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Negotiating with the car dealer can be a lot easier if ... Negotiating with the car dealer can be a lot easier if you come prepared (Credit: jupiterimages).
Mark McDonald writes the "Car Salesman Confidential" column for MotorTrend.com, a guest blog for the enthusiast magazine's website we enjoy. And he has a surprise insight for his readers this month.

Contrary to popular belief, McDonald advises car buyers to not negotiate a price for a new set of wheels starting with the invoice price and working up. He says, instead, to start with the sticker price and negotiate down.

McDonald gives an example of why a car buyer should start with the sticker and dicker downward. Let's say you want to buy a big SUV, like a Chevy Suburban or Ford Expedition. When gas prices go down one of these guzzlers sells for about $400 over invoice. "But when gas prices go up, past $5 a gallon, what happens?," asks McDonald.

If you negotiate with the dealer according to the principles of "fair market value," you might offer the dealer an offer below the invoice price you have researched on AOL Autos. And, says McDonald, they are likely to take it because the dealership has a dozen or more of those giant SUVs on the lot that are being financed. In other words, the dealer is paying interest on carrying unsold inventory on his or her lot, so it's in his interest to keep the vehicles moving through the lot. That is a situation that works in the buyer's advantage.

"They're happy to let a Behemoth go below invoice - because that's what the market dictates," writes McDonald.

Here are five more buying tips from AOL Autos and professional independent negotiators Ted Fenton and Wael "Y.L." Khalil on how to be a smart negotiator on your next purchase.

1. First do your research. Figure out exactly what you want before you start shopping.

Fenton's advice comes from holding every possible job in the auto-selling world. "I was washing cars at age 16 at a dealership, and worked my way up through sales, management and finance." he says. "Along that rise, I learned where the money is, what's negotiable, what's not, what all the tricks are, where they hide money. Depending on how the deal is structured, there are seven or eight places a dealer can add money onto a deal. Most people walk into a dealership and they are just concerned with the monthly payment. A dealer loves to hear a sentence like, 'I don't want to spend over $300 a month.' The consumer has just given the dealer license to rip them off. The customer also needs to figure out exactly what they want -- leasing, financing, model, color -- beforehand."

Khalil says, "It's all about your research. I find women are really good at research -- they just don't want to do the talking, not by themselves. I walk in and make sure she gets what she started with. It's all about the homework. I can have a 16-year-old with a checklist, have them call three dealers, and then I'll step in and do the deal. If they do research at home, you will be fine when you get to the dealer."

2. Call every dealer within a 100-mile radius and negotiate from home.

Once your choice of a vehicle is finalized, Fenton says, pick up the phone. "Get on the computer and contact 40-50 dealers, if you have to, within 100-mile radius of where you live. Look for dealers who have that exact model. Five to ten of those dealers will have those exact cars."

"All the negotiating should be done through the computer, the fax machine and over the phone," he says. "Some dealers say they won't give numbers over the phone. If they say that, call some other dealer. The car salesman and the manager want nothing more than to get you in the door. As a dealer, I don't want to give any numbers to any buyer unless they are in the door. But all you need is to get one dealer to say 'I will do this, this and this.' At that point you can call up other dealers. They will give you a lower price, lower points, anything to get the sale."

"Do not go to the dealership," Fenton says. "You do not have to go to a dealership to buy a car. As soon as you walk in, they try and sit you down in 'the box,' which is what dealers call a negotiation situation. Most people don't have those negotiation skills. How can they? The dealer is trained to sell."

3. Sell your car on your own.

If there is a trade-in involved, Fenton says, "The first thing I would say is to make an effort to sell car on your own. You'll get $3,000-$6,000 dollars more on your own. If you do decide to trade, don't tell them you have a trade-in until the very end. Drive to the dealer's after the deal is done and on paper, and say 'What will you give me for this car?' Just keep going back and forth where the dealers all get roughly within 100 dollars of one another. It will get to that if you do it correctly. You'll get to the best deal."

4. Play each dealer against the other.

Khalil says, "He who has the cash is the boss. There isn't a shortage of cars. If you don't give it to me for what I want, I'll go elsewhere. I don't have all day to go back and forth and back and forth. Part of their tactic is to wear you out. But I take info from one salesman and use it as leverage before we walk in. One says 'I can do a better interest rate.' Another will say, 'I can do that and nice carpet.' Let them play with each other. Let them fight it out, with you in the middle."

"I pit those guys against each other," says Fenton. "I say, 'Make sure you give me your most aggressive price.' That's how I get to the bottom dollar. That's going to be below invoice, depending on availability. The consumer also needs to understand that the dealer is essentially a broker for a bank, all of whom have different rates. The way the dealer makes money is to buy the loan, and mark it up. Most consumers don't know that they can negotiate. What I tell the dealers is you have to calculate this lease at your buy-rate. They all complain, but with me it's either you do it or don't you -- there are 20 other dealers."

5. Other than test-driving, there's no need to go to the dealership.

The only time you should be going to a dealership, says Fenton, is when you have already test-driven the car beforehand, you've made the deal and you're going to the dealership to sign the paperwork and drive the car home.

Khalil says, "I do all negotiating over the phone, 95% of it. And then I walk the customer into the dealership with all the e-mails and faxes in my hand. We walk in just to pick up the car. Deal is done."

When you must visit the sales lot, Fenton says, spend as little time as possible. "As soon as the salesman meets you, he's going to try to get control," he says. "I would go to the dealership and tell them I've got 20 minutes to 1/2 hour and I need to test this car and this car and this car, and then see. Tell them you're not buying today. The salesman's guard will come down and they won't try to sell you."

"You can test drive a car without giving the guy your e-mail address, fax number or even a phone number. You can also get up and walk out at any time," Fenton says.


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    • 1 Second Ago
  • 488 Comments
      acgwagen
      • 2 Years Ago
      Rofl! Look at the picture, they're at a JAGUAR dealership! They're screwed already!
        • 2 Years Ago
        @acgwagen
        Why don't you do a little research before you comment. http://businesscenter.jdpower.com/news/pressrelease.aspx?ID=2011029
      • 2 Years Ago
      Speaking as someone who had sold cars for six years, numbers 2, 4, and 5 are completely ridiculous because we know that you are calling other dealers, we will "low ball" you and then when you take that number to another dealership, they will not honor it.
      • 2 Years Ago
      Well i for one had a weird experience buying a car recently.... the website has a price ( used car ) and said make offer.... I offered 400 less then the asking price and was basically laughed at then told that price is firm ! .... then why does your internet listing say make offer..... so we went to the dealership to see said car.... and everyone was friendly and helpful.... until we were asked are you financing or paying cash.... the minute I said cash everyones tune changed.. I felt like because they were losing the intrest they could charge me, they were no longer interested in dealing with me.... I mean it was a complete 360 on how we were treated when we walked in..... So can someone please tell me.... is there a differance when paying cash over financing? If i buy a car for 6k.. i wanna pay 6k not 7k after intrest! So i pay cash when i can, or I dont buy.... this goes for a 20k car as well! ( please dont reply bashing my typos if any, just replies on the post )
        • 2 Years Ago
        some dealers, sell the car so cheap that depend on other means of profit. one way of merchandising is to is to make money on the financing. the bank sells the money to the dealer at a discount and the dealer marks it up. usually only allowed 2 points by the bank. if you want to pay cash they cant afford to sell car at the quoted price. usally they disclose somewhere in the ad must finance car.
          • 2 Years Ago
          If you have cash, agree to finance for the best deal, then pay the balance in full in month one.
          karebear1952
          • 2 Years Ago
          And to add to your assessment, the 2 points the dealer can markup a rate equates to no more than that same bank would charge a customer if they walked in the front door of the bank. The bank sells credit cheaper to a dealer because of the volume they give the bank. It's call enterprise.
        • 2 Years Ago
        They are crazy for not taking cash. It is instant. The only thing i can see is that they don't get that extra money from interest. It is kind of crazy. I understand how you feel. I don't to pay more for a car than it is worth.
          • 2 Years Ago
          you missed the point. they dont make $$$$ on the car without financing. cash means nothing if they arent making a profit
        karebear1952
        • 2 Years Ago
        The bank gives the finance rate, and they bill you, not the dealership.
        frankiespeaking
        • 2 Years Ago
        Don't even mention you want to pay cash. Go ahead and let them set up the car on credit after you've made your absolute best deal. Before you sign the papers...make sure there is no penalty for an "early pay off" of the contract and get it in writing BEFORE you sign the contract. Tell 'em you're going to make some extra payments. ( They lie...it's Karma... If they can't give it to you in writing....NO SALE!) Then when you make the first payment....the principle should be your final negotiated price and the stated payoff price and a small amount of interest.....so pay off the car ( which cancels any future interest charges on the contract). This, also, gives you a + on your credit report with the pay off...win..win, Baby! Car dealers try to make you think they've given you a great deal.....let 'em! They will give you more if you buy on credit because they know they'll get it all back and some in interest and kick backs from the financing entity. So do 'em both in one move.... It's legal! .. You just have to out smart 'em to get what you want. They will be so done......(my heart bleeds!) but they'll make it up on the next sucka! I don't get mad....I get to thinking ....of how I can do you to my advantage and your detriment. They will never see this coming! HA ha ha ha! .Happy Motoring! As for the "English " teachers out there scanning for errors....pay more attention to the message...not the messenger....case closed!
          karebear1952
          • 2 Years Ago
          @frankiespeaking
          You idiot, it says on the contract if there is a prepayment penalty. And unless you keep the loan for approximately a year, it does not help your credit.
        Lindy
        • 2 Years Ago
        Just sounds like you were unlucky enough to find a car you liked with a group that you wouldn't want to deal with. I sold for a long time and I never asked until the end how you were paying. Sure the dealer makes some money on financing so sure they would also like that extra profit, but the deal isn't based on that. If you have the money to pay cash, good for you.
      • 2 Years Ago
      If this guy came into my dealership to buy a car off of me I would kick his ass out. This is the kind of guy that says "i dont want to play games and be lied to" then in the same breathe he is playing games and lying. Carsalesmen make an honest living and have families to feed. On a new car a salesmen typically makes 100 or 150 bucks. We try to make the buying process as easy as possible, while this idiot is the one makingit a pain in the ass. 25 years ago (when this gentlemen as in the business) things were a lot different. He knows nothing and with articles like this he is trying to take food out of my childs mouth. BOO THIS MAN! boooooo!
        • 2 Years Ago
        Amen Brandon!!!!! This is not 1985 and sales PROFESSIONALS conduct themselves in just that manner - PROFESSIONALLY!!! I'll be willing to bet that this same guy is the "customer" who rolls into your service department demanding all sorts of free services, add ons etc...... Some "customers" are just not worth the effort!!!!
          items17070
          • 2 Years Ago
          some "DEALERSHIPS / SALESMEN" are NOT worth even looking at!
        • 2 Years Ago
        I have no pity for car salesman either. Last time I checked, you chose your career as did everyone else, if you do not like how you are paid then get another job. Also, by saying "I would kick his ass out" aren't you costing yourself potential money for yourself to feed your family?
        Hank
        • 2 Years Ago
        I have no pity for car salesmen. They are dishonest in the way they structure the deals to take advantage of the customer's ignorance to get the best deal for themselves and their dealerships. I don't care if a saleman wastes his time with me and won't make a deal. The phoney game they play keeping the buyer from the person that has the real authority to negotiate is dishonest.. The whole back and forth game is a joke. I tell the dealer what I will pay and leave him my phone number. Of course, most of the tiem they never call me. But the one or two times they did, I was back with the cash and got a great deal.
          Lindy
          • 2 Years Ago
          @Hank
          Not accurate....there are one to two sales managers in a whole store with 20 sales people...why would they have time to deal with you? They are very busy dealing with those crappy deals you guys bring to us...I could sit at my desk all day and never see a manager if the customer is ok with a normal deal (which there are Many people who are and you can bet your butt they didn't even read this article)...but you sound like one of those men who have to prove their manhood with the Great Deal they can brag about , a sales person does have to go get a manager to agree to the stupid deal and put his signature on it.
      kimallman
      • 2 Years Ago
      Discounts are deeper in the late summer and fall when the dealers are liquidating that model year inventory. My 2010 Silverado Z71 was 25% off the bottom line sticker price. Couldn't get the color I wanted, but white works fine. My best deal was dealer invoice and zero % interest for 60 months. That, too, came in the fall.
      dscarrollinlv
      • 2 Years Ago
      Khalil says....who the heck is Khalil????????????????????????????????????? A dirty thieving auto broker I bet. someone who preys on people and charges a fee so they can work out a deal for a customer......stick with the internet and playing dealer against dealer, unless it is a used car. But paying an Autobroker has got to be the dumbest thing ever, just throwing away money when you use an idiot like an AUTOBROKER>
      • 2 Years Ago
      a vote for obama will put you in a soup line ----------------------------------------------------------------------------------------------
        • 2 Years Ago
        You got it wrong pal. A vote for Romney will bankrupt the nation, and you will be on a soup line.
      ccdae5
      • 2 Years Ago
      I do most of my research ahead of time so when I get to the dealer, I know what model I want and the range of what I want to spend. In my state new car lots are closed on Sunday so I do my shopping then when no one is around. Then decide which car and write the check.
      • 2 Years Ago
      If anyone is ever in the Greenville SC area. Steve White Audi Volkswagen is one of the best dealers i have ever gone to. I bought a 2012 Jetta SE from there last august and couldn't be happier. To make it short i was in a big time crunch i had already handled most of everything over the phone. I got to the dealer and i was in and out within 30 minutes. They also don't pressure you into anything. I love that dealer and would recommend it to any one who is in the market for a Volkswagen or Audi.
      • 2 Years Ago
      people are sheep.. and need to be let to slaughter.. i cant waite to open my store tomorrow.. i smell blood
        • 2 Years Ago
        i think i made 3k just commenting here
          • 2 Years Ago
          i made 6k.. you should work for me
      • 2 Years Ago
      unfortunately my friends there is a combination of good and poor information on the internet. I have managed car dealerships for 13 years, and have never placed a sale over my personal integrity am concience. Believe it or not, most dealers are honest, and reputable people. We have some unscrupulous and shady folks in our business, as any industry does that causes distrust in the industry as a whole. The gentleman that wrote this article also displays a lack of character in telling people to lie to the people they are interacting with (tell them you don't have a trade). If we all dealt with one another in a respectful and honest manner, wouldn't this transaction be easier. As an executive at a dealership. I expect our customers to be up front and honest with me as I am with them. Understand we are a for profit business, as your business is as well. I don't seek to retire from a single car sale, but I do have employee's that need to make a living for themselves and their families, and investors who expect a return on their investment. I never want to take advantage of an individual, but rely on repeat business, and yes dare I even say a relationship with the customer even in this day of internet pricing. I guess I said all that to say this, deal with others as you want to be dealt with. Be fair to the dealer and he/she will be fair to you as well.
      Merrill
      • 2 Years Ago
      I was in the Sales end for over 8 years. Here's what I tell people like you.... I'm your boss. I'm going to ask you EXACTLY what it COSTS you to travel to work and home each day. In other words, what is your invoice. Then I'm going to offer to give you LESS than that cost! Would you keep the job? Yet you expect to BUY items like cars and have the dealer take a loss? Yes, there are incentives based on volume sold, like dealer cash, but how do you expect the Dealer and the Sales people to make a living? Invoice is invoice regardless of market value of a vehicle. Ask for the rebates, subtract them from the invoice and offer the dealer $250 over that total. Otherwise they might not be there when you need something else.
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