Buying From a Motor Dealer

The person who buys a new or used car without a clear idea of what they are looking for always end up with a deal and a car that suits the salesperson, not themselves, and inevitably pay a premium price for their car.

It is essential to know not only the make of car, but also the model, colour and options you want before you start the buying process.  The first step is to make a list of the features in a car which you consider are most important. This will be based on your lifestyle, the size of your family, and a realistic assessment of how you will use the car on a day to day basis

The idea is to get as much information as you can, and narrow the field to two or three choices, before you visit the car dealer. If you decide to buy privately then visit our "How to Buy a Used Car" page. On your first visit to the dealers, you need to test drive each of your possibilities.  Be up front with salespeople (who will inevitably try to sell you a car on the spot) and tell them that you're still working out which car is right for you.  Insist on going further than just around the block, and, as it is a family car you're buying, take the family along.  If you have infants, take your child restraints and see how they fit and how easy it is to get the kids strapped in and organised in the car.  

Don't be afraid to ask the salespeople to demonstrate the different features of each car you test.  Obtain factory brochures for each model that interests you.  Sorting through these can be half the battle, because popular cars often have a bewildering variety of body styles, trim and equipment levels, engines and options.


Know What You Want

Let's say you have decided that it's a Commodore you want.  When you next venture into your Holden dealer, your homework should enable you to say to the salesperson "I'm looking for a white V6 Commodore Executive sedan with automatic transmission dual airbags and air conditioning." If you know exactly what you want, the salesperson won't try to sell you something you don't need, and you can get down to some serious business.

The manufacturer's recommended retail price bears absolutely no relationship to the price you will actually pay for the car.  You also need to take into account registration, stamp duty, compulsory third party and comprehensive insurance, and the "dealer delivery charge" which generally costs between $750 and $950.  Add a rough estimate of these charges to the recommended retail price, so that you have a working total before you start negotiating.

If you have a trade-in, you need to get an assessment of its worth.  This can be difficult, because a used car's value is very dependent upon its condition. For example, if your dream machine is sitting right there on the showroom floor, it's costing the dealer money, so you'll find salespeople much more generous in their valuation of your trade-in than would be the case if your car has to be ordered.  Similarly, if you're after a model that's selling like hot cakes, you won't be able to negotiate -- trade-in or not -- to the same extent as you can on a model that's about to be superseded, or is not in great demand.

Don't make the mistake of thinking that having a trade-in will get you a better deal.  The only trade-ins attractive to new car dealers are late model (under five years old), popular, low kilometre cars, preferably of the same make as the new cars they sell.  Most trade-ins are a pain in the neck as far as the trade is concerned, and they end up being offloaded at auction, or being sold cheaply to specialist used car dealers.

If you have an older car, you're better off selling it privately, then buying your new car as a straight cash proposition.  You'll find new car salespeople much more flexible and generous in negotiations on price if you are cashed up, with no trade-in.


Let's Make A Deal

It's vital to have your finance arranged before you go shopping, because you then know how much you can afford to spend, and you won't end up going beyond your limits.

OK. You know the car you want, and you know you can afford it. Now comes the fun part.

What you need to hear from the salesperson is how much it is going to cost you to drive your new car out of the showroom.  This is the only meaningful figure in the exercise because it includes all charges and options, so it's the only one which should enter into your negotiations.  We'll call it the 'drive away price'.  If you have a trade-in, the principle is exactly the same, but we're talking about a "changeover price" ie. what it will cost you to exchange your old car for a new one.

Ask the dealer "could I have a drive away price on this model with these options please?" Always say "Please" because many people disguise their fear of negotiating with car salespeople by being obnoxious, which only makes things unpleasant for everybody.

At this point, the salesperson will invite you to sit down.  If you have a trade-in, it will be given a quick once over beforehand.  At the sales desk, a calculator will be produced, and the salesperson will take your name, address and telephone number, write down lots of figures, add them up, and give you a price.

You may also be asked if you're sure this is the car you want ("Yes") and if you already have a price from another dealer ("No").  You may also be asked if you are interested in looking at another model which we're doing special deals on this month ("No, thanks.")

When the salesperson shows you the price, check that it includes everything; all dealer charges, registration, stamp duty and your chosen options, especially air conditioning.  The most common mistake many buyers make is to negotiate a price on the base car only, which is a lot less than the drive away price.

At this point, you will thank the salesperson for his or her time, ask for a copy of the quote, and leave the showroom.  The salesperson may try to delay your departure by telling you that

a) this is a special price for today only or

b) you won't get a better price anywhere else.  

Neither of these statements is true.  If the salesperson refuses to put the quoted price in writing, then simply leave and go to another dealer.

This is what you will do in any case, because you now have a price with which to work.  Go to a second dealer who sells the same car, and ask if they can better the price you got from the first dealer you visited.  If they can, you'll go through the same process, and walk out with another piece of paper and a better deal.  If possible, go to a third dealer and repeat the exercise, using the second dealer's price as the basis for negotiation, or the first dealer's price if dealer number two can't do any better (which is highly unlikely).

Once you have a price from dealer number three, go back to dealer number one, whose original price will by this stage look rather expensive.

This is the hand to hand combat stage.  Dealer number one now knows you are serious because your shopping has shown how silly his original price was, so there'll be a furrowed brow and some grinding of teeth from the salesperson, who will probably duck off for a chat with'the boss'.  On his return, you'll be given a price which is "absolutely the best we can do".

Take this price to dealer number two, then take number two's price to dealer number three.  By, now you are nearly there.  Chances are you won't have to do the rounds a third time, because one of your second round prices will be too good for the next dealer to beat and the salesperson there will tell you so. You then have a choice of going back to the dealer who gave you the low price and buying the car, or making it a two-way contest.  But, by now each successive price you're offered will be very close to the last, so there will be little benefit in negotiating further.

After you have agreed on a price, you may be offered a few goodies to go with your new car.  These are a handy way for the dealer to pick up a few hundred easy dollars on top of whatever he's making on the deal itself. Rust proofing costs around $500-$750, and on a new car is of doubtful value.  Why?  All new car bodies these days are rust proofed, by sophisticated electrostatic methods or full immersion, at the factory before they're painted.  Rust attacks metal, not paint, so this is the only way to do it properly.  Window tinting, fabric protection and headlight and bonnet protectors may also be dangled your way just before you sign on the dotted line.

Shopping around, in an organised way, you can save thousands of dollars, but you must know exactly what model, colour and options you want, and negotiate only on the drive away price.  Be firm on these two things, and courteous to the salesperson with whom you deal, and the experience of buying a new car will be one from which you drive away feeling satisfied, rather than ripped off.



 

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