Auto Trends

There have been many experts over the years who have broken down the different scenarios of purchasing a car and have come up with a few simple rules and techniques to follow in order to receive the best deal possible.

Look towards the Beginning of the Month and Buy Towards the End- Similar to the end of the month when local law enforcement officers park out front of school zones to boost their “ticket sales”, car dealers also have their own brand of monthly quotas to reach. You see, car dealers get a bonus at the end of every month from both their dealership and many times also from the manufacturer. These bonuses range from number of cars sold, to the most expensive. With such incentive, towards the end of the month, a dealer who is one or two cars away from reaching one of these goals may be a little more likely to cut a low deal if it will bring them closer to reaching a bonus check.

Beyond the dealers themselves, the manager of the dealership has their own set of incentives towards the end of the month. Many manufacturers divide their newly released cars out to dealers, by giving the best selection to the best sellers. This means that the dealerships who can unload the greatest amount of cars will receive the most sought after cars to sell, which will in turn boost their selling capability for the next month. This is pretty good incentive for the manager to allow a few extra good deals to flow through towards the end of the month, so that they can reach their quota and receive a good inventory.

A good way to tell if a dealership may be willing to offer an extra good deal is if you notice several models of the same car on their lot. While the dealer is held by the manufacturer to selling their cars at a certain amount over their actual cost to make, you have to consider the amount of money they make through their service department. For every car they sell, they are introducing a new service customer into their system, so even if they don’t make a big profit on the car itself, they will certainly be making profit over the years in service. This rule does not always apply to every situation, but it certainly never hurts to go shopping towards the end of the month.

Keep Your Mouth Closed, Ears Open, and Discussion Simple- There are good things to say to a dealer and bad. There are rule books that go over the entire spectrum of things you should and shouldn’t be saying, but to make things simple, keep the discussions simple. You don’t need to be talking about monthly payments, incentives, trade-ins, or anything other than the total cost of the vehicle sale in question. Once you mix monthly payments and trade-in values, you can quickly lose track of the actual deal you are getting for the vehicle. As long as you know the general value of the vehicle in question, then you know approximately what you are willing to spend.

Dealers love to start out by knowing what kind of a payment you can handle per month. They can usually give you what you need by manipulating the length of your lease rather than the overall price of the vehicle. This makes the dealer richer and the consumer poorer, so don’t fall into this. This is the same reason that you won’t want to mention a trade-in, because the dealer will attempt to sweeten the deal with a “better” trade-in value, which will generally translate into a worse overall deal. Dealership transactions work best under the KISS principle which states, “Keep It Simple Stupid”.

Have a Pre-Approved Loan Before You Get on the Lot- But don’t tell the dealer too much about this. You see, dealers can make a lot of money behind the scene of the price of the car if they are able to finance the deal. This means that if they think they have a chance to finance the deal, they might be willing to give you a better price on the vehicle. Use your pre-approved loan as a way to let the dealer know that you know what rate you are capable of receiving. This should knock-off that second round of negotiations where the dealer gives a higher percentage rate you will have to deal down.

To get the best interest rate out of dealer financing, it is always a good idea to know where you are as far as your credit rating goes. You can always change your mind after receiving the quote and tell them you would prefer to go through another financing source, but it is to your benefit to keep their hopes up. If your credit rating is bad (under 550), then you can expect not to receiving financing unless you can find someone willing to co-sign for your purchase. Sometimes it is best to wait a year and repair credit rather before you shop, rather than accept a poor deal.