New Car Buying Basics - The Grant Method
**Note this doesn’t work as well with new models that just came out i.e. ones that have waiting lists or are selling out.
So you’re out of college with your first pay check in hand. What’s the first thing you want to do? Trade in your rust box and buy a sweet ride. Unfortunately for many newly corpies this is the first time they will be purchasing a car on their own. I’m going to share some of my secrets to make this purchasing experience as easy as possible.
1) Know what the car cost the dealer
This is called the invoice price. This is a price lower than the MSRP (manufacturer suggested retail price) otherwise known as the sticker price. It’s better to haggle up from the invoice price than down from the sticker price. Manufacturers have all sorts of crap baked into this, sometimes known as ‘dealer hold-back’ Basically you need this price since it kind of sets the bar for a good purchase price. Often times this ‘invoice price’ is higher than what the dealer actually paid, so don’t be surprised if you can beat it! In addition to this price, they always have some BS ‘dealer prep’ fee which is like $495 to ensure they make something. This is how other dealers can beat each other. If they match price, one might have a $395 fee so they can get that last $100 lower to win your business. Google around to find the invoice price even though the published invoice price is often slightly different than the real price paid by the dealer (damn manufacturers).
2) Find out what kind of deal you can get
I like to use CarsDirect.com to see what sort of price you could get the car for. Cars direct has some great target prices for cars. You can also add options to the car to price it out. Use the target price as a starting point because it’s usually a decent price.
3) Find all of the local dealers of your particular car in the near area. Try to get at least 3 dealers.
This is the fun part. Knock a few hundred dollars off the price you got from CarsDirect and call the furthest dealer. Email them about the car you want using the form on the internet. When one of their goofy internet sales managers emails you back (don’t ever give them your telephone number) tell them you have a quote from another dealer but would prefer to buy the car from them. Give them the fake price you made up and get them to give you a sales price for the model you want (with all the options you would like). Once you have this email, email the SECOND dealer with the offer from the FIRST dealer and tell them you would rather have their business over the other guys, see if they will beat the price. Once you have this second quote go to the THIRD dealer and ask them to beat the price. After you get the THIRD price, go back to the FIRST dealer and tell them you got a better bargain from another dealer. Basically you go round robin until one of the dealers balks and refuses to match the price. Cut that dealer out of the equation and keep going in circles. Eventually you will get to the point where another dealer says that it’s impossible for the other dealership to sell to you at that price. At this point, you get the quote in WRITING (get it faxed to you). Then you go into the dealer paper in hand and buy your new beautiful car.
Simple, easy, fun too! It’s all email, it’s practically like they’re not even real people. The fun thing is that you can LIE and tell them a fake price from the get-go since all dealerships are liars anyway. Feels good don’t it?
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October 12th, 2007 at 4:30 pm
I just bought a car and was amazed at how evil dealers are. I wanted to trade in my old car and the Kelly Blue Book trade-in value was ~$10,000. So when I asked the dealer how much he would give me for a trade in, he offered $4,800. What a joke! Seriously. They are pure evil. I think they do that just to see if you are a gullible bastard. I then spent the next 40 minutes getting him to give me fair market value. So I agree with you Grant. Lie, cheat and play dirty … cuz they will do it to you. Kill or be killed.
October 13th, 2007 at 4:48 pm
I would also say that getting your own financing beforehand allows you to negotiate the price of the vehicle, rather than the monthly payment, which is one of the ways they suck you in. You may even be able to get them to match your rate and make more concessions to get your financing.
Also, when they drive your car to establish a trade in value, insist on getting your keys back. They keep your keys after that to help you feel trapped.
October 14th, 2007 at 11:28 am
I saw a good Youtube clip recently that you all might be interested in. More good car buying advice:
http://www.dumblittleman.com/2007/09/hard-core-negotiating-tactics-for-car.html
December 28th, 2007 at 2:05 pm
[...] New Car Buying Basics - The Grant Method [...]
February 8th, 2008 at 12:37 am
This is very good information. I’d also suggest a method I used recently that was very easy. It’s best described in this article:
http://www.auto-broker-magic.com/newcarpurchase.html