Financial Literacy for Everyone

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Getting a Good Deal

If you think of the negotiating process of buying a car as a dance, you'll find it a lot more tolerable and you might possibly enjoy it. It's just two people suggesting and redirecting. And remember – you have the advantage. You have a long line of salespeople who would like to dance with you. If one isn't a good dance partner and isn't working with you to nail down a price, feel free to say, "Good night," and find yourself another dance partner.

Another good attitude adjustment before you start: dealerships try to average a specific amount of profit on each car they sell. People who pay too much allow there to be people who pay too little. With some preparation and education, you can be one of the latter.

Dealers will pressure you to make all your decisions in a single day. They've been doing this for a long time. They have all the scenarios mapped out. So when they react, they're acting with experience. For you, it's probably unfamiliar territory so that when you react, you may be acting with emotion. Dealers and salespeople know how to use that to their advantage. So slow the process down, sleep on decisions overnight and it could save you quite a bit of money.

Also, the more proactive you are and the more you take control, the better the result. Educate yourself. Understand how the car business works. Know what price the dealer paid for the car and have some alternate financing options.

Some strong negotiation moves can help you come out ahead:

  • Keep a neutral outward attitude. Don't sell yourself. If you give the impression that you could take it or leave it, a salesperson will work harder and be willing to give more to sell to you.
  • Avoid financing questions. Even if you don't have the money, tell them you're paying cash. They won't hold you to it. But it will force them to concentrate on the current price negotiation and not see a long-term strategy to inch up their profits.
  • Be prepared to haggle back and forth for a while. The salesperson might try to tire you out with a prolonged negotiation session. Don't give in. Stay strong and save money. Keep in mind an extra hour of persistence could save you a few hundred dollars.
  • Watch for the good cop, bad cop move. The salesperson will tell you that he or she really wants to give you the price you're asking for, but he or she will have to ask the manager. You may feel like the salesperson is on your team at that point. But just remember it's you versus them.
  • Shop for a car later in the month. There are a lot of bonus and rebate programs that are based on monthly sales quotas. If a salesperson or dealership is short of meeting goals at the end of the month, you might find more willingness to sell the car cheaper in order to get the extra sale.