most people buying a car, any discussions regarding prices is where it starts to get nervewracking. Why? Simply
because there is negotiation involved. For most of us, negotiation is not a fact of everyday life. Even for the
most adept of negotiators, there is always the suspicion--and the fear--that they could have done a little better.
This is why your preparation here is so crucially important!
The first place to start is to have a complete understanding of the components that make up new car pricing. What is MSRP? Is the Dealer Invoice the net price that the dealer
pays the factory for the vehicle? Holdback? What's that? How do factory to dealer incentives and rebates differ?
To familiarize yourself with these terms, you can find a glossary of them here.
Online Sources of Car Prices
| At Autos.com you select the car
you want, your request will be sent instantly to the best matches in their dealer network who respond with their
best price quote.
|Edmunds.com is one of the most trusted names in automobiles. Get a free, local price quote
and vehicle information.
How Car Pricing Works
When it comes to cars, the reality of pricing is this: except for "no haggle"
dealerships, everyone doesn't
pay the same price. Car dealers are able to survive by getting some "maximum" deals (those that are close
to or at full profit), some minimum deals (the minimum possible profit) and some deals in between. To save money,
your goal must be to get the minimum possible deal. Leave the maximum and the in between deals for someone else.
If you have spent the time to educate yourself in our "car buying school," you should reap the benefits!
This being said, don't lull yourself into complacency by thinking the dealer will give you the minimum price just
by asking for it. It's the worst mistake you can make!
Traditionally, car shoppers would go from dealer to dealer, asking "what is your best price?" They got
frustrated and angry when they got the run-around from many of the dealers that they visited. What was wrong with
this approach? The answer is simple. Pure psychology. A car salesperson earns his or her living by earning commission.
They earn commission by selling cars. They sell cars, generally, by giving the best price. The problem occurs when
a salesperson does give their best price to someone bouncing from dealer to dealer, only to have it beaten by another
dealership by $25. They lose the sale and the commission and they vow never to let it happen again. From that point
on, when a customer demands "best price," the salesperson puts on their best dancing shoes and the customer
gets the classic runaround. No matter what anyone else tells you, running from dealer to dealer trying to have
then give up their "best price" does nothing but guarantee frustration. No matter how adamant and insistent
you are, these salespeople spend lots of time in training learning how to combat your price attack. Don't let your
ego cost you money!
This is why the popularity
of car buying services such as Autos.com and Edmunds.com have blossomed on the Internet. The dealers who give you price quotes through
these services figure that they are only going to have one shot at you, so the best way to get your business is
to give you a rock bottom price. This doesn't guarantee the "perfect price" --nothing ever does--so you
still need to compare it to the pricing information you have gathered. It does, however, take a lot of the time
and aggravation (running around from dealer to dealer) out of the process. For more information, see our section on price quotes.
forget that the financing and insuring of the car are a big parts of the total price. Getting a great deal on the price
of the car and then giving it away in the Finance Office or to an Insurance Agent are mistakes that many car buyers
make. Familiarizing yourself with your financing and insurance options before you start visiting dealerships can
save both money and aggravation.
What if you still have to negotiate? See our discussion on price
Next section: Financing