Lomag

How do I negotiate a good price when buying my new car?

Much has been written about this subject, especially for the U.S. buyer. The car dealership profession has many secrets and many of them are known and free for the asking. Three helpful hints to follow before posting other sources:
1) Never start your negotiating until you know the invoice prices the dealer is paying and also current incentives and/or rebates. This information is free and available at edmunds.com. If you know that the dealer is receiving a 2% hold-back (or 'award') from the manufacturer, even though this isn't an award to you, this information should and will affect your negotiating tactics.
2) Always negotiate from invoice price up, NEVER from MSRP (retail) down. As soon as you ask for a certain amount off MSRP, your salesman will have a big grin on his face.
3) Go for your test drives in the middle of the month but go to negotiate/purchase close to the end of the month when the salesmen are desperate to fill their quotas.

Sources for negotiating information:
1) Border's or Barnes & Nobel bookstores
2) Edmunds.com and many other internet sites. 'Search' is your friend.
3) The "Rizzo Method" described here: http://www.bimmerfest.com/faq/rizzo.html


If you have any additions or comments please post them below for other forum members and web site visitors to read.

bmwin14rsm

I agree with 90% of the article. My father was a general manager of a dealership for 20 years. Here are his additional suggestions.

When deciding on buying a car talking to the salesman about the car is fine. Never, Never, Never talk price about anything to a salesman. Remember, the salesman does not have the authority to make any deals on pricing. In the past 5 years, I have personally purchased 3 cars for my family and 5 cars for other people and this technique worked every time.

After you know exactly what car you are getting, do all the steps stated earlier. When you know what exact car/truck you want to buy say:

"I appreciate you selling me _____ car/truck. You did a great job. I now want to buy the car and I only want to talk to the general manager, the one who can actually negotiate the price of the car with me. Please get the general manager for me so I can buy the car you sold me."

At this time, you will get some negative feed back from your salesman, but re-state the above statement. If the salesman returns with out the general manager and starts with brining a price on a piece of paper, instantaneously stand up and start walking out of the dealership. This will be very hard for most people. I don?t recommend having you whole family there at this time. This could get uncomfortable for some people. My wife absolutely hates this part of buying a car. I for some reason love it. In aprox 20 seconds, you will have the general manager at you side and he will either sit with you or ask you to go into his/her office to make the deal off the show room floor.

Before you start negotiations on the car tell the manager he has 15 minutes to agree to your price and the finance department has 30 minutes to get you out of the dealership. Remember, after all the time you invested in picking out a car and the salesman spent selling you the car, they don?t want you walking out the door. They know you are serious and willing to sign right now. This statement will get you bumped to the front of the line with the finance department. Now you ask for the invoice from the dealer and state exactly what you want to pay. Remember, do not buy the car for more than what you originally said you were going to pay. In every situation except one, the general manager has given me a price aprox $500.00 more than what I wanted to pay. At this point say:

"After all the work your salesman did to sell me the car. If I compromise on the price, I will always remember you took advantage of me for $500.00. I will come back to your dealership, but I will remember the $500.00. If you are not willing to sell me the car for what I am willing to pay, I will find another dealer who will." Stand up again and leave the managers office.

If the dealership is a ?serious seller? the general manager will agree at this time.

In all the transactions I have done, I have never spent more than 1 hour from time I agreed to buy the car to the time I drove off the lot. The fastest I have been in and out is 33 minutes. I purchased my 2001 325i and got the car for $100.00 over invoice.

I can not guaranty all dealers will go for this, but if the dealership is any good and reputable, they will. If they don't, this is the first step to protect you from getting ripped off. Find another dealership.

Good Luck.

530E60NL

In the Netherlands it works a bit different. You can deal with the salesguy and do your deals with him. I just tell them what discount I want if they want to sell me a car and if they don't give it to me I'll walk out on them.

Guest

Good point. I keep forgetting the members here are from around the globe.

530E60NL

What also is a nice tip in the netherlands is the following:

The dealer calculates how much the car will cost you and then tell you what he will give you for your old car. I always ask them to split it in a price for my old car and the discount I get. In that way you know if you are getting the best deal. For instant. A dealer who gives you 20.000 for you car and 5% discount wich is 5000 euros your total will be 25.000 euro's. While another dealer can give you 25.000 euro's divided in 18.000 for your old car and 7.000 euros discount. In that way you can confront the first dealer with the higher discount and make a total of 27.000 for the old car and discount added together.

This way of working has saved me loads of money through the years. I always tried to find the dealer who gave the most for my old car and then negotiate with him to get the highest discount possible.

Good luck with this strategy

Jimbo

The Rizzo Method of New Car Purchasing by Frank Rizzo
fromoriginal link<---here.
-----------------------------------------------------------------------------------------------

After explaining it 100 times in messages here, on other message boards, and in numerous E-Mails, it is time for the definitive post on the subject.

The "Rizzo Method" is my invention. After talking to numerous friends, and collecting the best tricks that they used to negotiate a car deal, I
devised this method. It is pretty simple to do, but requires some work on your park, but it is almost always rewarded with a lower price on the car that you are interested in.

You start by picking out the car that you are interested in. Once this has been decided, you need to head to an online service and see what the
car costs with the options that you want. I recommend 3 sites for this information.

#1 Edmunds
#2 CarPoint
#3 Kelley Blue Book

Edmunds seems to have more info, but CarPoint has the pricing tool which allows you to just click the options that you want, and it will total them up for you. From these sites you should be able to get the following items, which are important to
you.

Order Codes, Invoice and MSRP prices for car, colors, and options that you are interested in. It also allows you to check for rebates, or incentives
on your particular model of car, which, in some cases, can SERIOUSLY impact the amount you pay for the car!

We will need this info when the time comes to make our "Offer Sheet" for the dealer. I recommend that you print out the content at these sites, so
that you have it handy to refer to later. At this point, you should start deciding how much to offer over invoice price on the car.

It is said that somewhere in the 3%-5% range is a good starting place. If you are having trouble deciding what amount to offer, it sometimes helps to pick a number that brings the amount to a nice even number. That is what I did. I chose $775.29
over invoice to bring the price of the BMW to an even $32000. At this point, it is usually a good idea to check what the payment amount will be.
There are a couple of places that will aid us in that quest, the first is a place that will tell us what the loan rates are at our local banks. It is:

Bank Rate Monitor

Once you have the best rate from your local bank, the next stop is:

Edmund's Loan Calculator

This helps in that you can get a feel of the maximum amount over invoice that you would pay, in the event that no dealer will match the price we decided on above.

Now is the time for us to make our form. This form will be used soon. It is a pretty simple form, the format is not crucial, but the content
is. On my form, I have a title at the top that says "New Car Offer Form". Pretty simple. Then, I have a table underneath. It doesn't have to be a table, I just thought it looked neater. For the rest of this section, it will be assumed that we
are doing a table. There will be 3 columns to our form. The first column is Order Code. This is the internal code that is used at the factory, and the
car dealership to identify cars, colors, and options. We got these from the pages above.

The next column is Description. In this column, you should use the description of the item from the online sources. (Most of the time, it is the common terminology used by the dealer, so there will be no confusion as to what you are talking
about). The last column is Invoice Price. This is the column where you will put the cost of the car, and each option that you are interested in. Starting at the top, the first row should be the car itself. Don't forget to enter any model information there. (GL, GLS, GLX, etc). Then, move on to the options. I generally like to put the exterior color first, followed by the interior color. It stands to reason that the dealer is gonna want to see what kind of car, and then the
colors first. The options come later. Once this is done, start listing the options that you want, one at a time, one per line, like this..

928 Premium Option Package W/16" wheels $2,415.00
(This is in a table, so it looks better than that).

Continue on, until you have all the options listed. Then, there is one last option that we have to add. That is "Dealer Profit Over Invoice".
It has no order code. In this spot, put the amount that you decided on above. And, below that, you should add a row for "TOTAL". Add up the
Invoice Price column, and put the total there. Save your form for now, we will want to make a simple addition to it a little later. If you are
like me, you are a stickler for the fine points. I also included the taxes, title, and license amounts on my form. I encourage this, as it shows that you know what you are doing, and know what you expect to pay.

Now, on to the next step. You should go to the website of the company that produces your dream car. In the past I used this method personally for
a vw Passat, and a BMW 323. At their site, you should be able to get a list of dealers near you. At the vw site, you put in a distance that you would drive for a good deal, and it lists the dealers. In my case, I chose 200 miles, and was
rewarded with a list of 19 dealers. On the BMW site, you put in your state, and it gives you a list. I did this, and included the 2 dealers nearest me in the 2 nearest adjoing states. (I am in TN, so for me, it was KY, and AL). This gave me
a list of 9 dealers total. Print out this list, so that you have all the information handy.

At this point, there are 2 paths which you may take. I have used them both, and found them to be functional.

#1 The Phone Method. In this method, you will call every dealer on your list, and ask a salesman what the best deal he would give you is. Write these down, (Along with the salesman's name).

#2 The Fax Method. In this method, you will fax your "New Car Offer Form" to every dealer on the list. Call the dealer, ask for someone is sales,
and tell him that you are about to fax over an offer, and that everything he needs to know is on the fax. If they ask for a name, or phone number, tell them it is on the fax. Pseudo-anonymity is important! (For reasons disclosed later)

Now, since you have decided which you want to do, open up your form, and it is time to add the last thing to it. The technique that you are doing
determines what we put at the bottom. If you are doing the Phone method, you will want to fill in your name, address, and telephone number. You will
also want to add a spot for the Sales Manager's signature. If, on the other hand, you are using the Fax method, you will want to put your name, and
your fax number ONLY! This is very important! It accomplishes 2 things:

#1. It MAKES the salesman have to take a couple
of extra steps in order to communicate with you.
Thusly, you only get serious inquiries from
dealers.

#2. If you get a confirmation back from the
dealer, you have a hardcopy of the offer in the
event that they try to say you misunderstood, or
that "That's not what I said".

OK. Now that the form is done, print it out. If you are doing the phone method, get on the phone. If you are doing the fax method, get to faxing.

Now that you are through with that step, you should have a pile of information as to who will do what. At this point, it is important to find out what else is charged at each dealer. So, (regardless of which method you are doing), call
the dealerships back, ask for someone in sales, and just ask "If I buy a new car from you, what are you gonna charge me for?". I know, it's kind of
direct, but that is the way we have to be to get what we want. This will sometimes make that GREAT deal turn out to be a bad deal, if there are lots
of "other" charges. Examples of which are:

Document Fees
Dealer Prep (Or PDI as they call it)
Tire Fee (Someone tried to charge a Rizzoite this
one).
Regional Advertising Fee (This one CAN be
legitimate, but if there is only 1 dealer charging
it, it is probably bogus).
Etc.

The prices on these vary widely, and some dealers don't charge them at all. My BMW dealer charges for the car, + Taxes, Title, and License, and that
is all. While a dealer only 100 miles away tried to run the gambit of the above. Shameful. Anyway, once you get all these numbers, add them all up, and see who has the best deal. One thing to consider is distance. If you have to drive 300
miles to save $25, I don't know that I would do that. In my case, I am driving 275 miles to save $2000. Once the decision is made, call the dealer back, ask for the salesman, and recap the details of the deal. If all matches, see what their plans
are as far as getting you the car. If they have it on the lot, make an appointment to go to the dealer and get it. If they have to order it, find out a deposit amount, and ask them to fax or mail you a copy of your deal sheet with the info all
filled in, and you will mail them a check back. Tell them you appreciate their honesty, and look forward to dealing with them.

Now, one thing that is required sometimes is mental toughness. I am tough to the point of being rude. I have the money, I would like the car, but I refuse to get hammered on the deal. So, I put up the defensive shield before I go in. Some good places to read to find out why you should do this are:

#1 Edmund's Consumer Advice
#2 Car Buying Tips

These off a WEALTH of information on what tricks a dealer MIGHT try to play on you when you get there. I have used the "Countermeasures", and I have gotten to the point that I like to use them now. Hopefully you will too!

Once you are prepared for battle, (I should pause at this point to say that it isn't always battle. My last 2 deals have been completely stress free "Yes, we'll take that deal", kinda deals, with no pressure, and no stress), Do whatever is required
to get the deal sheet as proof that you are getting what you think you are getting, and send the check afterwards. If the dealer is local, or you don't mind driving, drive down, see the salesman face to face, and hammer this out. (Only after the
verification call, no use wasting gas if they wanna try a bait & switch on you).

Now, we have a deal sheet on our dream car, for the amount that we want to pay. What more could you ask? There is one last thing that you should know. Most dealers will try to see you some garbage after you have signed the deal for the
car.

Such things as "Scotchgarding the seats", or "Undercarriage weather coating", "Paint Protection", or a new one that I just heard about "Lifetime waxing". It seems that for WAY too much money, you can take your car in once a quarter, and the dealership will wax it. What a ripoff. It is
all garbage, overpriced, and basically useless. My favorite way to combat the undercoating, or "Paint Sealant" is to ask "If the ______ on this car is so bad, I don't know if I want to buy it" (fill in the blank with whatever useless thing they are
trying to sell you). You should have learned all about this from the consumer links above.

Lastly, if you are intent on leasing instead of buying, you might want to check out the following links for lease calculation information.

#1 Edmun's Leasing Link
#2 LeaseWizard

That pretty much does it for the Rizzo Method, good luck, and good shopping!

Rizzo Method Addendum
------------------------------
I have recently heard from people that they tried the method, and could not find a dealer who would take the offer. This brings me to the part that I left out. It is what I call the "Tough Market Section".

If you are trying to get a car that is VERY popular (Like the BMW 3 series is right now), then you might have difficulty receiving the very low "Invoice-3% over" deals that you can on most other models. There are also places where a particular car may be selling like hot cakes, if this is case, you might have a hard time also. But here is some wisdom to go with this. When I was shopping, I tried the big city of Nashville, and got mostly MSRP quotes on both models that I tried. (Passat and BMW 323). Both times, I found my deal in a small town. On the Passat I got $100 over, and on the 3, I got 3% over invoice.

The trick to this is to find the dealer who NEEDS your
business. They all claim to WANT it, but the small-town dealers might not see enough "traffic" to sell their quota of cars, so they will be willing to make less, to sell those cars. If all else, the method should make it possible for you to
get the best deal possible. (Which is all we can ask for). I had a quote from a person who used AutoByTel to get a quote, and the Rizzo Method in the same market, and got a better quote on their own. It's not always easy, but it is always
useful, if for no other reason than to get you in the right frame of mind come time to visit the dealer.

Hatchd

Do any of these methods change when paying for a car in cash?

BTW-very useful post.

Iceman

Welcome aboard, Hatchd !

Where are you from? Pls add your location (country at least) to your profile - it helps answering questions.

alohalc

welcome aboard, hatchd !

Guest

Thanks for the welcome guys.

And yeah, I was just in a hurry to ask that question after I read this post so I kinda didnt do my profile, lol.

From the US, St Louis, MO to be exact.