Sunday, June 22, 2014

Car Price Negotiation Tips

I shared a nice article as far as car price negotiation tips is concerned on my Google+ page. However, during my web research on the topic, I found several other good articles as well. Here is the compilation of the good tips I consider as practical guidelines, especially the ones I think is applicable in Indonesia:
  1. Know what a car is worth. Articles I read suggest to find out about the invoice price of a car which is basically what the dealer paid for the vehicle. I still don't know where or how to find this kind of information. But in general, I think AutoCarPrices.com is a fairly good reference for car price info.
  2. Ask the salesperson for his price. Speaking first in any negotiation is a bad idea, because your number might be higher than the other party's best offer.
  3. Negotiate up from the invoice price. Never negotiate your actual transaction price down from the sticker price. Otherwise, the salesperson will focus on undercutting that higher figure by a token amount instead of working off the lower figure. Never raise your bid until the salesperson has counter-offered on the first bid you make. 3% - 5% above the invoice price is a fair profit offer.
  4. Wrap up quickly. Try to complete the negotiation in 30 minutes. Much longer than that and it isn't worth the salesperson time to give you the best deal since they will end up with so little commission.
  5. Be nice. You will want to come across as friendly and confident, well-informed but not argumentative. Be nice and respectful to everyone you deal with. Sales people will try and build a good relationship with you on the principle that you’re more likely to buy from them if you like them. It works both ways – get them on side and you’ll have a better chance of getting the discount you want.
  6. Don't fall for the dealership's ploy. A car salesperson does this for a living and is an expert. During negotiations, they'll pull every trick in the book, it's just part of negotiating.
    • The salesperson will probably begin the discussion about price by focusing on your monthly payment. Insist on negotiating one thing at a time. Your first priority is to settle on the lowest price you can get on the new vehicle. It's important not to negotiate based on a car's monthly payment but on the purchase price instead. The reason for this is that it can be hard to figure out the purchase price if you're negotiating based on payment. This gives him/her too much latitude to give you a tempting price in one area while more than making up for it in another. And that means you might end up overspending for the car if you negotiate based on payment alone.
    • As you lobby for a lower price, better financing, or even free floor mats, you will be met not just by a counter-offer, but an emotional response as well. The salesperson would appear upset by your gall, seemingly perturbed by your “unfair” demands. In this case, it’s more likely that he/she is exaggerating, hoping you’d retreat. Negotiators will inflate their emotions hoping the other party will seek closure.
    • While you are in the office the salesman talks to another "customer" interested in the same exact car. Of course, the same is there is no other customer. They will tell you that they have no reason to lower their price because everyone wants that car right now. They will tell you you're stealing all their profits. They keep switching salespeople to work on you and wear you down. You’ll be told to wait an hour because someone is “on the phone with Japan” and so many other tricks. Just don't fall for their ploy.
  7. Don't fall in love. Go into the dealership ready to walk out without a car. You really can't negotiate effectively if you're emotionally attached to the car already. You can always buy tomorrow or a week from now. Take your time because good things come to those car buyers who wait!
  8. Follow-up on weekends. The opportunity to do one more deal before the end of the day might compel them to work with you if the week hasn't met expectations.
  9. Follow-up on the last day of the month. Consumers have an incentive to buy at the end of the month, because dealers receive monthly incentives from manufacturers. The manufacturer will give the dealer a bonus if it can sell a certain number of cars by the end of the month. A deal that didn't make sense on the 25th might make sense on the 31st.
  10. Don't sweat the small stuff. Sure, you want to bargain for a good price, but don’t let the perfect be the enemy of the good. If you offered a 3% profit you can come up to 5%. It may be infuriating, but don't walk away from a good deal over a small amount. Before you chase the last penny of savings, consider your own convenience. Provided you’re satisfied that the slightly more expensive deal is still a fair one, there’s no harm in paying a little extra if it buys you peace of mind.
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