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Living on a Budget
by Sid Kirchheimer, AARP Bulletin, December 25, 2009
Q. How can I negotiate a better price for a new car?
A. Before you visit a dealership, learn the dealer’s invoice price of your intended purchase—the make, model and options you want—as well as what other buyers in your region paid for a similar vehicle. You can get this information for free at TrueCar.com or Edmunds.com. TrueCar also provides the approximate dealer’s “true cost,” including “holdback” payments it receives from the manufacturer for keeping cars in stock and any dealer or customer incentives in force.
The invoice or true dealer cost is a better starting point for negotiations than the manufacturer’s suggested retail price listed on the sticker. But your chances of getting a price close to the dealer’s cost are affected by several factors, such as local availability and demand for your desired vehicle and how aggressively regional dealers are competing with one another. So it helps to also know what other local buyers actually paid for the same vehicle, and aim to beat their deals.
Many dealerships offer special pricing on their websites that can be lower than what’s quoted by salespeople on the lot, whose commissions are often a percentage of a sale’s profit. But you may save even more by phoning or e-mailing the dealership for a “best price” quote, since those requests are sometimes handled by staff whose commissions are based on the number of vehicles they sell, rather than profits from the sale.
Make sure that any manufacturer rebates or offers of “cash back” to buyers, often touted in TV ads, are not built into your starting price for negotiations. Get your best deal based on the dealer’s cost, and then claim any rebate.
When shopping for a preowned vehicle, AutoTrader.com typically provides the most comprehensive listing of local inventories. Similar sites are Vehix.com and Cars.com. Because some dealers earn a greater profit selling used cars than new ones, feel free to haggle over the sticker price—again, after researching the car’s true market value at Edmunds or TrueCar. As a general rule, no-haggle dealerships may ease some stress for negotiating novices, but experts say their prices tend to be higher than what can be achieved with dickering.
Sid Kirchheimer writes about health and consumer issues.
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