How to Buy a Car
by Tad Machrowicz
Kids Aren't Afraid of The Car Dealer - Why are You?
Online Research Can Save You Thousands
- With links to all of the important Web sites! -
The ability to negotiate is something we're born with, just watch your two year old for an hour and you'll agree. For good reason though, many of us have developed an unnecessary fear of buying a car. Some dealerships have taken advantage of our fears and become quite successful with their "no haggle" pricing. This policy is a large contributor to their impressive overall customer satisfaction rating and is just fine for those willing to limit their choice in cars to avoid the traditional "unpleasant" car buying process.
Negotiation is defined as a process in which two or more parties exchange goods or services and attempt to agree upon the exchange rate for them. It's really in our genes. A few million years ago, we were just trying to satisfy our basic physical needs; hunger, shelter, thirst, etc. It didn't take long to realize that offering a spare drink of water for a chunk of food was better than the "no haggle" option, also known as fighting for it. Sharing a bit of both goodies proved less stressful and better for survival than risking possible lumps to the forehead just to have all the water and food. Barter was invented.
Pretty comfortable with our food, water, and cave; we inevitably stumbled on the mad scientist down the block that had this new thing called fire. We all had to have central heating in our cave and the era of human luxury consumption began. The new warm caves gave us just enough energy to walk a bit further down the way and we happened on another tinkerer who had this round thing out front for sale. You guessed it, the wheel. The world's first car dealership - plaid fur coat and all.
Millions of years really haven't changed a thing. We've thrown currency into the mix to simplify things, and we operate a bit higher on Maslow's hierarchy of needs, but the concept is still the same. I want something and I'm trying to get it. Our children operate on this concept for the majority of the day. They want to eat and play among other things. Eating is a prime example of their negotiation expertise. Zachary, our entrepreneurial 17 month old, loves yogurt. If I held fast to a strict "clean plate" policy before giving up the yogurt, both Zachary and I would starve faster than our friend the caveman. Clearly this "no haggle" approach to meal time is not recommended or needed. Zachary realizes that he can get his yogurt, but at the cost of mixed in spoonfuls of noodles, greens, and other not-so-delicious as yogurt things. The high ratio of yogurt to non-yogurt though is the proof that he is the better negotiator.
Don't fret, it's not too late to negotiate as well as your child does. With a bit of up front research effort, a clear strategy, and patient negotiation, you can easily maintain a wide car selection and feel just as confident and satisfied with your purchase at any dealership. Even after visiting conventional dealerships, you might still buy from a "no haggle" dealer like a Saturn, certainly an excellent vehicle and value, but your choice will be made in a more informed manner. Likewise, you can apply the same principles to taking the fear out of selling your own used car rather than trading it in. No matter how you slice it, selling your own used car will save you money in almost all scenarios.
As an adult, we're a bit more susceptible to our ego, and a fear of not keeping up with the Jones' than our children are. Buying a new or used car and selling your used car is an exercise in "distributive bargaining." Basically, you and the other party have to divide up a fixed amount of "pie." Any gain you make is the other party's loss and their gain is your loss. Few people like to feel as if they have lost anything, and fewer want to hear how Mr. Jones bought the same car for $800 less. How many friends have started out their new car story with words different than "I got an excellent deal..." All of them have, as testament to our desire to affirm our own negotiating skills. More often than not, those same people really have no idea whether they got a good deal or not.
In the past, our fears about "the deal" have been valid. Sifting through the scores of vehicle models, option combinations, sale flyers, and salesperson rhetoric was nearly impossible. How can you evaluate a fair price with such an information overload. Fortunately, we've been saved by the information age. The comparisons and data reduction have already been done for you. A recent USA Today ran a comparison chart titled "car bargains" in their Friday Money section. This comparison of the top five midsize sedans gave us the information that we need to feel confident about negotiation: Sticker price, Dealer's Invoice, and Best Price a "seasoned negotiator" should expect to pay. With information like this, buying feels more like a business decision and less like a game of chance. Our fears are eased, and most importantly, for ego's sake, we know what the Jones' are paying.
Plenty of print guides are available at newsstands and bookstores, but most useful are the free sites available on the Internet. These sites will let you research new and used car pricing, learn about current rebates and lease offers, research safety and recall data and more. You can quickly get all the data you need about new and used cars and trucks to make any negotiation much easier.
Easiest to use is a comprehensive car purchasing site called Autobytel. A national news feature stated recently that it was started by a former auto dealer in an attempt to help reform the car purchasing experience for consumers. You can actually complete your entire purchase through this site, but most importantly it provides links to several of the useful research sites like:
If you are looking to purchase a used car from John Q. Public, you can search through all the nationwide AutoTrader magazines nationwide or by local area using their free online service. It's great for finding boats, cycles, classics cars, and commercial equipment as well.
Distilling the academic definition of the Negotiation process down into three main parts, you can help yourself considerably by concentrating on:
- Preparation and Planning
- Clarification and Justification
Preparation and planning is the most important phase. Careful work up front will make the next two steps easy to handle. Fortunately the Internet sites now make this very easy. For the cars that you are considering, you can generate a complete model profile including MSRP, option package costs, dealer invoice, rebates, etc. Beyond pricing, you can find reliability ratings, safety evaluations, typical maintenance costs, etc. For all of your options, you should develop a "most hopeful" and "worst acceptable" price. Generally, if you get within a few percent of dealer invoice on a current model year car, you have secured an excellent deal. Analyze these costs also from the point of view of the dealer to try to predict the bargaining strategy that they might choose. Going into any dealership, having the discipline to follow the strategy that you set in advance will help keep emotion from the negotiation.
Buying or selling a used car is easier than ever before. These same resources allow you to set an accurate wholesale and retail value and most importantly, compare similar used cars in the market without buying every Sunday paper you can find in your area. The Auto Trader Online site has a simple to use searchable database, and had over 3,000,000 cars advertised nationwide last time I checked. Search for a specific model, by region, price range, year, even by area code. Whether buying, selling, or negotiating a trade value for a used car, this is excellent support data.
Clarification and Justification happens next after you've exchanged initial positions. Armed with your three ring binder full of data from the Internet, you should be quite successful in supporting your position. Don't be afraid to share this data, your best bet is to make sure the other party sees this as your effort to justify your own position, not an effort to destroy theirs. It is still distributive bargaining, but there is benefit to taking every opportunity to avoid the appearance of confrontation. After all the positions have been supported, the terms have to be negotiated.
Bargaining should not be difficult since you know ahead of time the minimum you will accept and you have researched the likely strategies that the salesperson or prospective buyer will employ. A few tips can help here:
- Be positive - hostility never helps either side. They want to buy/sell the car just like you want to. Typically, making a slight concession in the beginning proves to be advantageous, and following up their concessions with more also tends to yield positive results. Remember, you've already set your minimum goal and no one can force you below that because you are negotiating from an educated rather than a highly emotional position. Concentrate on the differences in the offers, not the personalities involved. You have a difference with the other party's offer, not their personality. Contrary to what you might think, personality has proven to be largely insignificant in negotiations.
- Treat the initial offer as just that, don't get hung up. Focus on your predetermined decision points. Everyone hates to lose, so emphasize win-win situations whenever possible and try to create a bigger "pie" that is being divided. Buying a new car might not present many of these situations, but don't ignore the "pie" when selling your used car. Be careful because overpricing initially is counterproductive, but you will benefit from offering the prospective buyer the feeling that they are moving your price down in the negotiation. Make every effort to justify an increased worth of your car in the beginning - this "virtual pie" is the easiest to give up.
- Structure your conversation to instill a sense of openness and trust. Listen well and avoid words and phrases that will irritate an opponent. Especially in the case of selling your used car, the more they feel that they are receiving truthful information, the less they will "fear the unknown."
- Lastly, borrow a page from the kids again and be patient. Since you planned up front and you know the minimum deal you will accept, and have allowed ample time to advertise and sell or buy your car, you can afford to be patient. As much as children seem impatient, they put us to shame when it comes to being doggedly persistent in the pursuit of what they want.
Last week, our friends' son Johnny negotiated like a pro at Chuck E. Cheese's. Even the delicious pizza was not enough to distract him from all of the fun and games. (To be honest, I didn't eat too much either.) Mom set the initial offer at ten pre-cut bites for the required entry fee to the games and attractions. Johnny's offer was much lower at two pieces. After about ten minutes and no less than 45 complaints to his salesperson, the offer still stood at ten. Not deterred, Johnny tried the "I've already finished ten" ploy. No good. The mechanic checked the plate and evidence indicated that nine pieces were still left. Attack plan two: "How about four pieces?." No good. Eventually Mom offered six, much to Johnny's dismay. Time to complain again for another ten minutes.
All that complaining sapped his energy and he was forced to eat two more bites. Energy levels restored, Johnny kept us his persistent negotiating. All said and done, he left the table after three pieces; Mom turned down a previous offer of four! She didn't give in by any means, his patience would have outlasted Stonehenge. PATIENCE, PATIENCE, PATIENCE!
Education, Control of your Emotions, and Patience make for an easy negotiation that you will never second guess. The Internet has helped with the education and planning phase, but you'll have to handle the emotions on your own. You can build the patience in by planning ahead and allowing plenty of time for your ads to reach the public, or plenty of time to visit all the dealers more than once.
At daycare, I watched through the window as Zachary approached a little girl playing with a shiny red fire engine. Excellent truck, late model, low mileage, excellent condition. As he tried to take possession, she presented him with a streamlined yellow sports car. He drove off with the sports car, emotions in overdrive, but he forgot about his primary need of firefighting. The classic bait and switch! Well, the youngsters may have the upper hand in planning (studying the opponents tendencies), and patience; but at least we can control our emotions while buying that shiny new car or truck!?
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