Buying a New Car

1. Do some price shopping, starting with a visit to www.carcostcanada.com.  There you will find some valuable pricing information, also the latest buying incentives being offered by the manufacturers.

2. You need to know what every car seller knows: there are three ways to make money on a new car deal.  First there’s the “front end” - where there is money to be made on the difference between what you pay and the dealer’s cost.  So go do your pricing research.  Second, there’s money to be made on all the the add-ons you might buy with your new car.  Finally, there’s your trade-in.  The salesperson wants to pay bottom dollar for a used car he can sell later at top price either on the lot or by wholesale to another dealer.  What we can’t emphasize enough is that in all cases, negotiate each deal (new and trade-in) separately.

Tricks of the sale trade -

1.   First, be alert to the buddy system:  That’s the salesperson who works to convince you they’re on your side, that they’re fighting management to get you a low price.  That maybe true, but don’t forget most car sellers work on straight commission and when the price  gets too low, it will come out of the seller’s pay.  Commission can run from 25 tp 50 per cent of the gross profit on a new vehicle.  That sounds like a lot, but reliable research shows that dealers generally have just $1,000 to $1,500 to cover sales commission and their fixed overhead costs.  So it would be fair to say car sellers earn an average of $300 commission on $ 1,250 in gross profit.  Here’s the rule in this area: If the salesman needs to leave negotiations more than once to talk to the manager about the deal, get up and walk away. 

2.   Second, the silent treatment:  Don’t take it.  If the salesperson gets up to check with the sales manager for any reason, warn him that your time is valuable and you don’t have the time to wait around all alone for that salesman to get an answer.

3.   Third tip. If the salesman returns from a meeting with his boss asking for a small “bump” to the monthly payment you’ve negotiated - say $50 “ to help him out” - say no.  Fourth, watch out for lowball offers.  If a quote sounds too good to be true, it is.  Beware of the salesperson who quotes a price, only to return confessing “the boss wouldn’t go for it.”  Five, don’t be taken hostage.  If you write a deposit check as evidence  you’re serious about the offer, you become a hostage.  That check will keep you from shopping around for a better deal.  Only agree to a deposit when the whole deal is completely done.  Finally, don’t bite on a limited-time offer.  Salespeople want to close the deal now, today.  If you come to a price, then ask for time to consider such a big decision.  Of course, some salespeople will say they can’t guarantee that price will be on the table tomorrow.  You say that’s fine, you will find that price somewhere else.  You’ll probably witness a serious change in attitude.