auto

10 rules of thumb for dealing with the dealer

Negotiating a wise business transaction is virtually essential, or you'll pay more than you really need to. And then you'll pay interest on that higher price.

Dealing with a dealer scares a lot of would-be customers when it need not. The key is doing your research on the vehicle of your choice before you go to a lot.

When you are dealing with dealers, it's hard to recall every fact you've researched, but keep these 10 key points in the back of your mind:

  • Dealers have a profit margin commonly between 7 percent and 15 percent. Usually, this is the difference between the sticker price (the price they want you to pay) and the invoice price (the price they paid for the car).
  • If you don't see exactly what you want on a new car lot, consider ordering it. This may take time, but at least you'll be paying for what you want and not paying for extras the salesperson talked you into.
  • Now reverse that last idea. If you are sure of what you want and don't budge, a dealer may offer to let a car go cheaper if it is 'almost'what you want. Have an idea of what your second choice would be, and if the offer comes you'll know whether to say 'yes' or 'no.' . Here's a chance to pay a lot less and get something very close to what you wanted.
  • Emotions can cost you money. If you let a dealer get you too 'high' on a vehicle, if you reveal you have to have a certain vehicle, or if you are excited but not well researched, you'll almost always pay more.
  • Do not be too embarrassed to walk out. Do walk away and consider your purchase at least overnight. Buying a car is a long-term commitment, and the dealer will be available the next day. Many dealer tricks are designed to keep you in the showroom.
  • Consider beginning the process by phone. Getting some competitive prices is your first step, but there's no need to get involved with a salesman just for that. Don't accept a refusal to talk over the phone. A dealer who demands your presence before offering any numbers is not speaking your language.
  • Get all the dealers you talk with to use the same figure. Use the manufacturer's suggested retail price; you will never be given the factory price. And include the add-ons you want. Then each dealer must give you a number you can use for comparison. Every dealer pays the same for the same car -- the factory invoice price.
  • Dealers sometimes get extra factory incentives and may be able to sell below factory invoice price.
  • Negotiate for a price, not a monthly payment. Price first, then payments!
  • Don't pay for unnecessary add-ons. Be prepared to pay extra for taxes, registration, licenses and destinations charges. Don't pay for delivery, promotion, handling, sales charges, floor charges or any other fancy words the dealer is using to charge for something you don't have to pay for. Turn down fancy extras like rust proofing and pin striping. They're expensive and you may not want or need them.

Pam Withers is a business journalist, business book editor and author of a best-selling teen novel at www.pamwithers.com.

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