Is there anything more infuriating than finding out from a colleague, a relative, or some random person on Reddit. You paid thousands of dollars more when buying a car than you should have? It’s enough to make you want to hop in your (overpriced) car and head back to the dealership to demand a refund — or at least, a rebate. Hence, you must learn what to know when buying a car before you actually attempt it.
Unfortunately, things don’t work that way. Instead of apologizing and adjusting your invoice, the salesperson will look at you with amusement, and then insist that you leave the premises. So much for the “we don’t sell cars, we build relationships” rhetoric that you heard before you signed on the dotted line, huh?
The good news for you, however, is that car dealership can’t stop you from getting informed and ensuring that you never, ever get gouged again (so basically, you can be the person on Reddit telling others that they paid too much — remember to be compassionate!). Here are 5 things you need to know, and that car dealerships really wish you wouldn’t find out:
The profit margin on most trade-ins is staggering
Most people focus on negotiating deep discounts on a new car (more on this in a moment). They neglect to realize that dealerships often make a ridiculous amount of profit on trade-ins. What does this mean to you? It’s simple: know how much your trade-in is worth (it’s easy to find out by looking on the web and identifying comparable vehicles in your area), and refuse to accept a lowball offer from the dealership. If they don’t increase their offer, then sell your car privately.
Don’t get fooled by the MSRP
MSRP stands for “manufacturers recommended selling price”, which frankly is a pretty meaningless and arbitrary number. Before going into a dealership, go online and find out the actual invoice price of a car, and then use that to negotiate. Of course, the dealership is also entitled to make a reasonable profit. But if you don’t know what the invoice price is and you start playing the MSRP game. You’re always going to pay more than you could.
Do your research online
This can’t be stressed enough: before you make a deal, head online to research the car (or cars) that you’re interested in. Focus on features and functions, as well as the total cost of ownership. For example, some cars need oil change several times a year, while others only need it once or twice a year. Over a 10-year lifespan, the difference is in the thousands of dollars. And speaking of research: if you’re at the dealership and the salesperson says something to you that seems “too good to be true”. Simply wander over to the customer lounge and hop online to verify the facts. Moreover, enjoy upscale seating, task lighting, and probably an espresso or two. (Thanks to the work of companies like Key Interiors, many of today’s dealership customer lounges look like first-class airport lounges.)
Be willing to walk away
Obviously, your time is valuable and you don’t go from one dealership to another as a hobby (by the way, if you’re looking for a fun and healthy way to spend your free time, then check out adult kickball!). However, it’s essential that you have the ability, if necessary, to get up and walk away. You’d be surprised at how more flexible and respectable salespeople get when you stand up to leave.
Last but not least: all car dealerships have monthly sales quotas. As such, you’re likely to get the best deal if you shop towards the end of the month vs. the beginning. In some cases, dealerships will be willing to sell a car at only a few percentage points above the invoice price. Simply because they get a bonus (or avoid a penalty) by meeting their overall quota. To put this another way, you’ll be doing them a huge favor by purchasing one of their cars. You’ll win, and so will they. Isn’t that a great way to end the car buying story?