We reviewed what kind of car we can buy for our needs in last episode.
Today we will see, how we can negotiate with the dealer to score the best deal.
What I am sharing here is for US market.
I don't know how car buying process works in India. Sorry.
If we want to buy a new car, what do we do usually?
We go to dealership. After test driving a car, we start negotiating with them if we like the car.
They make us sit in a table in the middle of the dealership and just go on with the negotiation.
For every decision, they go to their manager room for approval and abscond for 15 mins.
They do that at least 6 times.
What happens there? Nothing really.
Their goal is to make us tired and force us on a decision that is favorable to them.
And that is why we should never make the mistake of going into dealership for price negotiation.
If you follow the procedure that I am going to share with you now, you will definitely get the best deal.
First step is to decide on which car to buy for your price range.
If you are considering many models, test drive all of them.
Fix an appointment with a dealership close by your home.
Let them know all the models that you would like to test drive.
If you have already informed them, when you go to the dealership, they will have the car ready for you for the test drive.
Without any shy, test drive as many cars as you like.
When you go for test drive, do not talk about price to them at all.
Your focus should only be on the car.
Even if they bring up the topic of price, stay away from discussing the price.
Do not say anything about your price preference.
Focusing only on the car model, ask as many questions as possible to know the car better.
After finalizing on a make and model, decide on the trim level as well.
Then decide on exterior color, interior color and other options after checking them out in person.
That clarity of knowing exactly which car to buy is very important.
If we do not have that clarity, thats what a salesman will try to take advantage of.
As an example, lets say that we have decided on buying a 2021 Honda Accord EX-L
The next step is to see what price on average people are paying in the market for this model.
Go to truecar.com
If we provide the model that we have chosen and our zipcode there, we should be able to see the average price that it is selling for in the market.
Even though the MSRP of our Accord EX-L is $32,045, the average selling price is only $29,766.
Our goal is to buy the car cheaper than this average price.
So note down this price.
The next step is to check what are all the offers available for this car in Honda site.
Lets go to automobiles.honda.com.
Click shopping tools and prove your zipcode to see the current offers.
We can see two offers here that can be of useful to us.
1. If we already own any car, $500 off.
2. 0.9% financing offer.
Note down these two.
All Honda dealers will give these offers.
If we have plans to finance the car, assuming that we have a good credit rating, we should target for 0.9% financing.
The next step is to identify all the dealerships in your area.
If I search for Honda dealerships in google maps, I see 19 dealerships in Chicago area.
If you are in a small town, consider the dealerships in the near by city as well.
The next step is to send an email to the internet sales department manager of these 19 dealerships.
Instead of us haggling for the price, we have to make them bid for us with the best price.
"I am interested in 2021 Honda Accord EX-L...
"with Silver exterior and black interior...
"I am living in so and so zipcode...
"What is your "Out The Door" price" is what we need to ask them.
There are 3 important things here.
1. We should provide the specific details of the car that we are trying to purchase.
Instead of just saying "Honda Accord", we should be giving specific details like "2021 Honda Accord EX-L, Silver Exterior, Black Interior"
2. Zipcode. They can calculate the tax only based on our zipcode.
Without that, they will not be able to provide the total "Out the Door" price to us.
3. "Out the Door" keyword.
The moment they see the "Out the door" keyword, they know that you are a serious buyer and you are not messing around.
Instead of "Out the Door" price, if we just ask for a price, they will give a price.
When we visit them in person thinking that their price is cheap, they will add on the title fees, document fees, delivery fees etc.
That is why it is important to ask for "Out the Door" price that includes all the fees and tax.
When they see these 3 things, they know that you are serious buyer.
If they know that their price will be the best, they will definitely respond.
If they did not respond to our email, then it means that they cannot afford to offer the best price.
A sample email template is included in the description. Feel free to use it.
Another important note.
Avoid using your personal email.
They will spam us everyday.
Its better to create a temporary email just for this.
Also its better not to give the actual phone number.
Give temporary number like Google voice number.
We should be able to disconnect it after we buy the car.
Else they will torture us everyday with their calls.
If you do not have a temporary number, give a 555 number or dont even bother giving the number.
Its better to have all the communication in email so that all price agreements are in email.
OK. How do we find their email address?
Go to the dealer's website from google results.
Each dealership have their own websites.
Our goal is to send the email to their internet sales manager.
In this example, we can see the internet sales manager details under "About Us" -> "Meet the staff"
They have not given their email address. But there is a form to submit.
Here we can give our name, temporary email address and paste the email content into the comments section.
We have to repeat the same process in the other dealership sites.
If we can, we should do this close to the end of the month.
Because if it is close to the end of the month, they might give better deals as they have to meet their monthly quota.
After doing this, wait patiently.
Most of them will respond with "Out The Door" price.
If they have not mentioned "Out the door" price in their email, then ask for it specifically.
Again - it is very important.
Among the offers that you got, choose the best offer for your needs and fix the appointment with them.
If you have two offers close enough, ask the second best dealer if they can beat the best offer you have.
You never know, they might do it.
Now you have to go to the dealership to finalize the purchase.
Its better to go alone or with a friend.
Avoid going with family, especially with kids.
Because, we do not know how long it is going to take there.
If we have the family with us, and if the car purchasing gets delayed, there are chances for us to make wrong decisions.
So it is better to avoid taking family with you.
Ask for the sales agent with who you agreed on the price.
Do not hesitate to walk out even if they ask for single penny more than the agreed upon price.
Just get up and walk out.
Have the full control of that sale with you.
Trust me They won't let you go that easily. They will give it for the price they agreed upon originally.
If they still did not agree on the price, and keep going inside to check with manager, just walk out.
If they do not agree upon the price they agreed on the email, we should not give our business to them at all.
We should go to the dealer who has offered the second best price.
Some of the dealers actually follow a different tactic.
They will offer the cheapest price in the email.
But when we go in person, they will say that they made a mistake. Sorry. Give us the second best offer and will match that.
We should not be giving business to such cheap tactic dealerships.
We should ask for the agreed upon price, else we should walk out.
Once you have agreed upon the final price, if you would like to do financing, ask for the financing offer that you saw in the offers page.
If your credit rating is good, they will definitely give you.
Do not bring in the financing conversation before agreeing on the final price.
Because, they will misdirect us into talking about how much monthly payment we can afford than talking about the final sales price.
So never talk about financing before agreeing on final price.
And if they offer any extras, accept them only if there are free.
If they ask for fees for those, decline them all.
They will try to sell additional warranty. Dont buy it.
There is no need for additional warranty. Even if we would like to buy it, we can easily buy it from other dealers outside online for much cheaper price.
There is no obligation to buy it here.
So its better to decline that.
They will offer other things like seat protection etc.
Just decline them all without any shyness.
Just buy what you came here for buying.
The same Honda branded extra items like rubber mats can be purchased online for much better prices.
Remember that as well.
That is all to a car purchase.
Drive home the new car happily.
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We will soon meet again in the next episode. Thank You.