So, you’re looking at buying a car?
Has it been a while since you have had to negotiate with a Car Dealer?
Let’s be honest. The worst part about buying a car is usually having to deal with the salesperson.
I suspect that most buyers would be much happier bypassing the dealer and just buying the car direct, but unless you’re buying privately, there’s not much you can do to change that.
So, here’s a few ideas of what sorts of tricks they’ll try on and how you can best avoid them.
Trick #1 is the trade-in.
Because car pricing is more competitive now than ever before, dealers often have to sell you a car at a lower (discounted) price than normal RRP.
It’s that or lose the sale, and since they can’t afford to lose the sale, they will often discount the price of the new car just to get the deal.
However, one of the ways they recoup their lost profit margin is to offer you less on your trade-in than fair market value.
This way, they can either sell the car in their 2nd hand lot with a big fat margin on it, or sell it to a wholesaler but still come out ahead.
Either way, you lose.
So, the short simple solution to this trick is to sell your car privately (websites like Gumtree, Ebay Motors & Car Sales are all good low-cost ways to do this) and get a better price for it.
You can even sign the offer to purchase with a condition that the dealer gives you a 2-3 week window to sell your trade-in vehicle privately prior to taking delivery on the new car.
This way you can achieve the best of both worlds: a discounted new car AND a great price on your trade-in.
Trick #2 is High Interest rate finance.
Finance is one area that Dealers use to build profit back into the sale.
You negotiate a great deal on the car, only to pay the savings back through the loan offered direct at the dealer. High interest rate finance from dealers is not uncommon, so beware and investigate your options up front.
The simplest way to bypass this one is to get pre-approved for a great rate from Best Loans, and THEN go shopping for your car. Not only do you save money on the loan, but you also have more bargaining power against the dealer when it comes to buying a car. It’s very simple to say “I have my finance approved, and this is all I have to spend. If you can’t give me the price I want, I’ll take my business elsewhere.”
Nothing like a immoveable object to force the dealer’s hand into giving you a better deal.
Trick #3 is the lost leader.
This is where they advertise a GREAT deal on a car, but when you come in to take a look at it, it’s “just” been sold.
However, all is not lost, because they have plenty of other quality cars for you to look at. Since you’re now at the dealership, you might as well look around, and before you know it, they’re trying to sell you something else that’s not quite as good a deal as the vehicle they had advertised…
The solution to avoiding this is to ring first, make sure it’s still in stock, and if it’s been miraculously sold by the time you make it to the dealer, just turn around and walk away!
Trick #4 is the super-duper low car finance interest rate.
Whether it’s 0%, 0.5%, 1%, 2.3% or even 3.4% comparison rate, the real facts are a lot different than most people realise.
The long and short of this is that this low finance rate is only for the vehicle at full retail price. In other words, they won’t negotiate on the actual outright price of the car with you if you want to take up one of these low cost manufacturers finance offers. Also, in most cases, they’ll only offer that discounted rate over 3 years, which means the monthly repayments are a lot higher than most people can afford!
Or, the alternative might be that in order to offer what appears to be a discount, your trade-in will be low-balled (under-priced).
Either way, you end up potentially paying more for the car than if you negotiated a great price on it and got a great rate loan from us!
There was an article on The Age’s Drive website about this very topic not that long ago, where they compared the purchase of a new Holden SS Commodore ute (full retail – $47000) at 0.5% vs negotiating a better price ($38000) and getting a loan at 12%! Both loans were calculated over 3 years, and the 12% loan was actually cheaper! $293/week vs $310/week…
Long story short: If it seems too good to be true it probably is. Read the fine print & do your own shopping around before falling for those amazing interest rate offers.
Trick #5 is stock availability (or lack thereof).
This one is a little more difficult to detect/avoid, but basically it centres around the dealer not having stock of the car you want. It’s on a boat from somewhere, or still being manufactured at the factory in Japan/Korea/China…. So, you’ll have to wait – maybe 2-3 months!
You decide not to buy because of this. But then, they’ll call you a few days later to say they’ve managed to get their hands on one and it will only take a few weeks or a month at the most to get into stock.
If you come straight down to the dealership and put a deposit on it (or get your finance approved and signed off with them), they’ll save that car for you, and you’ll get it a couple of months sooner than expected!
The only problem is that they then call you back a week later to apologise for an unexpected delay. The car now won’t turn up for a few months again. Terribly sorry about that Sir or Madam. Nothing we could do about it – it is outside of our control…
So, now you have a choice. Wait 2-3 months (which you didn’t want to do in the first place), try and get out of the deal (no guarantees there…), or go somewhere else and try and buy the same car, only to find you’re at the back of the queue (again). Whichever choice you go with, you’ve been “had”…
What’s the solution? Either don’t bother buying from the dealer under these circumstances, OR, have them put a clause in the loan contract that applies penalties to them if there are any delays in getting the car to you when they say it will be there. At least that way, the pain of having to wait is lessened by the “reward” they will have to give you for non-performance.
So, there’s 5 tricks to be mindful of when on the trail to purchasing your next vehicle.
Just remember that the choice of which car you buy, from which dealer, for which price is YOUR choice. If none of the conditions meet your requirements, you can always walk away and try another dealer – one that is more reasonable and prepared to bargain fairly.
If you don’t feel confident following some or all of the above advice, and prefer to let an expert handle the hassle, why not check out Find My Car. By using findmycar.com.au you cut out the countless hours it takes to find a car. Without even entering a car dealership, a car broker from findmycar.com.au can find the right vehicle for you at the right price. Best of all, using their service to find a car is FREE.
As always, if you have any questions about this article, just drop us an email or ring 1300-002-130 and one of our loan specialists will be more than happy to help.
And, if you haven’t gotten a loan quote from us yet, click here to get one started.
One of our Loan Specialists will be in touch to collect the extra information all lenders require, and then we can shop around for the best loan for you, and come back to you with a confirmed quote and pre-approval, all normally within 24 hours.
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