I recently purchased a new Honda CR-V. Here are some detailed steps that I used on how to bring the price down.
1. Determine the Car Make, Model, Trim Level You Want to Buy
This does not cost any money to determine. Research online and visit dealerships to test drive different cars and learn the trims and options. Without fixing this, you cannot compare prices properly.
2. Check and Secure Financing Ahead of Time
If there are no dealership financing specials, get pre-approved for a loan for the car you want. If you have access to a local credit union, that can be a good alternative loan source. Online loans, IMO, are too many and complicated. If you know a really good online financing source for new cars, let me know.
3. Research Internet Prices on That Model for Each Dealership
Internet prices are around or below the invoice price of the new car. You should be able to find prices lower than invoice through internet pricing. Since this will be close to your target price to purchase, I will detail this process.
a. Once you have determined the car model and trim level (e.g. Honda CR-V EX or Toyota Sienna LE with xx options, etc) go to the dealer website around your area. (use Google Maps) It should be around 3-4 dealers or more than 5 or even 10 if you live around a large metropolitan area. Google maps also shows you the dealer ratings for you to consider.
b. Browse their new car inventory and choose the model and color you like and submit a request for the internet price that they send you through e-mail. Usually, in a day or 2 you will receive an internet price.
c. Also check dealerships that are further outside your area. This is important. Some may not like the idea but a 3-5 hour drive will save you up to $500 to $2,000. (I have done this before.) Some dealership may even offer to deliver to you. For example, instead of purchasing from the NYC area, a visit to the PA or D.C. area will likely save you more. At the worst case, this will provide you a price base if you need to negotiate.
d. Internet pricing includes destination fees. Skip if not included. Ask for the extra fees they charge. It should be taxes (a fixed price) and doc/registration/plate fees (no more than $300).
e. Double check that your internet pricing includes promotional discounts.
f. Narrow down to your best 3 local dealership prices and 2 or 3 remote dealership prices, including fees.
4. Choose Whether to Purchase Locally or Remotely
A local purchase will likely be faster, but you will probably pay higher and will also might have to deal with price haggling. Note that some remote dealers will deliver your car to you, either for free or at a reasonable price. Ask since this might work better for you. Working out prices remotely is far more less stress than with a sales person in front of you persistently trying to raise prices.
a. If you decide to purchase remotely at the better price, request all the prices including the car price, taxes and additional fees to make sure there are no mistakes or added charges to the final price. Secure financing ahead of time if you can, or if the dealership has special financing offers, apply for that before heading down so you don’t waste your time. Also try searching for the same additional cars they have, as a back up, just in case your test drive of the car you picked online is not satisfactory in person. Choose a free date with sufficient time to travel and spend at the dealership. Don’t forget IDs, payments and documentation. Drive safe.
b. If you wish to purchase locally, visit dealerships with the lowest prices, I would target a purchase price no more than $500 higher than the lowest remote dealership price you have. You can probably get the car delivered to you for less than $500 so check that if it works better for you.
Here are some tips when purchasing locally.
If you have to negotiate prices, don’t do it at the dealership. Take your time and request it over e-mail or ask over the phone. You are more in charge when you are not in the dealership as salespeople are more compelled to bring you in. Since you have an idea of the market low price, any negotiations should be minimized.
When bringing down the fees, tell them (over e-mail) that the car price is very similar with other dealers and that the fees and dealer’s service incentives need to be compared. Ask for all the final fee amounts in writing. This way they surprise you less with fees at the dealership. (they will still try though)
Be polite. You have alternative options if the salesperson becomes intimidating. You will less likely get a good deal being rude or angry.
Most sales people are vicious as their goal is to get the highest price without turning you down. They expect you are there because your research concluded that they have the best deal so the process can easily get intimidating. Since you have already agreed upon a price, you should refuse negotiations if brought up at the dealership in person. Be prepared to walk away cool if the sales person gets disrespectful or makes you upset or changes prices. Some will drive you to the end to test if you are bluffing if you claim you have alternative sources.
Be firm that any amount added above what you discussed will result in a no deal and that you will turn down this sale. There is no need to buy from a dealership that does not respect you and your agreed price. There are great, no pressure remote dealerships available.
- If you live in a auto sales competitive region, set the lowest price you’ve seen people purchase online (assuming it is lower than the internet pricing) and send that out to multiple dealers and say you’ll buy it from whoever agrees first.
- If you have a trade-in, get the price from the dealer but don’t sell it to them. You can add $500 to $1,000 to that price (more if car has more value) and go to an auto repair shop and tell them that is the dealer trade-in price, and ask for at least $500 more than that. Or, sell it at a price close to the used car price from KBB.com (about $500-$1,000 less than KBB, depending on condition… this will still be more than what the dealership gives you)
- Everyone knows it, but I’ll say it again. Keep your credit scores high, always. When your car gets wrecked unexpectedly, you’ll need that high score.
- If the sales person discusses monthly payments, get an idea but never focus on lowering the monthly payment. You can do that yourself by extending the loan period or down paying more. Only focus on the car price that includes the destination fees. Getting your car price as close to your lowest internet price is the goal.
- Calculate your taxes, fees, interest and monthly pay amount and correct any mistakes that over charge you when stepping into the financing department to sign your final papers.
- Don’t take additional offers from the financing office.
- If you have enough lowest internet prices, your purchase price can be even lowered.