How to buy that car you've always dreamed about.

How to buy that car you've always dreamed about.

You've done your homework, read every statistic in the brochure and you've narrowed it down to that perfect new car. The next step is to go to the dealership and purchase the car. But wait, there are some things you should know to defend yourself for the battle you are about to go through. Read on.

How you make your deal at the dealership can save or cost you thousands of dollars. You're about to face the salesman who is going to try to get the highest price for the vehicle they can right? Wrong, you see the primary goal for the salesman is to sell the vehicle. Now it would be improper to say they don't want to make the most commission they can by getting the highest price, but the bottom line is that they want to make the deal. Salesman not only get commissions for the sale but also get bonuses for number of cars sold at the end of the month in addition to daily spiff's for any number of things. A spiff is a bonus usually paid out in cash at the end of the day to the salesman for performing different tasks that day like test drives, filling out a credit application, making a sale, etc.

To understand how the purchase works at most dealerships we must first understand that the goal of any dealer is to have you driving out the door in your new car or truck thinking you've made the best deal in town. To do this the dealer has comprised a system where they get you in a position of wanting that vehicle more than anything on earth. The first step is to get you to pick a vehicle that you like and then test drive it. I worked for one of the largest dealers in the San Diego area our sales manager always said "It's the feel of the wheel that makes the deal". By getting you to drive the vehicle you experience that new car feeling along with the new car smell. It always get's you drooling since the car you drove up in is no match for the new one. In fact test driving was a must at our dealership. When we would bring the deal to the manager the first question out of his mouth was "Did they drive the car?" If the answer was no he would send you back and make you take them on a test drive. Now with that said let's explore the closing room. Most dealers have a secluded office where all negotiation is done. Now some of the more up to date and savvy dealers have found that by using the area in the showroom with a lot of people sitting at different tables makes the customer feel more in control. But are they? The thinking is that if there's a lot of people around they can't hurt me because I have witnesses. That's what they want you to think. The tactics are always the same weather you are in an office or at a table in the middle of the showroom.

The first thing that happens is the credit application. This not only is vital to the price but shows the dealer that you are serious about buying the vehicle. Let's take a moment and look at your credit. The higher your credit score the better the price and terms you are going to receive. Be honest at this point with the salesman. You can save yourself a lot of wasted time and aggravation by telling them that you're credit is below average, average or above average. Why go through the hoops if you can't really buy the car anyway. Remember they want to sell you the vehicle so start with the truth and you're experience will be much better.

Now while you're filling out the credit information the salesman is going to be busy filling out what they call a four-square. This is a form they are going to use to visually show you the payment information when they return from the manager to present the deal to you. They will take your credit application and the four-square to the manager while you sit and wait. The manager will run your credit and based on what they find will give the salesman three payment figures to present to you and it's usually for 36 months, 48 months and 60 months. The reason they give you three figures like this is so you can pick a payment that fits your budget. You say this one and they say great and away you go in your new car. What's important here is to understand that the first set of figures is based on the highest price and the highest interest rate. This gives them room to negotiate down to the deal you think is best. Don't roll over at this point and pick a number just because you can afford it. It's at this stage that you need to speak up and ask what they are selling the car for. You'd be surprised at how many people only look at the payment and don't have a clue as to what the price of the vehicle is. If the price is full sticker, then tell them you would be willing to pay say $100.00 over invoice for the vehicle and see what they say. The salesman now will take your offer to the manager and bring you his decision. Now when the salesman comes back with a counter offer and some new figures, remember it's designed to make you think your beating them. They will usually come to a figure in between the first and the $100.00 over invoice you asked for. Stick to your guns and say you'll pay $ 100.00 over invoice. In fact put your hand out like a handshake and say "I'll buy this car right now for $ 100.00 over invoice. Do we have a deal." This will blow their minds since they use this on customers all the time to get a commitment. Watch the salesman's reaction as he will have to go back to the manager for approval. Now consider this tactic. If the salesman shakes your hand and says OK then the manager will have to honor the deal, and if they don't, then you have a really strong negotiating position since the salesman already agreed to it . If they say OK to the $100.00 over invoice, then ask to see the invoice. Boy you're a really tough cookie and you have to be since it's your money you're playing with. If they don't want to show you the invoice then ask them why. Are they hiding something? Most dealers will be happy to show you the invoice for the vehicle. I didn't say they would offer it, I said they would show it, but only if you ask.

Now you've seen the invoice and the price for the vehicle is exactly $100.00 over the invoice price. The next thing you want to know is what the interest rate is. Remember the higher the interest rate the more the monthly payments will be. If you have extremely good credit you should go with the manufactures interest rate which in some cases I have seen as little as 0% for new vehicle purchases. If you're looking at a used vehicle it might be better if you went to your own bank or credit union and got a pre sale quote since they will give you a better rate than the dealer. The dealer will add points to the rate for themselves which again will make your payments and overall cost higher.

Remember this is a game of negotiation and feelings will be tense. I have seen people get down right angry at this stage of the game and later end up driving out with their new car feeling like the dealership was the greatest thing that ever happened to them. They even think that the dealership lost money on them and gave them the vehicle at below cost. There is an old saying that "Las Vegas wasn't built on winners" and neither are car dealerships.

You've got your price at $100.00 over invoice. You've got your interest rate at the lowest possible. Congratulations, now make the deal! Remember it's you that is going to make the payments with your hard earned money so don't let them do anything to get you to buy the vehicle on their terms. This takes preparation. Go to your bank first and see what kind of interest rate you can get for both new and used purchases. See how much the bank is willing to loan you in total dollars. Being prepared will always get you the best deal since you know exactly how much you have and what the terms are.

Good Luck - Author Ed Krusiewig