AS THE OLD ADAGE GOES, NEXT TO YOUR HOUSE BUYING A CAR IS THE MOST EXPENSIVE PURCHASE YOU’LL EVER MAKE. HERE’S HOW TO GET THE BEST DEAL ON A NEW CAR.
BUYING A NEW CAR is a stressful experience for many people. There’s a lot of money at stake, and you’re dealing with experts who are out to get as much of your money as they possibly can.
However, there are a number of ways you can swing the balance in your favour, especially if you know the tricks of the trade and what to look out for.
By all means, let the dealer make an offer on finance, but always talk to your own bank, motoring association of finance provider before signing on the dotted line. Your own bank will almost always come up with a better deal than the dealer, who is quite likely to apply a substantial mark-up. In fact, many dealers make a bigger profit on the finance deal than they do on the sale of the car. Don’t be suckered in by so-called zero finance deals, or any other “too good to be true” offers. And don’t succumb to appeals to “sign up now” – the offer will almost certainly still be there tomorrow.
ALWAYS TAKE A TEST DRIVE
Drive the car on roads you know, but before you jump behind the wheel, check that the car is insured and find out what the excess is. Dealers keep their premiums low by accepting high excesses… and if you crash the car, you’re the one who pays the excess. It can be as high as $5000, so if you’re not comfortable with it, say no.
Remember when test driving that you are comparing this car with others you are considering buying, not comparing it with the car you currently own. Any new car will feel a lot better than a three or five-year-old car with 80,000km on the odometer.
DO YOUR SAFETY RESEARCH
Before you approach the dealer, check the safety rating. You can do this online by going to the ANCAP website.
CHECK THE FUEL CONSUMPTION
The fuel consumption should be clearly displayed on the windscreen, but as we have often told you, what it claims and what you actually achieve may vary considerably. Reset the tripmeter and trip computer before setting out on your test drive and check it when you get back. Ignore any claims made by the sales people.
The price on the windscreen is often not the price you can pay, if you know how to negotiate. You need to know the all-up driveaway price and then you can make an offer. Knock 15-20% off the price and see what sort of reaction you get. You may be surprised just how far the dealer is willing to go. Don’t be embarrassed to haggle… the dealer certainly isn’t. And if he/she says no, so be it.
One proven technique is to tell the sales person that you have a set budget. They’ll try and talk you up. But tell him that your wife/boyfriend/significant other has made you absolutely promise not to exceed a set price. The wife/boyfriend/significant other isn’t at the dealership, and so can’t be manipulated. And you can say even though you’d love to spend that extra three or four thousand dollars, it’s more than your life is worth.
This ruse allows you to hold fast to your budget, whatever incentives are offered. If you can’t come to an agreement on the price, walk away and tell the dealer that you are going to shop around. Dealers hate to see a sale walk out the door, so quite often the deal gets even better.
DON’T RUSH IN
Resist the temptation to sign up, especially if you’re being told that this deal is only available if you sign today. It isn’t.
KNOW THE VALUE OF YOUR TRADE-IN
Go online and research the approximate trade-in value of your car (not only will you get a figure for the price a dealer may offer you, but also the price you could achieve if you decided to sell privately). Phone the dealer before you go in and ask for a valuation of your car over the phone, but make sure you give a realistic assessment of its condition.
DON’T FALL IN LOVE WITH THE CAR YOU WANT
It’s easy to say, but if you get emotionally attached to a car, you’ll be in a poor negotiating position. Remind yourself that this isn’t the only car in the world, and you can probably buy exactly the same car elsewhere. Always be prepared to walk away.
DON’T BUY ON THE PROMISED MONTHLY REPAYMENT
Dealers can fiddle and tweak deals like you wouldn’t believe. If the dealer knows what you are aiming for as a monthly repayment, he can do all sorts of things to meet your goal. But you’ll pay in the end.
RESIST THE TEMPTATION TO LOAD UP WITH EXTRAS
Some brands have options lists so long that you can almost double the sticker price by ticking too many boxes. Resist the temptation. Be realistic and ask yourself if you really need all those extras. Despite the all-up price you pay for your new car, when the time comes to sell it, it will only be worth the book value.
Similarly, say no to such offers as rust proofing (modern car manufacturers provide better rust protection than after-market installers, and most now have a long warranty against rust incursion), mud flaps, paint protection, fabric protection and all the other “must haves” that the dealer delivery coordinator (often an attractive young woman) will try to convince you to include.
Even the theft protection of window etching should be avoided – to the best of our knowledge, no police department has ever used window etching to locate a stolen car (although it can be used to identify a stolen car after it’s recovered). Dealers apply huge mark-ups to extras like these, and if you really must have them, go to a specialist after you take delivery.
Another area where you may be able to negotiate the price down is the so-called dealer delivery charge. This rort has been around forever, and new car buyers are slugged thousands of dollars for the dealer (or an apprentice) to check the fluid levels, wash the car and vacuum it, check the tyre pressures and not much else. See if you can haggle the delivery charge down.
SLEEP ON YOUR DECISION
Away from the dealership and the pressure being applied by the sales team, you may be able to more rationally look at your decision. You may even decide that you can’t afford a new car, or that your current car is more than capable of doing service for another few years. And as we said before, the car and the deal (or one exactly the same) will still be there tomorrow.
SHOP AT THE END OF THE MONTH
Dealers are usually faced with a monthly quota, so come the end of the month, they’re often desperate to sell a few more cars to meet their quota. By shopping when the dealer is keen to make a sale, you hold the upper hand. This works even better if you buy a car that’s in stock because these cars are costing the dealer money and the dealer is even more motivated to make a sale.
Strengthen your negotiating position by finding reasons why you don’t want to buy this particular car… you don’t like the colour, it’s auto and you’d prefer manual… the reasons don’t matter; just look like you’re aren’t convinced. If the make and model you really want are so popular there’s a waiting list, the dealer is unlikely to do a favourable deal. Wait until the initial rush is over and they’ll be keener to make the sale.
DON’T BUY A BUNDLE
We mentioned before how a dealer can fiddle a deal and one of the favourite tricks is to bundle everything into the one deal. Don’t fall for this one. Treat finance, trade-in and actual purchase price as separate deals. Get the best price you can on each one, individually. There’s no point getting a big trade-in if the extra is simply added on to the purchase price, or buried somewhere else in the contract. Even if you do decide to use the dealer’s finance (and we strongly recommend you don’t), don’t tell him/her so until after you have negotiated the price and trade-in.
DON’T BELIEVE ANYTHING YOU ARE TOLD
The dealer’s primary objective is to make an immediate sale. Once you walk out the door, he/she knows his/her chances of making a sale have been dramatically reduced. Don’t believe the claim that this car or this deal are only available today. Don’t believe that there is another customer who wants this car and has just gone away to arrange finance (or get the deposit). Don’t believe his/her claim that there is a price rise pending and you’ll have to pay more if you don’t leap at this deal today. Don’t believe that his/her finance deal beats the banks, credit unions, motoring associations or any other credit provider.
USE A BROKER
Let’s face it, when negotiating with a dealer, you’re a rank amateur. Car dealers do deals every day of the week; you probably only buy a car every three or four years. One way to be in control is to negotiate the best deal you can with a dealer, and then not sign the contract. Approach a car broker and it’s almost certain he will be able to get you precisely the car you want for a better price. You can even ask him/her to put your trade-in out to tender where you will get the best market price for it.