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How to save money when buying a new car (flickr, ryanma... How to save money when buying a new car (flickr, ryanmaxey)
Airlines cleared $3.5 billion in baggage and seat fees in 2012. Fees are practically a hidden economy across all industries. And buying a car is no different.

But there are ways to be tough with a new or used car dealer in the negotiations. And going after some of those pesky fees on the invoice is one of them.

Delivery Charge: Really? The dealer expects us to pay a line item charge to have the car delivered from the factory to his dealership? That seems like cost of doing business to us. Still, we have long paid this fee in the form of a "destination charge." Look to see if there is a "destination" charge, as well as a delivery charge. If there is, tell the dealer you aren't paying the "delivery charge," because it's nonsense. The "Destination Charge" is an accepted fee.

Advertising Charge: Come again? You want us to pay a line-item charge for what it cost you to advertise the car? This nonsense fee can be hundreds of dollars. In how many languages can we say "No way." Be tough, stand your ground and tell the sales-person that the ad fee is his problem.

Documentation fee: Dealers often play hard ball on this fee, which can be as high as $400.00, and is said to cover their cost of handling paperwork like registering the car, getting your credit score, etc. Make them break it down for you line by line, and be willing to pay only what the dealer really spent out of pocket.

Dealer Prep: Forget it. This is a fee that dealers like to charge to cover putting oil and fluids in the car, washing it, etc. For us, this the cost of doing business and handling the merchandise you are selling.

Rust, Paint and Fabric Protection: These are high-profit add-ons for the dealer, but they don't do much for your car, because car companies already put this stuff on your car. That's especially true with fabric protection. If you and your kids are slobs, then go out and buy a can of ScotchGuard and dose your upholstery once a year. As for paint protection, the product the dealer is using won't really help protect your paint for very long. No worries, because paint has never been better on cars and trucks. And the kinds of things that will bedevil you won't be solved with the dealer paint treatment--that's loose shopping carts running into your car, or people opening their door and whacking the side of your car in a parking lot and scratching the paint.

Extendend Warranties: These can cost between $800 and up over $1,000 and purport to cover your car from mis-haps after the basic warranty is over. There are two things we don't like about extended warranties: they are often sold by fly-by-night companies through the dealer, and there is a lot they don't cover in the small-print. We say "pass." If warranty protection is important to you, though, shop for a car at a company where the basic bumper-to-bumper warranty, as well as the power-train warranty, are long--longer than 36 months/36,000 miles.

Is it difficult to negotiate these? No. Will you get the sales-person to waive all of them? Probably not. Be prepared for the basic ploy from a car sales-person: to make you feel guilty about not paying for extended warranties or paint protection. "You are making a big financial commitment, and so it makes sense to protect it."

Here is your game-plan going into the dealership, or if you are negotiating online.

1. Never negotiate around a monthly payment. Get the best price for your car, and all the rebates and incentives available, and then do your own calculations on how long a term you want for your loan.

2. When the price is agreed upon, ask the dealer to present you with the invoice. At this point, review all the fees, and tell the sales-person that you aren't going to pay all these fees, and start going over them one by one. Be prepared and query them on each one. Insist on some of these being waived (like the delivery charge if it's on top of a destination charge), and cutting down other fees like the preparation charge. The advertising fee is non negotiable, for you, so don't pay it under any circumstances.

3. If the sales-person gets tough on these fees, and brings in a sales manager or some other personnel to back him up, stand your ground. Car dealers have a bagful of approaches and time-honored ploys to get you to pay these fees. Hang tough.

4. A confident and knowledgeable car buyer is the toughest customer for a dealer to negotiate with, so prepare. Take a notebook of information and reminders about how you are going to negotiate the transaction. And try to do as much of your negotiation online or over the phone, so you are in the comfort of your own home and not under the pressure of being on the other side of the desk from the sales-person.

5. If you aren't happy, walk away and try another dealer. It's your money, and your choice. The dealer has to win your business.

Five Ways To Get The Better Of A Car Dealership



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    • 1 Second Ago
  • 19 Comments
      Ron Wizard
      • 2 Years Ago
      When you apply this taxtic. Prepare yourself to deal with another dealer for the auto you want. Year back, I tried this tactic with local dealers with pleasure. The back and forth travel/traverse of the "minion"/ sales person to the top dog's office was fierce. Until the top dog himself decided to come down from his perch. We argued back and forth about every fee I intended not to pay for, until his frustrations kicked in and he asked me to leave. The pleasure I got was watching the reaction from other potential buyers in the showroom and the knowledge that I hadn't signed any contract yet. A few potential buyers began to ask questions of their own after they witness the treatment I was getting. From the showroom floor back to my car, the "minion"/ sale person still insisted that a deal was possible. I finally got the car I wanted at another dealership in another nearby city without those stupid fees and extended warranty.
      Stan
      • 2 Years Ago
      Car Dealers are ****** (; What does A ***** want YOUR MONEY! ****** will lie, cheat and bs you to the point of no return. I don't think any grown man reading this at one time or another has not been charmed and burned by a *****. So be nice be polite BUT ABOVE ALL THE LESSON HERE IS YOU ARE DEALING WITH ******! treat them as such. It took me 5 months of dealing with all kinds of shady dealers until I found one guy who knew, if he wanted my money HE DAMN WELL BETTER GIVE ME A FAIR DEAL! He did! After 3 years of driving my Camry, It runs and looks better than the day I got it.
      envpcc
      • 1 Year Ago
      Watch out for the "I've got to take this to the manager ploy." Tell them that if you have to deal with the manager to get him to the table. The routine is that the salesperson will just go off and leave you waiting to soften you up. Be careful not to be trapped by the good guy/bad guy routine.
      mpdlr
      • 1 Year Ago
      What is the dealer's cost on an I-PAD? What is the dealer's cost on an I-PHONE? how can we make sure Apple doesn't cheat us?
      Thomas Rockford
      • 1 Year Ago
      Want to save money on a car? Pay cash. Borrow the money from yourself. Want to save money on insurance after buying it? Get quotes online FROM THE RIGHT PLACES. I'm paying just $30/month from 4autoinsurancequote. My friends pay $100+ / month and I think they are crazy. Want to save more? Service it with a local qualified mechanic in his own shop. Mostly, just change the oil. Once a year have him inspect the "vitals" (brakes, hoses, etc.) The service program that the manufacturer set up is a scam. Todays cars don't need "tuneups". That little "service your engine soon" light ("maintenance minder") is a device designed to suck your wallet empty. Just turn it off. Never, never, never bring your car back to the dealer for service (except for recalls or warranty repair). You will save thousands more than all that wheeling and dealing I just read about. Dealers make money on service like restaurants make money on alcohol.
        • 6 Months Ago
        @Thomas Rockford
        your post is filled with some major misinformation. First borrowing from yourself is not exactly saving money. if a car dealer can get me financing at 0%, 9.9% or 2.9%, that beats the hell out of me taking money from my mutual fund earning a healthy return. Secondly, I learned the hard way that my car can't pass the dreaded SMOG test with an engine light on. Yes, it does suck money to fix whatever causing the light to come on, but it's cheaper than having to deal with a failed SMOG test.
      mpdlr
      • 1 Year Ago
      Oh, and if AOL's software keeps locking up computers to the point where they went from one of the biggest online service providers to a joke, what is AOL's true-cost in providing us service?
      johnvq9x
      • 1 Year Ago
      Time and time and over again and again, I have tried to deal with ((Salesmen)). Tired of getting ripped off over and over again. They are Lieing all the way, because if they don't, they will go broke.
      • 2 Years Ago
      I have been selling cars for about 3 years now and I have gotten quite successful at it. (grossing over 6 figures from the past 2 years) BUT, what is really annoying is the thought that "every salesperson is out to get you" Doing research is highly recommended before you come to a dealership but you should be within a day of purchasing before going to a dealership. Nobody wants their time wasted from the consumer to the salesperson who does this to make a living. There is certain pricing you have to qualify for through the manufacturer and if you don't then you don't get it. That's not the dealership or the salesperson's control. Also these websites that offer "how to buy a car" advice although having some good tips will also make which should be a comfortable pleasant experience drawn out
        • 1 Year Ago
        Not all cars salesman are bad but MOST are. Only once have I gotten a salesperson that didn't try to pressure me into buying something I didn't want. I've flat out told salespeople that I don't want something over a specific price only to be immediately shown cars thousands of dollars more than what I asked and then when I understandably got mad and tried to leave the lot they spent the entire walk to my car trying to make me feel bad for not wanting to look at any of their cars. I'm not even kidding the salesperson was pouting. LOL that pathetic nonsense doesn't work on me. Most salespeople are scum no offense. The entire job is based around getting you to buy something you don't want.
      Jaybird248
      • 2 Years Ago
      All this goes by the boards if the dealer already has the best price in the area and the exact model/equipment you want on the lot. I paid a dealer fee but saved about $2,000 by simply going out of my local area. Any dealer will service the car under warranty even if you bought it elsewhere.
      rgjarrell
      • 2 Years Ago
      Why would anyone buy a new car anyway? Once someone decides that they have to have new, then it's all academic. You're officially going to be over-paying. What we're talking about in the article above is a small part of the whole price. Good Negotiations or just good shopping might add up to a savings of $2000 on a $40000 car. That's just 5% of the price. The depreciation (trade-in or private party value compared to purchase price) alone once you drive it off the lot is probably about 20% or about $8,000 - $10,000 on the $40,000 car. Regardless of the fees or taxes or whatever discounts, you'll still have something that you can't sell back. Private party used car deals are the only deals that are priced appropriately. There's usually minimal taxes involved, there are no extra fees. If you buy a car and get a temporary tag (like a temp 14 day sticker or something), you could use it and flip it for about the same $$ or a little more or less without paying sales taxes or title fees or any of that stuff. That's the only true measure of whether or not the price was "fair". Any time you deal with a dealership you've got to pay the profit they build in for themselves. What's your peace of mind on the transaction worth compared to doing business with an auctioneer or an honest private party? I'd rather sink $20,000 into "repairing" / "building" up an older shell of a car with aftermarket parts in a way that would be easily repairable rather than supporting the government created car oligopoly. But that's not financially sensible because no one else would trust your repairs and / or think the older vehicle should ever be close to worth that much money. So, basically, the sensible thing to do is to get something that is 3 to 8 years old and get a few years out of it. If you can get 1 year of use per $3000 spent on the car, then that will leave a lot of choices out there in the used car marketplace to choose from. If you one loves new but hates fees as much as the author, what about finding a private party used vehicle that is about 2 years old with low miles? Even though it might cost $20,000. That's probably $15,000 less than the out the door price when it was new 2 years ago. It might even still have the warranty. Frankly, I'd rather buy a lower priced car without the warranty than a higher price for the same thing with the warranty. Any place doing warranty service seems to be way less motivated to really fix the car right when doing warranty work as compared to when they're doing work for cash.
        jstahl4450
        • 1 Year Ago
        @rgjarrell
        If no one ever bought a new car.....where would you get the piece of crap used car from?
      l8rpt8r
      • 2 Years Ago
      You should make a plan when buying a car. It should consist of a three day affair. The first day you go out and shop for the vehicle that you want. Test drive it, however if you do, the salesman will ask you for your drivers license and will make a copy of it. And while you are out driving the vehicle he will run a credit check on you, and now he has your address. You do not want to give this guy any information about yourself at all cost. So you tell him or her that they can get in the car with you and go for the ride. This way you don't have to give away personal info. The Second Day you go back to ask any questions that you thought of that you didn't ask the first day. The third day is the day you will buy the car. You ask for the Dealers invoice, not the invoice stuck on the window. They will tell you that they don't have one, but they do. If they will not provide it just walk. All of a sudden they have one available. Think about what I am saying here. A grocery Store makes 5 cents profit on every dollar that you spend. I will tie this together in a second. Now after you get the Dealer invoice you go through it line by line. There is a charge that is called a holding charge, and it is usually about 900 dollars. The thing about this charge is that the factory gives the dealer $900.00 dollars for selling the car. That's the holding charge and the dealer will try to charge you for this also, this is called double dipping. bottom line you are only going to pay for the destination charge and the taxes, everything else is not happening. Getting back to the grocery store, After you have negotiated the charges, you then offer them 5% over the dealer invoice cost, plus the destination charge and taxes. They will ask you how you had come up with this number and that's when you tell them that a grocery store makes 5% on a dollar or 5 cents on the dollar. and they are happy to get it, so why wouldn't you be happy with the same thing. If the salesman says man you are taking food out of my families mouth, you turn it around and say the same thing back to him. So now you have negotiated the price of the car and both have agreed on the deal. Now its time for your trade in, The will low ball your trade in, stand firm on what you want for you car. However be reasonable. They will take your trade in and sell it on their lot and ask 4000 to 5000 dollars more then they gave you for it. Financing is now the last step, have a letter from your credit union that states what they will finance and be prepare to put down some money if there is a difference in the price of the car and what the credit union will finance. Remember this, never give the salesman any information, he will use it against you. So if he asks you while you are negotiating the price of the vehicle, how you are going to pay for the vehicle and how much are you going to put down, he will use it against you. Bottom line if you follow these simple guidelines you will save a tone of money. Good luck...
        edbon64
        • 1 Year Ago
        @l8rpt8r
        Ok Idiot..I sell cars for a living, and have done so for the last 10 years. It is IMPOSSIBLE to run a credit check from a driver's license. Unless someone's Social Security number is printed on their license, just exactly how would a credit check be run ? Plus, it is ILLEGAL to run a credit check without a signed credit application, and Privacy notice. With regard to what you refer to as a "Holding charge", both your terminology as well as your understanding of what it is are incorrect. First, it is called Dealer HOLDBACK. There is no set amount as to how much it is. It varies based on the vehicle, and the Manufacturer. No dealer owns the new cars on their lot. They are all owned by a bank. Dealer Holdback is paid to the dealer by the Manufacturer to offset the cost of interest paid by the Dealer to the bank while the car sits on the lot. Esentially, this is the Dealer's money. If a car sits on the lot past a certain amount of time, that money is exhausted. Charging holdback is not in any sense of the word "double dipping". With regard to your advise about trade in value..A car's value is based on age, mileage, and wholesale market value. depending on where you are shopping for a particular car, and the time of year, the value will vary. If we take in a car that we plan to retail, the cost of reconditioning needs to be factored in, plus the potential retail price of the car. There is no such thing as a Dealer making $4,000-$5,000 on your trade in..If, for example a car is taken in for $10,500, and has a retail value of $14,000 it would break down like this. First, the car would require a safety check which is $130 at my dealer. Then..Let's say it needs tires, brakes, and the usual oil and filter change, that would be about another $600. Then the detail department needs to clean it for the lot, $65. Then someone negotiates the price with us down to $13,200..Now the Dealer is making a whopping $1,905. Then, they need to pay the sales person their commission, 20-25% of the total gross profit, a high end of $475..AND where I work we put a 12 month 12,000 mile powertrain warranty on our used cars. Profit for the Dealer is now $1,180. Nowhere near the $4,000-$5,000 you want people to believe. I WISH we could get 5% OVER Dealer Invoice for our new cars. MOST deals that leave our lot are written at invoice minus ALL Dealer Holdback, or "Triple Net Cost" because of the highly competitive nature of dealers in our area. The Dealer isn't in business to make a killing on the cars that we are selling. We are in business to sell cars, put them on the road, and hope that they are brought back to our facility for service over the next several years. This is the true profit center of any car dealer. Educate yourself before you try to educate others. That goes for Mr David Kiley as well..He spouts off about things that don't exist out there any more, and creates a more difficult car buying experience for people by breating fear of the dealer..
      • 2 Years Ago
      Don't pay this and don't pay that. It sounds to me that the journalist covering this article has been burned buying a car and is taking it out on the industry. Do you realize how many people it takes to prep a car, do the paperwork on the car, contact the banks, secure funding, handle human resources, medical and dental for employees, taxes, fees, safety, training, hiring salespersons and mechanics and on and on and on. If you don't like a dealer for it's fees, go somewhere else. Most of them have the same exact fee in place and will not waver on them. The dealership I use will not waive the fee, period. They will let you walk, as will the other one I went to and the other one. Judge a dealership based on it's service, people and reputation. Getting a car for a good price is part of negotiation but if every dealer "gave" their cars away and fees and so on, where would you buy your car or get it serviced. Don't be so angry next time.
        pklarreich
        • 2 Years Ago
        (and you sound like a desperate dealeship manager) That aside, the way around this, making everyone 'happy' and dealing fairly, is simple: You: When you quote me a price, it is the 'out-the-door' price, completely itemized in the form of a "buyer's order". Dealer: Well, I'm not sure what things may cost. You: Do the best you can -- it's not the first time you've sold a car, is it? The dealers in FL are notorious for adding on a 'dealer fee" after they quote a price. This way, it will be upfront and readily comparable to other quotes. (BTW, 'out-the-door price' is their standard term for this, not mine.)
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