Negotiating For A Car, Part 2

20130514-154549.jpgLast month, we looked at the preliminary research needed for negotiating for a car. No doubt, it’s an exciting time for both you and the dealer you’ll work with, but as you begin the process of looking for a new vehicle, you should consider a few things before you jump into negotiation.


Understand your limits and boundaries.

We said it in our last post : purchasing a car is a huge financial decision with many responsibilities. With this is mind, you should plan out your expenses before you hit the dealerships. When you start preparing yourself to look for a new car, you should already know exactly how much you are willing to spend. When you hit the lots, you can discuss finances with a salesperson that can better help you find vehicles within your price range. Remember: your price range should also cover the sales tax added on to the final price.


What goes into the car’s price?

You’ll notice: car prices do vary. Any new car’s price is going to include the cost to the dealership, the cost of transportation, and the upcharge from the dealership to cover everything from insurance to keeping the lights on. When the dealership gets the vehicle, they need to prepare it for presentation. The upcharge from the dealer is the amount of money they will make off of the sale, though it’s often considerably less than one might imagine. Often, the state makes more on sales tax than a dealership does. With Indiana’s 7% tax, this is almost always the case.


This is all normal and how everyone involved makes financial gains from the entire process. Remember, while you deserve a great deal on a car, the salesperson is exactly that: a person with responsibilities like putting food on the table and keeping a roof over the heads of his or her family. While we all remember Danny DeVito’s character from Matilda, the stereotypical used car salesman turning back the odometer and putting sawdust in the engine, that’s by far the exception, not the rule.


When is bargaining too much?

You want a good deal, and the best way to get it is by respecting the salesperson. Negotiate for a price closer to your budget, but don’t hassle the salesperson. There will usually be some leeway on the final price, but you get there by observing your budget, talking with the salesperson, and realizing the costs of the vehicle you are looking at. If you’re trying to reduce a price too much, it may be a clear indicator that you are looking at a vehicle that is out of your price range.


If you can’t afford it, don’t buy it. You don’t want to be stuck with a vehicle you can’t pay for, or even have it repossessed. If it’s out of your price range, look for a vehicle with fewer special options, higher miles, or an older model. Finding the perfect combination of those factors is difficult. Be honest with the salesperson, and he or she can help you make that perfect match.


After two posts, we’ve covered quite a bit of ground on negotiating vehicles prices. What have we left out that you think others can benefit from knowing? Share with everyone in the comments section below!

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