Negotiating the Best Deal on a New Car Purchase or Lease. . .
. . . depends on homework. Whether purchasing or leasing, the
important negotiating starting-point is the final price of the car . discuss monthly payments and
trade-ins later.
Start with the dealer's cost, available, at no-charge, for more than
three hundred different vehicles at Car Point
Pricing Reports. They provide Manufacturers
Suggested Retail Price (MSRP), invoice pricing, standard equipment, options,
warranty information, specifications, advertised and unadvertised incentives,
rebates, and financing specials. To decipher the reports' terms, read the
comprehensive Vehicle Pricing FAQ.
Your target price should be $100 over dealer cost.
You'll pay more for an extremely popular car but if the dealer is overstocked,
you can negotiate closer to his cost. Hot, sexy cars lose their value faster
than conservative cars . important if you're leasing because your monthly
payments are based on the car's depreciation, not the total value.
Decide whether purchasing or leasing is right for you.
Consider leasing if you answer "yes" to two or more of these
statements:
- Like to drive a brand-new car every 2-3 years.
- Maintain your car in mint-like condition.
- Never modify your car after it's left the
dealership.
- Ownership isn't important . a car is
transportation.
- Have consistent mileage per year and can live within mileage
limitations.
You're prepared for endless payments,
unless you exercise the buy option at lease-end.
Shop for the best interest rate . from your bank, credit union, or
other institutions. Few qualify for the lowest dealer financing. Check the fine
print -- low financing might depend on a 40% down-payment or accelerated
payments, e.g., 24 instead of 36 months. Avoid deliberate loan calculation
errors, as explained in "The
Art of the Car Deal," by pre-figuring your payment with these
loan or lease
calculators.
Get the best price for your trade-in. Check its current value in the
Kelley Blue
Book . which lists trade-in and
retail values. Clean, wax, and vacuum your car, including the trunk. Remove all
personal items. Leave service records in the glove compartment but not the
title. Don't let a dealer know if you're still financing. Get your keys back
after the appraiser test drives your car so you can exit easily if negotiations
sour.
Selling the car yourself takes some work but will usually bring
a higher price. Check local car classifieds for regional pricing when setting
your price. Other alternatives -- consignment dealers charge a service fee
and/or a commission of 6-10%r or donate your car to a charity and claim a tax
deduction.
Negotiate . . .
until you get your target price or walk out of the showroom. Get
the best deals late in the month when salespeople are eager to meet quotas and
earn bonuses.
Know the dealer's cost but keep it to yourself. Let the sales
person make the first offer, counteroffer with a figure substantially below your
best price, and work upwards to your maximum price. Restate you target price if
the salesperson presents the dealer invoice to prove he's offering you a good
deal.
If the salesperson hasn't met your price and threatens,
"Better take this deal. You won't get any lower," head for the door.
You'll make a dignified exit or the salesperson will start negotiating
seriously.
Saturn and other "One Price" dealers can break their own policies by offering
more than their original appraisal for your trade-in. "Negotiating a Good Deal" will give the finer points of negotiating.
The Transaction: Purchasing
- Make sure it's really the deal you want -- getting a refund
on your deposit is often impossible
- Avoid Finance Department add-ons -- everything from
credit and life insurance to paint sealant.
- Consider an extended warranty only if you plan to keep the
car until it dies or you're a high mileage user.
- Know your state's tax rate on automobiles . often different
from other retail rates. Tax is payable on the price before rebate, but
incentives are deducted before tax is calculated.
Leasing Tips:
- Stipulate a closed-end lease which fixes the car's value at
lease-end. The lessor is responsible if the actual value is less; if the
actual value is higher, you can buy it at the fixed value and sell at a
profit.
- Consider a down payment, even if not necessary. It reduces
your monthly payments
- Read the fine print for hidden charges . destination charges,
security deposit, registration fees, early termination fees, and lease-end
service charges.
- Arranging your own insurance is less
expensive.
- If you think you'll exceed the annual mileage maximum,
usually 15, 000 miles per year, buy additional mileage before you sign the
papers. The penalty at lease-end can cost 10-25? per mile.
- At lease-end, return the car in good shape, with no signs of
excessive wear and tear and without modifications. Maintain the car
meticulously and keep all maintenance records.
By Calli Soules
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