Situation

Now with Black Friday around the corner, I thought it would be good to talk about how to walk out of a car dealer with a deal of the lifetime. Car companies love to put these invisible veils around their dealers protecting them from savvy negotiators that want a deal, and today I’m going to give you some tips on how to shatter that veil.

First things first, timing is key. Don’t bother going to a dealer when the sun is out and people are happy. No, the best times to hammer out a deal is right before the end of the year when dealers are trying to meet those quotas from corporate or when it's dead outside in the middle of February. Salesmen hate these days because they feel they won’t be able to sell anything with no one going out. So pounce on the dealers only if it is either snowing (if you’re on the East Coast) or raining (if you are lucky to live somewhere that has some good weather).

But even before you stride into the dealer, make sure you know what you want. I would recommend doing your test drives in different areas to get a feel for the driving experience your prospective car has. Also, make sure to leave around 4-6 months between the test date and the purchase date just to make it look like you aren’t really dependent on that dealer for a car immediately.

Look on TrueCar to see if your car is in budget. Take a close look at the invoice (the dealer’s price of acquiring the car) and if it really differs from the sticker price, buy buy buy baby! That means there’s an oversupply and great deals awaiting. Plus, some dealers say if there are cars coming soon. If there is a lot coming, wait it out since they will be more willing to do a deal with oversupply.

KBB will also tell you how much your trade in is worth and don’t be afraid if the dealer low balls you. When trading in my dad’s old Acura, the guy proclaimed that it was worth no more than $3,500. After spitting out some facts, I got him all the way up to $7,000.

All of your pricing info should be put on a spreadsheet that you can casually refer to on your phone while negotiating.

So once you are ready to go into to the battlefield, adjust your mentality. The dealer shouldn’t be thought of as a war ground. Rather, you should treat the salesman with respect as this is a mutual transaction (commission for car) like Herb Cohen describes in his book Negotiate This. Play nice and the deals will flow in.

Now, you need to keep your poker face on the whole time. Keep a neutral position at all times. Love the car but don’t doll it up so much that you seem ready to pay sticker. Don’t hate the car so much since the salesman will just show you the exit since you are a waste of his time. Instead, use facts and take an analytical stance.

For your offer, it all depends on that invoice. When I negotiated my dad’s car, we wanted to come in about $2,000 under invoice but just asked if there was a discount and they immediately slashed 20%. Refer to that spreadsheet on your phone and come in just a little under invoice. This will allow you to have some wiggle room.

Have a ceiling in mind. Maybe it’s 5% below sticker, who knows. If you can’t get to that price, just remember you are the guy shopping during the ugliest day of the year and tell the kind salesman thanks for the time but I will head over to a different dealer. Pro tip: when you walk away, tell the salesman you are going to go buy a car that competes directly with the one you are looking at.

Once that magical price is achieved, hooray! You made it! Here are a few tips for special scenarios.

If you are buying a German or Italian car that is going to depreciate by like 50% in three years (ahem...Maserati?) then lease baby. Also, negotiate all of the warranties into your lease agreement as they will help you in the long run.

If you are in the lucky position to pay cold cash, do so! Dealers love the fairyland appeal of a cashier’s check fresh from Chase. It’s a once in a lifetime occurrence for them and they will do ANYTHING FOR IT. The phrase “yeah, I’ll run over to Chase and in 15 minutes I’ll come back with a check” is like a blue moon to them.

Well guys, I hope you can all go out there and get some deals! Make sure to be smart and courteous while negotiating as it will pay off in the long run.