If you’re going to buy a car, the first thing you need to do is gather some very basic information; most important is what you actually want. If you show up at a dealership not knowing how much you want to spend or what car you want, you’re going to buy something they want to sell you. Decide what car you want, then go online and find the market value of the car if it’s used, as well as what it is selling for at all dealerships in your area within driving distance. Know specifically what you want; options, color, etc. Be specific. Then decide what is negotiable (i.e. color) to give you wiggle room.
Do Your Research
Before contacting any dealerships, you should have a very clear idea of what car you want to shop for, what its average price is nationwide, statewide and locally. This is important, because if your state’s average price is below the national average, then you should expect the same from the dealer. Similarly if your local dealers average less then the state average, then you have a starting point.
If you talk with a salesperson who begins by quoting a price higher then the local, state or national average then it’s time to walk away and go to another dealer. You’re more then likely dealing with someone who is going to try to milk every dollar with you. While it’s possible to still get a good price out of this situation, if you have other options then it’s probably not worth the time and effort it’s going to require.
Get Quotes In Writing
Before you get to this step, you want to be more prepared. Figure out how far you’re willing to travel to buy a car. Realistically, unless you live in an isolated area, you’re probably not going to want to travel too far. Somewhere around 30 miles is probably a reasonable limit. Take that number and look up all the dealerships in the 30 mile radius.
While you’re online, shoot them all an email (you can write up a draft so you can just copy and paste it to save time). In this email, specifically state that you’re looking to buy a car by a specific date. List the car and options that you’re shopping for and ask that they please reply back if they have that car, and to please include what price they are asking for.
Make it clear that you prefer them to email back. You want it in writing for several reasons:
They may try to bait and switch. In other words, they’ll call you and try to convince you to come to the dealership (whether or not they have the car). Once you’re there, you’re on their turf and they have the advantage, unless you’re prepared.
You don’t want a dozen dealerships all calling you trying to sell you over the phone.
You’re going to use this information to negotiate a price.
Start a Bidding War
Give it a couple of weekdays for all the responses to come in. Not everyone will respond and that’s fine. At this point, you’ll have a handful of prices. Email everyone back except for the dealership that gave you the lowest price. In that email, thank them for responding and tell them that you appreciate their offer, but you had been quoted a better price of ‘x’ by another dealer. This gives them the option to offer you a better price.
So without stepping foot on a car lot, you’ve spent probably 30-60 minutes of work.
During this time, you’ve:
- Researched the national average of your desired car
- Figure out if your state is below or above the national average
- Figured out if your local area is below or above the state average
These three things give you a starting point for shopping and provide you a clear red flag if a dealership is trying to take advantage of you and:
- You’ve contacted all the dealerships in your area
- Got quotes from those that have your car
- Started a bidding war between those dealerships
This is what you want. You want them competing for your business, as opposed to going to one dealership and arguing over a price that don’t actually have a basis for asking for; other then that it’s less then the starting price. And you’ve done this while spending very little time.
Close The Deal
At this point, you’ll have gotten the lowest price you can through this bidding war. Take that price and contact your closest local dealership and offer them a final chance to match or better that price. This is because – especially in the case of a new car – you’ll probably want to have maintenance or warranty work done at that dealership. So buying from the closest one is convenient for you in the long run.
If they won’t match it, no big deal. Take that email (in writing) and go to the dealership that offered you that price and buy from them.
Final Note: Be willing to walk away. The moment you start getting emotional, you lose your advantage. If you can’t get a fair price, go back to the drawing board; that could even mean looking for a different car. But you have to be willing to walk away.
A couple of bonus tips to keep in mind. Car salesmen work on commission. Especially with new cars, there can sometimes be bonuses at the end of the month, end of the quarter, and end of the year. It’s pretty difficult to find out exactly when and how much these bonuses are, but if you commit to buying a car during one of these times and state it in your original email, you’ll get a better price if there’s a bonus for them to earn. This is because they’ll be willing to take a loss on a few cars in order to get a larger bonus for meeting a quota. It’s one more advantage in your favor.
