For those that don't know my past life, I used to flip cars in undergraduate, worked as a used car salesman for a hot few months before going back for my Masters in Business, and I've helped tons of friends negotiate both new and used cars.
New ones are the easiest because you know exactly what the dealer owns it for, and I’ll help shed some light on some other incentives that will allow you to buy it for them for under invoice.
1. Decide exactly what new car you want, and when you're going to purchase it.
Of course to do this you need to test drive what you're going to invest in…
If I'm right, you might find yourself at the dealership test driving before you complete steps 2-5. If you go in to test drive it before reading more, simply print this out and demand $2,000 below invoice for every $10,000 worth of car you’re buying, that’s usually a good stab in the dark. Be prepared to walk out of the dealership if they say no, and be prepared to buy it right away if they say yes.
They will give you many different reasons on why and at the end of the day, tell them you're planning to do what this blog says unless they can match that.
Now assuming you’re able to test drive a car and get out of the dealership, here’s how you can knock it out of the park.
2. Call dealerships before wasting your time in person (appraising your trade in, running your credit, doing another test drive, etc).
Your goal on the call is to let them know you’er ready to buy today and make sure they’re available for you and not too busy. Some people say buying at the end of the month can help, although I truly believe that if you read all of this you can get a great deal on any day of the month.
3. Don't negotiate. Make an serious offer. Decline when they attempt to ‘work something out.’
Most the time you'll get a common and annoying response, "Come on in and I'm sure we can work with you."
Immediately decline and tell them, "If I come in, I'm going to be very upset if I can't have this price, so please talk with your manager and call me back ASAP if you're going to want my business today. I will be buying a car today."
4. Go eat some lunch… seriously.
...because car shopping and buying is hard work and generally you’re going to spend a lot of time waiting. Most dealerships are going to take forever to get you through their processes. Hopefully you'll be out of their by dinner so eat a good lunch.
5. Pick a specific car from a specific dealer.
Before any dealership agrees to your $2,000 below invoice offer, they’re generally going to want to know exactly what car you want to buy. so take a look at their new inventory on their website and be educated and decisive on what color and features you want with the car you’ve already decided on.
On top of that price, you’re likely going to pay a dealer fee (especially in Colorado where I’m based) and tax. This is also known as “++” so in auto industry terms, you’re offering the dealer ‘$2,000 back on invoice plus plus.’
We’re getting close to the part where you drive to the dealership.
6. Drive to the dealership, start due diligence process and purchase.
Once you get there, of course you want to test drive the actual car, even if you’re familiar with the model and trim levels already.
Check the mileage if it’s a new car. Hopefully it has less than 100 miles on it. But with the average driver putting 12,000 miles on a car per year, it’s not really worth stressing over.
Check the body and interior for any random damage or scratches. It’s a new car, so make sure it’s perfect and shiny.
New cars should come with a full tank of gas.
At this point it may be the first time you see ‘the numbers.’ They’ll bring out a document that better match the car, discount ($2,000 less than invoice, but much more than that below MSRP), and MSRP. Compare that to the invoice which you can find online for free, or request the exact copy from them.
7. Decline the extras.
Most dealers will put on clear bras, auto protection, and other add-ons that ‘come with each car.’ You should be able to decline and remove those. This works about 90% of the time, as sometimes they’ve made the annoying investment already and if they’re not able to remove it because whatever it is is already installed on the car, then you can at least request to have the add-on that you don’t want at the dealer’s cost.
By the way, you should be aware that the sales person is not going to be making much, so remain thankful for their time, but firm.
8. Dealing with the Finance Manager.
After you agree to the numbers, you’ll have to go into the finance manager's office or desk 99% of the time. Even if you're buying cash, they'll go over extended warranties and other upsells for you. Be prepared to say "No" unless you were previously interested in something.
Chances were, you weren't, and they'll be using your emotions of fear and greed in order to get you to impulse buy something. Stay smart and non-emotional.
9. Congratulations on your new purchase.
Comment with a photo of what you just bought and tag a friend who could use some negotiating advice!
If you’d like to see my video recapping this blog post, subscribe to my YouTube channel here.
Or, here's the video on how to buy a used car.