Buying a Car: How to Negotiate With the Dealers
Photo courtesy of JD Hancock
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.
Conclusions
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.
I still haven’t had the opportunity to go car shopping, but it sounds like you just revolutionized the approach. I probably would have started at the dealership. You’ve essentially found a reproducible way to demolish the sales aspect of the transaction. I love it!
That’s exactly why I love it so much. This lets you take pretty much all of the power out of the dealer’s hands and gives you a huge set of choices without ever leaving your computer. It’s really a win-win.
I think your ideas polish my approach and provide valuable info. It’s worth mention though that things can change once at dealers? For instance, they have more tricks. They could say they don’t have that exact car anymore.The one they have has more options costing more. I told the guy he’d have to eat the pinstripe in cost or I’d walk. He gave it to me free then .
I hate talking to car salesman. When I set out to buy my last car we shopped at a few places and if the sales person annoyed my right off the get go I was out the door. I absolutely cannot stand to feel like I am pressured. I will ignore the salesman and walk straight out if I don’t get the honest answers I want. Or if they are trying to sell me on 20% interest on the “great low monthly payments.” Luckily, I should have my car for quite some time!
Yeah the pushy salesmen are really not worth dealing with. The one nice thing about email is that you can push back on them a little more without actually having to deal with them in person. That way you can still see whether they can end up offering you a good deal without as much of a hassle.
Thanks for the info. This is my least favorite part of buying a car, but I think I’m armed with a lot more info now that will make me more confident walking in a dealership. I think you have to be prepared to walk away if things go south. There are always a lot of other options.
Great point about being prepared to walk away. And even if you aren’t actually ready to walk away, you’re probably not going to lose anything by faking it, except for maybe some pride if you turn back around. But so what? You’ll never see them again and you did what you could to know you were getting their best offer.
And as Shannon mentioned, one of the nice things about email is that you don’t have to negotiate in person, which might make things a little more comfortable for some people.
Haha, your spreadsheet sounds like mine the last time we were car shopping!
We wended up deciding between two nearly identical cars that were just different colors and the best negotiating tactic was having the other offer in writing to present to the other party.
It was really easy to say, “look, I want the red one, but it’s hard to justify paying $3K for the color when there’s a black one 20 miles down the road exactly like it for $3K less.” They matched the price within just a few minutes.
Wow, $3k just for a different color? The pricing differences are really pretty amazing when you start getting into it. I still don’t really understand why the exact same car will have such dramatically different prices at different dealers, but that’s exactly why it’s worth taking the time to contact a lot of them.
Great tip on the email Matt! We did the same thing with a handful of dealers when we bought and it saved us quite a bit of money as well as a ton of time. We had an email which was very similar to yours and the ones who ignored what we were asking for immediately got put in the trash. It was all worth it to see the look on the salesman’s face when we told him the price we wanted and knew we could get it elsewhere.
Information is really your biggest asset in this negotiation, and email lets you get a lot of it in a short amount of time. Just the sheer volume of offers was incredibly helpful in understanding what the market really looked like and what kind of deal would be realistic.
Great approach! I’ve only bought 1 car from a dealer, and we did it in person but I thought it worked out well. We were going to go see a car of the same model somewhere else, and it was priced lower. We told the salesperson this, so he asked, “What price will get you to drive this car away today?” We gave him a lowball offer and he accepted it! I think it helped to have an available alternative.
I like it! Having that other option out there is really key, both for your own mentality and as a bargaining chip. It’s definitely important to remember that there is no single perfect car and if you don’t get the offer you want now, there’s always something else out there. No need to rush the decision.
Great post. Since W is a car salesman (he is a nice one though, he often gets told that he is TOO nice for the business since he will tell his customers about all of the tricks before they come in), I know some tricks. Taxes out the door can be difficult for them to calculate though, as the city you live in and your trade in can greatly affect the number. I will say that if you say that you aren’t purchasing right now and are just looking around, usually they won’t give you a great deal since they don’t know what pricing will be like 6 months down the road and the salesman might think that he is just wasting his time on you.
All of the dealers I talked to were able to tell us the full cost. The only trouble I ran into was when they avoided the question. But maybe that was just my luck or maybe my specific location (we only have state taxes, no city taxes).
But I think you’re absolutely right that this strategy really only works if you want to buy within a short time period. You can’t really do this for a purchase that’s several months out, although you can certainly start doing your research that far in advance.
Oh okay that makes more sense. We have both city and state taxes here, so whenever people ask W that, they think he’s lying about not being able to share the exact price.
So do they not know the city tax rates for the surrounding area? When they sell the car, don’t they include those taxes in the sales price? That’s definitely how it worked for me. We have a state excise tax that’s in addition to the sales tax, but all sales taxes were included in the final bill from the dealer.
There are a lot of small reasons for why they can’t always give an exact price. We live right on the border of MO and IL, and if you buy in MO but live in IL (& vice versa), occasionally you do not need to pay taxes on different components on the car depending on your county or city. Also, a lot of people don’t like to give their location via email to them, so it’s near impossible for them to give a price without a location.
Interesting. Thanks for all the detail. Just goes to show that everyone’s experience will be slightly different.
Great post…I may try this approach if I purchase another car. When I called the dealerships before going to a no-haggle place, they kept on encouraging me to come in. They said it was hard to negotiate via phone/e-mail…but I’m sure some places are willing to do that as you’ve done it and I’ve heard others do it. I think a lot of them think that once they get you in the door, they can use more of their shady tricks to get you to pay more. I don’t know about craigslist…there can be some great deals but also some scams.
They will absolutely negotiate via email, they just don’t want to because they’d much rather just get you into the dealership. But as long as you make it clear that email is the first step AND that you’ll be making your decision soon, they’ll open up.
I love the email approach to negotiating, this is something I am definitely going to do the next time I am in the car market. It is so much easier to “walk away” if they can’t meet your criteria which puts the onous back on them to sweeten the deal.
Exactly. That’s one of the big benefits.
This is a great guide on negotiating car prices, Matt. We will be in the market relatively soon so I appreciate you sharing. I will do everything I can to avoid saying how much I’m willing to pay, as it seems like that could save me a few hundred (or thousand) dollars.
Definitely avoid giving them a number as you’re doing your initial data gathering. Once you’ve got your choices narrowed down to just a few, or maybe even just one, naming a price can be effective. But that should really be pretty late in the game once you’ve already let them negotiate against themselves for a bit.
I love the organized approach. The pre-planning work goes a long way in any negotiation.
I also like the upfront & honest declaration that the suppliers are in a competitive situation. If you ever wanted a career in Procurement, I think you’ve got a knack for it. 🙂
Haha, I just had to look up what a career in Procurement was. Anyways, thanks for the compliment! I think letting them know that I’m talking to other dealers, in combination with the short timeframe, lets them know that I need their best offer quickly. If they mess around they’re going to lose a sale. At least that was my goal.
Love this, Matt. It’s great how you took control of the situation, rather than allow them to do so. I’m sure it made it so much easier AND helped you get the best price on the vehicle you want. This is an especially good tactic if you are uncomfortable negotiating too. I think many people are uncomfortable “haggling” and end up paying more than necessary. This is definitely a way for them to get the best price with the stress of face-to-face negotiations with a pro. Great series, Matt!
That’s a great point about this being especially useful for people who are uncomfortable negotiating. I think I actually fit that description, though I didn’t really think of it when I pursued this strategy. But it’s definitely much easier to take some of the emotion out of things by using email, and it gives you more time to evaluate the dealers’ responses and form your own response. You don’t have to react in the moment, which I think takes away part of the dealer’s typical advantage.
Yup, this is a pretty good approach. Avoids many of the hassles.
Did you happen to use TrueCar as well to get further validation on the price you were getting offered on the new models? I really like their price distributions as a starting point for what I think is a good deal.
Sites like truecar and kbb were helpful, but I found that the sheer volume of offers I got with this strategy told me all I needed to know about the market. I mean, I had over 40 different offers by the end of it, so it was pretty clear what was and what was not a good price.
Good point. Your strategy is deep. How did you finally end up compared the True Car distribution? Or, did you not buy new?
We ended up going with a used vehicle, but we did have an offer on a new one that doesn’t even fit on the truecar scale. That’s the direction we would have gone if we didn’t find our eventual choice at the last minute.
I have a question about the 40 offers. Did you go to the lowest cost option out of all 40 dealers? Or did you take the lowest price email to your local dealer and buy there?
I need a vehicle but want to buy local for service needs. Also, What if your local dealer tells you no?
Hey J. Good question. I was living in Boston at the time, so it was pretty easy to find 40 dealers within a reasonable distance. So they were all “local”, though that was less by design and more by circumstance.
I guess I would think hard about what kind of savings you expect to receive from going to a local dealer for service needs instead of finding a good local mechanic, and weigh that against the price difference of the car. I don’t have a definitive answer for you there because I think it will probably depend on your specific circumstances.
I am going to go to my local dealer for service because the car will have 100% Factory Warranty and a good local mech can’t complete warranty work.
I have shopped around and everyone is coming back around the same numbers. They must have some kind of deal where they don’t give people good deals and they all stick together.
If I can’t get 2k off and free floormats it’s not a “good deal”
Gotcha. That’s frustrating that they’re all coming back with the same price. My guess is that’s just what the market is for whatever you’re looking for, though you could expand your search if you’re willing to travel. In any case, good luck finding those free floormats!
Are their any places that you suggest going to for researching car values and what other people are paying for similar models?
I really found that simply by contacting a large number of dealers I was able to get a very fair sense of what a fair price looked like. When you quickly get 15+ “best” offers for the same vehicle, you can know very quickly what you’re realistically looking at. But I think truecar and kbb and good places to look for ballpark values.
I really like the advice about emailing the dealerships instead of physically going there. The only experience I have with buying at dealerships has been seeing my parents buy there, and they always visited the dealerships to test drive potential cars. Emailing is easier and doesn’t require as much effort or gas. I think it also allows for more options as I know I wouldn’t be able to visit 40 dealerships in a weekend. I also like the idea of using a spreadsheet to track all the offers as juggling 20+ responses would be a little overwhelming.
We actually did visit a couple of dealerships before this process just to look at different cars and figure out which ones we wanted to pursue further. But I think email was by far the easiest way to really know for sure what all of your options were across a large number of dealers, and to take a little bit of the negotiation power away from them.
Your advice is spot on here again, Matt. When we shopped for a new car, we did this, and we did, like you said, get salespeople who completely ignored our instructions or insisted that we didn’t know what we were talking about. Don’t give in, and wait for the right price and the dealer who appreciates your business.
Right on Laurie. You just have to stick to your guns and they’ll come around. Or the won’t in which case you’ll know that they’re not worth dealing with. That’s one of the best aspects of this approach. If they stop responding you know you’ve either really gotten their best offer (so far) or they don’t have anything worthwhile.
We like to do all of our research ahead of time then show up to test the cars we’re interested in. Last time, we picked Greg’s Prius but couldn’t get them to come down enough. But, lo and behold, they came down to our price once we started to leave.
Like magic! They really really don’t want you to leave the lot. Sounds like you guys played it perfectly.
Very nice series, I’d read the previous three later. But doing your home work like this definitely helps. Another thing about haggling is, whatever price you agree on, later on you’ll feel like being defeated in negotiation.
I can definitely relate to that last point. Even though I was very happy with the price we got at the time, I still feel pangs of remorse afterwards feeling like there were ways I could have done even better.
Hey Matt,
Here are my thoughts on negotiation, both generally and specific to a car.
1. As a buyer you need to establish intrinsic value of the product or service – in this case a car. Since you know already the Make and Model you should be able to establish the base price available through a third party such as Kelly Blue Book value. This information is useful, but should not become your lowest price point.
What you should do with ‘generalist’ data like the KBB price is use it as an upper cap but not a lower cap on what you could pay.
2. As sellers there are various amounts of pressure to achieve results. Many companies would operate on a Quarterly basis, so pressure to perform increases, perhaps by date in relation to closing within the Q. Further to which certain sellers might be better than others at closing deals and finding the ‘wiggle room’ that makes a great deal.
By emailing, you do have the benefit of casting a wide net, but you do not have the ability to really qualify who you are dealing with at the dealership. It is not fair to say that because Bob at XYZ motors quoted you X or was slow to respond that they can’t be the best deal. What you need to establish is which dealerships out of the viable ones (viable by whatever metric you chose, such as distance from home etc) actually have the car you want, and within that group, which can offer the best price.
If out of 20 dealerships 10 have the car, they are all suitable candidates for the purchase, and by ignoring 1 of the 10 because of a slow, or unsatisfactory email response could cost you a deal. The email might be handled by the intern who reads a stock price, whereas a follow up call to a sales guy might provide a lot more flexibility.
You have now got a pipeline from 20 (dealerships in the vicinity) to 10 viable with the car. You then correlate with the KBB and can pull all of them to that level. Then, see how much below you can get them. A simple way to do this is to call back dealer #3 and say ‘hey, I got a like for like option at dealer 4 and I like the guy but I’m not totally sold on the color, I’d come down and take a look but you are going to have to do better than X for the price, can you do it?’
In person negotiations are the final step and should include a reduction below the best price you have. You should look at 2 options (if there are two) and have one guy undercut the other.
Also, the human factor (need for sale) will apply to the method of payment. Beyond the mathematical advantages of paying with cash or using financing you should consider the impact to the attractiveness of the sale:
1. Does a cash sale close faster for the salesman and get them their check faster?
2. Does dealer financing offer them a cut of the finance interest and therefore incentivize?
The method and terms of payment should come right at the end, when you have ALMOST agreed the price, then through out ‘OK how much lower if I pay cash right now?’
The in person tactics will require finesse. Negotiation is an art, and the ability of the person you are dealing with to recognize your skill and guide each other to conclusion will matter. Not unlike playing… poker 🙂
Wow, lots of great stuff here Matt. Thanks for sharing! I think your point about not ignoring a dealer because of a poor initial email is a really good one and is one I actually incorporated in my experience. I pushed back on every email I received, no matter how poor an initial offer or how much they ignored my initial request. My logic was that it was easy to do so through email, and as you say by judging too quickly I was potentially missing a great deal.
Some of your finer points about timing and using the method of payment as a negotiation tactic are things I could have done better for sure. I’ll be following up with a post on how to handle things at the point of sale, and part of that will be how I failed to utilize my leverage at that point. Your points here are very well taken and I hope both my readers and I can use them to our advantage the next time.
Thanks Matt.
The biggest takeaway from this is that in negotiation we shouldn’t overlook the human factor. Tools like email can cast us a wide net, but lack the subtle touches than can find real ‘gems’ in negotiation, such as that sales guy that really needs his number etc… that level of fine tuning is certainly a phone (better) or in person (best) method.
Sounds like you had a good process. And yes, you definitely have to go to the dealership at some point and you can even do some more negotiation there. But getting most of it done through email, or online chat as you suggest, is a great way to get yourself ahead of the game before ever setting foot on the lot.
Thanks for this post! I’ve never bought a car from a dealer and that might be far in the future for us, but this was very helpful for my future reference. I love that you’re turning their tactics back on them!
Thanks Emily. It was definitely a pretty easy way to bid them down without really have to make any concessions myself. I’ll take that any time!
Hi Matt! Great article, and I have followed your advice and secured an offer from a dealer.
The dealer is a couple of hours away from me, which is totally fine, but now he has sent me this in an email “Please send me your complete address, for registration, and I will work up your offer.”
Could you give me some advice here? This is my first time doing this so I am not sure what he is asking me to do. Will this be legally binding if I do send him this information? Thanks so much!
Hi William. First of all, congrats on securing an offer! I’m glad this advice was helpful.
So I’ll start by saying that I am not an expert of the ins and outs of the transaction process, but I don’t think anything will be legally binding until you sign the purchase agreement. He’s probably just asking for your address so that he can have as much prepared ahead of time as possible.
I did a little googling and didn’t find anything too helpful, but if you really want to make sure I would post any questions you have somewhere like the Edmunds forums: http://www.edmunds.com/forums/. As far as I know though, until you sign a purchase agreement you shouldn’t be under any obligation.
Let me know if you have any more questions. Best of luck!
Really appreciate the article. My previous method was to look for last years models on the lot, check consumer reports pricing then negotiate for 15% less than the consumer reports target price. This generally resulted in heated salesmen & sales managers with about 8 hours of stressful negotiations.
I got the prices I was looking for but I think this way is much easier.
Glad you found it helpful Kris. I really liked this approach because it let me negotiate with a lot of dealers all at once AND it avoided much of the face-to-face negotiation which, as you say from your own experience, can be pretty length, heated and stressful. But I also think that using resources like Consumer Reports and doing the kind of research you talk about here is an important part of the process no matter which way you go. You need those anchors to help you understand what a fair price looks like.
Hello. Thank you for your very well written article. How would I follow the steps you’ve indicated when a trade-in is involved?
Thank you,
Tracy Winger
Hi Tracy. Thanks for the kind words! I would follow the exact same steps, but in your email I would add that you’re looking to trade in your current car and I would give them the year, make, model, mileage and general condition. They should be able to give you an estimate including the trade-in value, though they’ll probably have to take a look at the car themselves before giving you an exact number.
I would also look into what kind of deal you could get in a private sale. Trading your car in can be very convenient, but you can often get a better deal in a private sale.
Good luck and please feel free to reach out if you have any questions.
Think that coverage of trade in is critical — the dealer gets a number of swings at your checkbook pinata 1) car price/options & used vs new 2) trade in –hard to say you’ve reached final cost until the trade in is factored in and you won’t get firm figure until it’s on the lot; 3) financing % and #yrs. No trade in gets a lot of bugs off the windshield to really evaluate price to price. Also, “cash” can mean that you’ve negotiated a loan from say your credit union and can just give them their check… Navy Federal FCU for instance can give you a check for pre-arranged limit and you fill in the $ amount of purchase at time of purchase(which you can augment with your own cash to reduce the amount being financed if desired.
Good points! We weren’t trading our car in so I don’t have much experience there, but you’re absolutely right that it would be a crucial piece of the price comparison. Thanks for pointing it out.
I tried your link to the Comparison Spreadsheet and it returned a Not Found. Can you email the spreadsheet or an updated link. Thanks so much.
Hey Pat. Sorry about that, but thanks for letting me know! The link is fixed, and you can find the spreadsheet here: http://momanddadmoney.com/car-cost-comparison.
Hi Matt – thanks for the thorough analysis.
I was trying to download the spreadsheet with the link, but it still says “Sorry, the page (or document) you have requested does not exist.”
Would be great if you could have a look at that again.
Thanks,
Bjorn
Oh man, sorry about all the trouble! I believe that I figured out my mistake and that it is FINALLY fixed, but please let me know if you’re still having trouble. And thanks for the heads up!
I’m interested in knowing your thoughts about purchasing a car through places like Costco or Sam’s Club.
Hi Karen. Sorry it’s taken me so long to reply! So to be completely honest with you, I didn’t know that you could buy a car from Costco or Sam’s Club, but I guess I would treat them the same as any other dealer. Do your best to negotiate, and before you actually make your decision consider the idea of taking the car to a mechanic to check it out. I talk about how I did that here: http://momanddadmoney.com/test-drive-car/.
Hi Matt,
I took your advise and emailed all the dealers, I went to the one that gave me the best price so he agreed to honor it so i had a car to trade in which i checked the value on kbb & edmunds which was valued at $12,300.00 they offered me $8000.00 when i said no way and showed him the copy of the kbb value he left for a few minutes to talk to his manager when he came back he said he could not budge on the offer on the trade in and said it would be best to sell it privately and then come back, so i left, any advise woul be appreciated thanks.
Sorry to hear about that Peter. So I’ll be honest that I don’t have much experience trading in/selling a car, but I guess my first step would be to do a little more actual market research to get a better sense of what the car would actually sell for. Maybe you could list it on Craigslist and see if you get any offers? You don’t actually have to sell it right away, but that might help you gauge the market. You could also talk to a few more dealers and see what they say.
In general, I would try to make the trade-in part of the initial negotiation if you’re going that route, just so that you don’t run into this kind of frustrating situation. But I hope you’re able to figure this out and get top-dollar for your car!
How much did you end up paying for comprehensive car insurance?
Wondering if it’s worth getting an older car worth less than 10k, just so that we can skip on comprehensive car insurance.
Thank you for sharing your thoughts.
Great question. Comprehensive coverage on our newer car is currently $34 per year with a $1,000 deductible. Collision is another $144 per year with the same $1,000 deductible. But that will vary a lot by insurer and car, and you can get an exact answer if you simply call up your insurer and tell them what kind of car you’re considering. I did that myself and it was very helpful.
You are awesome!!! I read your article and a light bulb went on. I’ve read several other articles about negotiating and car dealerships’ methods and basically my conclusion is that I could not win the game. They are professional negotiators and I am an IT consultant. There is just no way I can beat them at their game. Your approach is basically not to play their game, it is to “change the rules”. I found this extremely useful!!!
Within one day I was able to get the new car I wanted from a somewhat desperate dealership (probably wanted to meet their numbers for the week / month / quarter / whatever).
Thank you! Thank you! Thank you!!!
That’s awesome Daniel! I’m glad you were able to get such a good deal, and thanks so much for sharing! I love to hear these success stories.
Hi Matt, great article. Thinking about doing this but I’m wondering how this will work with Subaru cars. They rarely budge from msrp in my area. I also have a car I want to trade in that is worth more than what I owe on it but of course the dealer always asks how much I owe, then comes back with a low ball offer.
I would sell it privately but its my main mode of transportation. Las time I traded in a car I actually got what I asked for in person a couple years ago.
A lot of dealers in my area will throw you a trade in number then dock everything off that value when they ask to see the car in person. Would you reccomend asking dealers to beat the true car value?
It seems they just say its only an estimate.
I don’t have any inside information on Subarus specifically, but it can’t hurt to give it a shot. The worst that happens is you don’t find a good deal, in which case you could simply move on to a different strategy.
As for the trade in, again I’m not exactly an expert here but I would think that you could simply include that as part of the negotiation. Maybe you could have your mechanic do a full inspection and provide a report that you could include in your email? That would give them less room later on to say that they didn’t know about something and try to knock down their price. Just an idea.
One other option would be to gauge the private market now without making any commitment to actually selling it until you have the new car all lined up. Some of those people may be willing to wait for that to happen, but in any case you could get a sense of the market.
Good luck!
How about mentioning the financing end of things right off the bat? My mother purchased a nearly new car, was a repeat buyer (as I will be) and paid in full and she saved what I considered to be a small fortune. She didn’t negotiate they just offered it to her on a four month old demonstrator model. When I went back looking at an older car (a year later) and asked if there was an incentive to pay up front without financing the sales guy just said “thats fine”…..as if A)he wasn’t listening B)He didn’t care……I did not buy a car that day or even bother to test drive.
I’m ready to pay in full with a certified check.
I contacted three different dealers as a starting point via email and the responses I got using this method were less than helpful.
Dealer 1: Dealt with the Internet manager directly and he initially said that I had to call to discuss any pricing as their dealership does not negotiate via email. I followed up with him again asking for their best out the door pricing via email and he sent me a bill of sale with the sticker price plus all of the taxes and fees along with a note saying that they only negotiate price in person. This dealership is not an independent place either. This is a real Chevy/Cadillac dealership in PA.
Dealer 2: Sent me an email back almost instantly with “their E-pricing” price that took maybe five hundred dollars off the price and it came with a note that it was not their best price but they too will only discuss final out the door pricing in person at the dealership.
This is a real Chevy dealership in NJ.
Dealer 3: Called me within ten minutes of my initial email and then proceeded to call me four more times within the next two hours. They don’t do anything sales related via email and of course want me to come into the dealership for their best pricing.
This is a BMW dealership in NJ that happens to have the type of Chevy that I’m looking for.
With dealer one at least I was able to speak with a manager even though he completely stonewalled me where as with dealers two and three my email got routed to assistant/admin types who more or less said that if I wanted out the door pricing I would have to come into their dealerships to speak with a manager. In terms of offers, dealer 3 would not give me an offer via email, dealer two did but told me that I would need to come in to get their best offer and dealer one gave me nothing except the sticker price.
While I’m glad that this strategy worked for you it certainly didn’t do much for me.
I’m sorry it didn’t work out for you Christopher. I hope you’re still able to find a good deal!
Hey Matt,
I’m in the market for a used car and would prefer the email route but at what point are you test driving these cars?
Good question Chris. What I did was use email to narrow my list down to just a few cars that looked like the best deal. Then I called the dealers to set up a time to test drive. You can read my post on test driving here: Buying a Car: Test Drive Like a Pro.
I have slightly changed the email template to answer some of the common questions that dealers reply with:
Hello [Dealer Name],
I’m looking to purchase the Toyota RAV4 LE 2wd (automatic transmission, preferred colour RED) before 4/30 from whichever dealer quotes me the lowest price. Please reply me with the best price you are willing to sell for, including tax, title & license (vehicle will be registered in [city], [state] [zip]). I have already test driven the car, and have no trade ins.
Again, I will be making my purchase on or before 4/30, and need you to quote me the lowest OTD price you are willing to sell for. I will call you to set an appointment if your quote is the most competitive.
Sincerely,
Michael
I love it Michael! Thanks for sharing.
Thanks for all these tips about communicating with car dealers. A good dealer can be very helpful if you are able to communicate your expectations and what you need. I’m in the market for a new car, so I will definitely be using this information. Thanks for all the help!
I hadn’t thought to form a big-picture strategy before visiting a car dealership but from what I’ve read it could benefit me quite a bit. I didn’t know that car dealerships would work with me through email so I’ll have to try the strategy that you outlined by contacting multiple dealers and seeing what they can offer. I like that you included the most important point to have in an email that should lead me to the dealers best offers. Thanks for the helpful post.
Hi! Great article! My husband and I look forward to implementing this method to see how it works. We are looking to buy a new truck soon. Do you have any advice on what months are the best to buy a car? Given that November is tomorrow, should we wait till January?
That’s a good question Carol and the honest answer is that I don’t know. If you’re not in a rush, it probably can’t hurt to try it now and see if you like the offers you get. If not, then you could wait a couple of months and try again. But I don’t know if any particular month is usually better than the others.
I used this approach in 2007 when we purchased a Dodge Grande Caravan and again in 2013 when we purchased a Nissan Pathfinder. We are getting ready to do it again next week when we purchase a new 2017 Honda Accord.
One more bit of advice, if you can get 2 or 3 dealers in the same ballpark then you have the power to walk out if your first choice starts changing the deal once you arrive.
Also, if you have a car to trade in, go to your top 3 best choices to figure the best trade value. Do not tell them you are trading a vehicle during the negotiating process. When we go the Caravan, we were down to 2 dealers and one dealer offered $700 more for our trade in.
Good to hear that it’s worked for you David. And thanks for the additional tips!