May 8, 2017 at 6:20 pm #2592
I grew up in the wholesale automobile business. My grandfather was a car dealer, my dad was a wholesale dealer and even my husband went into the business later on. I grew up washing cars, driving to pick cars up at the auctions, moving cars around the lot, and chasing down titles.
I learned how to negotiate a deal at an early age, went to the auctions and helped dad bid on cars (he’d work one lane, I’d work another), etc. I learned that a new car depreciates the minute you drive it off of the lot, and a good used car could save you a lot of money…IF YOU KNOW WHAT YOU’RE DOING.
BEFORE YOU BUY
Before you step into a dealers showroom or on a lot, practice negotiating. With new cars, many times they can’t negotiate a lot on the price of the car, but may be able to give you more than book value for your trade.
Be an informed consumer. Look over a copy of Kelley Blue Book or a NADA Guide. Check out TrueCar and do some price comparisons before you shop. They now offer pricing on both new AND used. Make sure to print everything up before walking into the dealership. You want to use those as bargaining tools.
If you’ve got cash and have no plans to finance the car, you can go DIRECTLY TO THE WHOLESALER (used cars only) and purchase a car. Just note that you probably won’t be allowed to trade your old car (which is fine, because you generally make more money on a retail sale of your car vs. a trade), you can’t finance, and real wholesalers do not warranty cars. So, make sure to have it completely checked out by your mechanic. If he says it’s good…you’ll be saving lots of money.
If you’ve got any other car buying tips, I’d love to read them.May 9, 2017 at 5:16 am #2595
I did not even know that there was an option to go straight to a wholesaler. That’s a great tip.
I always tell my clients that you should negotiate the price of the car over the monthly payment. You said there isn’t much wiggle room with negotiating the price of the car. Do you know how much room there is to actually negotiate?May 15, 2017 at 7:33 pm #2643
In terms of wriggle room, it depends. Each car manufacturer is different when it comes to new cars. In many cases it’s only a 5% markup from invoice price (high end luxury cars tend to have more of a markup – in the 7% – 10% range). BUT, manufacturers often give incentives and rebates to the dealerships, making their profit higher.
Used cars are a different story as they tend to get marked down the longer they sit on the lot. They need to keep fresh inventory. If a car has been sitting on the lot for a VERY long time, you’ll find that they may even sell it for even money if you hit them at the right time (just so they don’t have to bring it back to the auction).
Wholesale dealerships have a VERY small markup, sometimes only a few hundred dollars over what they paid for it.