What is a good deal on a new car?
You can walk into any new car dealership and they will almost always offer you some discount off of the sticker price (aka MSRP) and tell you that it’s a great deal. But the dealer inevitably expects you to negotiate further and will almost always leave room to do so. And so what we are left with is the age old dilemma of how to get a great deal on your new car without losing your sanity.
How much is enough?
Should you be happy with a discount of $500 off of MSRP? What about $1,000? Or $1,500? Negotiating the price of your new car is difficult because buyers will never have access to the same information dealers do. Some suggest finding out the dealer’s cost and negotiating up from there as a better strategy. You will even find experts who will advise what a standard profit margin over cost for the dealer should be.
However, this all fails to take into consideration that different dealers may be more or less aggressive at different points in time, depending on their specific inventory levels or sales targets. Profit margins vary by brand and vehicle. And some dealers are just simply more aggressive than others. Just because you are told something is a great deal, does not necessarily mean it is.
The lack of visibility in the marketplace furthers the confusion. You typically don’t know how much other people recently paid for the same car you’re buying. As well, it’s difficult to determine the supply and demand of the car you want in the current market – low demand with an oversupply of inventory will drive the price of your car down and vice versa.
New Car Price Negotiation 101
Before making any type of big purchase, most people will price shop between at least a few different stores. I recently bought a new computer monitor and I checked several stores that sold the exact model I wanted before I decided where to buy. Because I saw all the prices from competing stores, I was sure I got a great deal and walked away very happy.
You can do the same thing when buying a new car. Decide which exact vehicle you want, let multiple dealers know that you are ready to buy and have them each make you their best offer. Let each dealer know that you will be checking their price with others. Tell them you are a serious buyer and they can win your business if they put their best foot forward. This approach quickly navigates you through all the price murkiness to give you peace of mind that your deal really is a great one.
Unfortunately, this kind of price shopping means you will likely be spending your nights and weekends meeting with car salesmen and driving between multiple dealerships (not fun). Ironically, most dealers dislike this back and forth as much as you do as it wastes their time too.
While the above approach can be very effective and suits some people, we created Unhaggle for everyone else that hates negotiating and values their free time. Unhaggle is an online marketplace that allows you to invite dealers to compete for your business without ever leaving home. Check out www.unhaggle.com if you want to learn about an easier way to buy a new car, without sacrificing a great deal and exceptional service.
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