If you’ve followed along with the first three posts in this series, you should already have a budget for your new car purchase, a timeline for making the purchase, thoughts on whether you’d like to pay cash or take out a loan, and finally the exact car models you’re interested in purchasing.
Once you have those things down, you’re ready to start negotiating with car dealers.
For our recent purchase, I was able to take a lot of advice I found online and mix it with a little trial and error to come up with some tips that will make this process a lot easier for you when it comes time to do it yourself, including the exact email I used to extract the best offer from each dealer I contacted.
Forming a big-picture strategy
The internet is your friend when it comes to negotiating with dealers. Gone are the days of spending hours driving from lot to lot hoping to find that perfect car. No longer do you have to do your negotiating on the home turf of the dealer. Now you can do the bulk of the work right from your computer, taking the power right out of the hands of the dealer.
You see, the dealer’s big goal is to get you on the lot. They know that until they can do that, they aren’t selling you a car. You need to use that to your advantage, and the way to do that is with email. You can spend a day or two exchanging emails with all of the dealers in your area and end up with the very best offers from each of them. Then you can simply pick and choose which ones to actually go and see. Here’s how it’s done.
Finding the dealers to contact
Doing this by email allows you to contact many dealers with minimal effort. The more you can contact, the better your understanding of the market will be and the more choices you’ll end up with.
My suggestion is to use a site like AutoTrader and search for dealers in your area based on the brand of car you’ve decided upon. Given that we had narrowed our search to the Honda Odyssey and the Toyota Sienna, we searched for every Honda dealer and every Toyota dealer within a 50-mile radius of our house. This gave me a list of about 40 total dealers to contact.
I tried a couple of different strategies to reach out to these dealers, including collecting direct emails of people from each dealer’s sales team. But the most effective method was simply using the contact form right on the dealer’s website. This almost always led to a quick response from someone on their sales team. You can use the email script I give you below to quickly jump from site to site and paste the exact same message into each contact form.
The exact email script you can use to get exactly what you’re looking for
There are a few things you want to communicate with your email:
- A near-term deadline for your purchase. If you say you want to buy soon, this gives the dealer a sense of urgency. You can use that later when you work them for a better deal.
- The specifics of the car you’re looking for. I’m talking make, model, trim, year(s), mileage, specific features, everything in as much detail as possible, including the things you’re not interested in. You’ve already done the research so don’t leave anything open to question. The more specific you can be, the less back and forth you’ll have to deal with and the more they’ll know you really mean business.
- Make sure to request the full out-the-door price, all taxes and fees included. You need to be able to compare apples to apples across all of your various offers, and you can only do so if you know the full price.
Here is the exact email I sent out to Honda dealers:
“My wife and I are looking to purchase a Honda Odyssey by the end of the week. I am interested in hearing the lowest full out-the-door price you can offer on both of the following two options:
1. New Honda Odyssey LX (2013 if in stock, otherwise 2014).
2. Certified pre-owned Honda Odyssey with less than 40,000 miles.
Price is our biggest factor, with mileage being 2nd. Other features are irrelevant. Again, full out-the-door price is requested so we can compare to offers from other dealers.
Thank you for your help with this.”
There are a few reasons why I think this was an effective email:
- It communicated a sense of urgency.
- It clearly communicated that I was going to compare their offer to those from other dealers.
- It was specific about the things we were looking for (lowest price, specific model, year and mileage) and the things we were not (all other features).
- It requested the full out-the-door price in two separate locations. This is something I found them reluctant to give so I wanted to make sure they knew that was what I was looking for.
Obviously this exact email won’t work for your specific situation, but you can start with this template and modify it based the car you’re looking for and the features you care about.
Handling the dealers’ responses
A number of the dealers who respond will sound like they completely ignored your entire message. Expect this to happen and do not let it get you frustrated. Simply repeat your message until they respond to your specific requests. If they only respond to parts of your request, politely push back until they respond to all of it. They are trained to dodge the tough questions and just try to get you to the dealership as quickly as possible, so it’s your job to stay on message and keep pushing. It may take a few emails, but they will eventually give you the answers you are looking for.
One thing they will almost all ask you for is the price you want to pay. DO NOT GIVE THEM THIS INFORMATION. Keeping them in the dark on price is one of the most powerful tools you have at this point. Remember, you have all of the power right now because they still need you to come to the dealership and lowering the price is the best way they can convince you to do so. Keep them swinging at an invisible target and you’ll start to see the prices shoot down.
What you can do, and absolutely should do, is tell them that their price is not as competitive as what you’ve seen from other dealers and that you’re sorry but you’ll have to be going elsewhere. They will ask what price you’ve been quoted from the other dealer, and again you will not give them this information. Just tell them that unless they can make a better offer, your business will be going elsewhere. The point at which they stop lowering their price is the point at which you know you’ve gotten their best offer.
Tracking the responses
As you get more and more responses from these dealers, you’re going to have a lot of offers that you want to keep organized. You’ll want to know exactly which dealer offered what price on what car without having to dig back through your emails. This will allow you to quickly compare all of your different offers and know exactly who to reach out to when you’re ready to actually go test drive.
I created a Google spreadsheet to keep myself organized and I’m sharing that with you so that you can use it as well. You can get the spreadsheet with this link here: Car Cost Comparison Worksheet.
So let’s walk through how you would use this spreadsheet, starting with the main “Offers” worksheet. Each row represents an offer on a single car. There are columns for the name of the dealer and the email of the salesperson who made the offer to you. Then you can record the Make, Model and Trim of the specific car the offer is for, as well as that vehicle’s mileage if it’s used (enter 0 for a new car). The “Price” is the full out-the-door price you requested above, with all taxes and fees included. The “Notes” field allows you to enter anything unique about this specific offer that you would like to remember.
All of that organization is incredibly helpful simply because it provides an easy way to remember who you’ve talked to and what they offered. But it’s the “Annual Cost” column that really helps you make the comparison between offers. This uses the Mileage and Price from the “Offers” worksheet, along with the “Expected Annual Miles” and “Expected Total Miles” from the “Mileage Projection” worksheet. The expected miles are numbers you should enter for your specific situation. The “Expected Annual Miles” is the annual mileage you expect to put on the vehicle. For us that’s about 12,000. The “Expected Total Miles” is the mileage you expect the vehicle to be able to get over its lifetime. For the cars we were looking at, we assumed they could reach 200,000 miles.
Once you have those numbers set, you can compare the annual cost of owning each car. Newer cars may have a higher initial price tag, but they can also be expected to last longer because they’re further from the “Expected Total Miles” limit. So while this calculation isn’t perfect, it’s a really good way to compare new and used cars, and even used cars with different mileage. It really lets you narrow in on which options are truly the best from a pure cost standpoint.
One thing I need to mention is that this cost comparison doesn’t include the cost of taxes or insurance. You should know that both will be higher for newer cars, but the costs will change over the life of the vehicle so the modeling gets a little tricky to include here. This model also assumes that the cost of maintenance will be similar on an average annual basis over the life of each vehicle, which may or may not turn out to be accurate.
A quick note about Craigslist
I have to be honest, though I know that some people have done really well finding cars on Craigslist, I didn’t have a whole lot of luck with it. What little time I spent on it came up with few options that were competitive with what I found from dealers, or led me to vehicles that didn’t seem like they were in great shape. Part of this is that we were looking for lower-mileage vehicles, which simply weren’t all that prevalent on Craigslist.
With that said, you can absolutely include Craigslist offers into your Car Cost Comparison spreadsheet to get a full apples-to-apples comparison between all of your different options.
I have to admit, this was the part of my car-buying experience where I had the most fun and also the one where I learned the most. The internet really gives you a lot of power in this negotiation and there are some really simple ways to use it to get yourself a great deal. Start with my email template above and organize yourself with the spreadsheet I provided and you’ll be well on your way to finding the perfect deal on the perfect car.