Hangman said:
I'm planning to buy a modest new car (mid 30's). I have 2 models in mind.
What I'd like to know is what can I legitimately expect to be able to bargain the salesguy down on? Total cost? Freight and PDI? Finance rate? Or am I better off trying for some free extras, like a free set of snow tires?
Any help is appreciated. I just want an idea of how to approach it.
Freight and PDI are just other components in the sale and typically cannot be negotiated. If you did get them to reduce the freight, they would probably show it as a discount off the sale price and bill the freight at full price.
What you really want to negotiate is the total.
Many dealerships have great finance rates offered by their parent company, which you probably will never beat anywhere else. If you are financing it through a bank, go to your own bank and get an idea of the rates they will charge. If the dealer charges more than that, then finance it yourself.
On high priced vehicles, trucks, luxury cars, etc, there is a LOT of wiggle room, sometimes $5 - 10,000, so if you are buying one of those, negotiate to those levels. On mid size, mid priced cars the profits are less, and so will be the possible discounts. On a mid 30's priced car, you will probably see profits of 1,000 to 3,000 and so discounts will be based on that margin. And on econmy small cars the profits may be very small with little of no discount available.
When the Dodge neon first came out the profit was about $100, so there were no discounts.
If you are going with a new vehicle, I'd suggest you research the ads in the paper carefully. Find the good deals, as advertised and then take the ad into the dealership and ask them to improve on that deal.
I've had customers go back and forth between dealers with ever-lowering prices, ending up with very good deals, but its a lot of work. Depends how much effort you want to put into saving a hundred dollars or so.
Trade in valuation is another tricky process,and I'd suggest you try to evaluate carefully what your trade in is worth. Look at ads for similar cars, check out car lots. You can soon get a wholesale value by visiting a couple of used car lots and asking them if they want to buy it for cash.
If your trade in is not worth much, or is not something the dealer wants, they will wholesale it out right away to a lower end dealer, who may shine it up and sell it.
Many dealerships will try to get you to sign an "offer to purchase", and pay a deposit to lock in you to a sale. Then they will negotiate the heck out of a price. I'd avoid signing anything until you a price. If they absolutely refuse to consider a deal without a signed offer, then write on it something like "subject to cancellation" and only give them a very small deposit.
On the other hand if you've done your homework and you KNOW the right price, it doesn't hurt to offer a low-ball price with a hefty deposit, because if they decide not to accept it, you'll soon find out. I personally would use a cheque for my deposit, because if you do run into a dealer that wants to play games, you can always stop payment on it.
In days gone by, I've heard of dealers who drive away the trade it for "evaluation" and delay that process to give the sales staff time to work on the customer. That's probably mot too common today. And typically a used car estimator can tell pretty quickly at what price they are will in value a trade in.
In dealing with the dealership staff, sales staff and management, remember that negotiation is their business and they are probably going to be very good at it. I suggest you be polite but firm.
Don;'t be afraid to get up and walk away if you are not getting the best price. There's lots of dealers out there and many of them are cutting prices to the bone in this recession.
If you've given them a cheque, you can always stop payment on it after you leave, if they won't return it to you. But that is unlikely with reputable dealers. if you are determined to not buy, they will likely just return your cheque.
Good luck!
