Recently, I had to replace one of our cars, a black Trans Am I drove as my primary car for a decade. I made the decision to part ways with my pride and joy in order to purchase a new car to support my growing family. Thereby breaking the first rule most frugal blogs tell you, never buy a new car.
Why a New Car?
Depreciation on a new car can be massive and many people that buy a new car do so on a schedule that simply does not allow you to support a frugal life style. If you are buying a new car every 2 years it is very unlikely you will be able to stock pile enough cash to become financially independent. However, I don’t buy a new car every 2 years, so that argument does not apply. I do buy cars to last a decade, as made obvious by my current car ownership that contains a second decade old car. The depreciation on a new basic car amortized over a decade will be minor. The added benefit is that you will know the history of the car and can enjoy a care free warranty for the first few years. That being said, the process I describe below will help you regardless of whether you are interested in purchasing a new or used vehicle.
How to Lower Your Price
The key to this or any purchase negotiation is to identify a person with a need equal or greater then your own and fill that need while filling your own. It is a well known fact that car dealerships manage to a monthly quota. So, it stands to reason that hitting them up for a purchase around the end of the month will work in your favor. Each dealer will have a different level of need. Some will be fighting to stretch that last little bit of their quota, while others will be looking for the sale simply to keep the doors open by meeting their financial obligations. The key is to find the dealer with the biggest need, but how?
Find the Dealer with the Biggest Need
The key to this strategy is to get price quotes on a similar car from as many dealers as possible and ensure they know they are actively competing with another dealership for your business. In this way you are creating the same situation they create for you when in their office and they go to ask their supervisor for a cheaper rate, a feeling that they could lose the sale if they do not put their best foot forward. To start compose an email. This email should be addressed to the dealership and ask them for their lowest price on the specific, make, model, options, and color you would like to purchase. Include in this message any financing you require. Denote in this message that you will purchase in the next week, that you have sent this request to multiple dealers, and that they should send you their best price. Wherever possible separate the sale of your existing car from this purchase to keep the negotiation as simple as possible. Send this message to all the dealers within 50 miles of your home via their internet contact us page. Note that it does not matter if the dealer has your options on site, as many dealers will trade for a car with another dealer if it means their sale.
Making the New Car Purchase
After a day or 2, you will have 1 or 2 much lower offers for the car with several more you can thank and pass on. At that point you can decide if you want to play the two dealer prices off against each other or choose one. Consider getting the price quote in writing before driving in to purchase your car. This will ensure they do not attempt to renegotiate upon your arrival. Then avoid any of the extras while completing your purchase and your all set. One final note, pay attention to whom you bring with you to the purchase and the situation you put yourself in at the purchase to ensure you don’t inadvertently reopen the negotiation at the dealership. Do not go into the dealer without a way home if the purchase falls through and do not bring someone who is impatient with you who might undermine you.
I’ve used the above method to save thousands of dollars and so can you. For the record, I bought a nice shiny Mazda 3. I walked out the door at over 4 grand under MSRP and 1K under invoice.
Do you have a car purchase story?