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This blog exists to teach you how to negotiate a car deal. I find that stories are really good tools for learning. So today I want to share a story about negotiating a car deal in pieces and what I did to get my client a good deal.
It’s kinda like poker.
If you’ve read my story, Confessions of a Former Car Salesman, you know why I started YCBA. You know about the huge conflict of interest I felt selling cars at a dealership. I found myself not telling the whole truth and as a believer, I felt convicted in my spirit. So… I quit!
At YCBA, we work for our clients and not for a dealership. Sometimes I don’t share the whole truth with dealerships when working deals because I need to protect my clients best interest.
I was working a deal for my client. I contacted numerous dealerships in his area to try to get him the best overall deal. We finally found the vehicle he liked best and I was in contact with that dealership. I promise my clients that I have only their best interest in mind and I do everything I can to get them the absolute most bang for their buck.
This client, let’s call him: Doctor Dave, inquired on the website. After filling out the contact form he received an email that asked some discovery questions about what he was looking to accomplish. I do this first because I never want to charge someone if they have unrealistic expectations.
Doctor Dave’s answers to the discovery questions let me know he probably had some of those common unrealistic expectations. He thought his BMW was worth more than it really was and he thought he could get a SUV for less than what I knew they cost, especially with all of the options he required.
He had found a used SUV that he liked at a dealership that fell in his budget but he didn’t know that the vehicle had been in an accident and he had no idea what they would give him for his trade in.
I called him back and explained that while I am skilled at what I do, I am unfortunately, not a miracle worker. The market sets the prices on vehicles and I could not in good faith take his payment if he was expecting a miracle.
Next, I told him what I thought the value of his BMW was based off the information he knew about his car and about what I thought a SUV would cost based on the features and mileage of the vehicles he was considering. I also told him about the accident on the vehicle he was considering.
My offer to help was dependent upon changing his unrealistic expectations. If he wanted me to advocate for him, then he would have to trust me.
This is the tail end of our text conversation. Because this is a true story, I would never disclose a client’s personal information. So here goes our convo…
Truth be told, his expectation was still a little off in my opinion but after talking to him again he said he trusted me and wanted me to help negotiate a car deal for him. You see, before I work with anyone, I need their trust. (This is obviously hard to come by in the car industry.)
True, I have knowledge the average consumer doesn’t, but I cannot make someone pay more for your trade than what they are willing to pay. I cannot make a dealership sell a vehicle for any less than they are willing to sell it for.
If you are looking for a miracle, I am not your guy. I can’t get you a Porsche for the price of a Chevy. If you are looking for a great deal without the hassle and haggle, then I’m your guy.
In the interest of making a great deal, I talk about a lie I told a dealership in a second. Stick with me here.
I started by researching the actual value of Doctor Dave’s trade-in. Inputting the VIN on KBB, I received this response: $20,574 – A super low offer.
I knew his vehicle’s value was worth much more than that but I also knew this KBB inquiry would trigger phone calls and emails from interested dealerships.
I fielded some calls and everyone was telling me between $20-22k for the value.
I had an idea. I knew that this vehicle would be worth more to a BMW dealership. Think about it. If you are looking for a BMW, where would you shop? A BMW dealership, of course.
Not only that, but this vehicle could be certified by a BMW store. Certified cars always cost a little more and I thought they might want to buy it even if Doctor Dave didn’t want to purchase their car. (You don’t need to trade-in at the same dealership you purchase from.)
I called the manager and said I was looking to buy a vehicle from one of their previous clients. Not a true statement. I told them that their client asked me to call them to get an original window sticker. The manager quickly sent me a print out of the exact vehicle my client owned. Just as I expected, this car was loaded.
So what’s the deal with the lie?
I had no idea where my client bought this car and I wasn’t trying to buy the car. I just wanted the original window sticker and I didn’t think I would get him to do the work unless he thought he might have an upset client if he didn’t help me.
I needed that original window sticker to show all the features of the car. I knew that all the bids I had so far were not factoring in the doctor’s exact vehicle. I needed to show them that this car is the top of the line. $22,000 was a crazy low offer. I would never let him trade in for that number.
About a half hour later, I called the same BMW dealership and spoke to the same guy. I divulged the truth; that I wasn’t really trying to buy this vehicle from his client but that I was helping him buy a new SUV and wanted the build sheet to send dealers. I asked him if he would be willing to buy this vehicle even if we didn’t buy a vehicle from him.
He was glad I called him because he really wanted the car. Depending on the condition of the tires, he would give me between $23,500-$24,000. With this information, I then knew what we should expect as the actual trade-in value.
We would not accept less than $24,000.
Here’s what a wholesale dealer had to say when I suggested $24,000. He thought I was crazy.
I knew the vehicle’s value and I knew the BMW dealership really wanted to buy it. Can you see in this story the steps I took for how to negotiate a car deal?
You’ve got to do it in pieces.
Even when negotiating a used car price (deal) you need to do it piece by piece.
Doctor Dave decided on the vehicle he wanted and it wasn’t the one that had been in an accident. I arranged test drives for him on a couple vehicles that I thought fit in his budget.
There were two vehicles in a 100 mile radius that met his needs. I called both dealerships and got them to send me a proposal. I also was very clear that I wanted to know all the imperfections in the vehicle so there were no surprises when the doctor came to pick the car up.
Both dealerships sent me pictures of all the imperfections and proposals for the vehicle. Here is a proposal from one of these dealerships. Keep in mind that I have already negotiated more for the trade in number and $22,000 was the most they were willing to give.
You can see that I was getting to the bottom line and this dealership would be writing my client a check for $4,911.25.
Not really though.
Doctor Dave owed $24,700 on his BMW trade-in. It would require a check for $19,789 to buy this vehicle.
You might be thinking… Why not sell the car to BMW and net the client another $2,000?
If you look closely at the proposal you will see that there is no sales tax.
Here is the proposal if he does not trade.
Can you tell the difference? If he doesn’t trade he is losing a $1,032.37 tax credit. This means he would only net $967.73 by selling to BMW.
Not bad, but my work is not over yet.
If BMW really wanted his trade-in, then maybe we could find a vehicle in their inventory. I also thought they might give him more than $24,000. So I asked my client to take his car to the BMW dealership so we could get an exact number for it.
I provided the dealership all the needed information to do an appraisal and had a vehicle prepared for Doctor Dave to look at while he was there.
He was a little hesitant because the vehicle I told him to look at was priced $6,000 more than the other we had quotes on. But it only had 20,000 miles instead of 40,000 miles and it was loaded with more options like leather seats, moonroof, navigation, blind spot monitoring, just to name a few.
While there, Doctor Dave text me:
He liked this vehicle. I thought he would. This vehicle had most of the same features his BMW had. I wonder… would you negotiate a car deal in the same way? Let’s keep going.
Here is the first proposal the salesman sent me.
After reviewing, I told the dealer that he is almost $6,000 more.
As you can see, this vehicle even though its selling price is $5,700 more, the actual difference is only $4,385.25. Look again at the proposal if you are confused.
The first proposal would give my client $4,911 cash back and the second proposal would only net my client $526. That’s only a $4,385 difference.
I knew at this point I needed to talk to Doctor Dave.
After doing research I realized something.
I thought the vehicle he liked was over priced. I asked the Doc if he’d be willing to spend $4,385.25 more for it.
He agreed that he would. He told me to see what I could do.
I then verified Doctor Dave’s payoff amount with BMW, $24,700. If he wanted to pay cash, he would have to write a check for $24,174. In the proposal, the dealership was giving him a check for $526 assuming no payoff on the BMW.
$24,700 – $526 = $24,174
If this is confusing, you’re not alone. It took me a good amount of time to explain this to the doctor. And he is a DOCTOR! He is a super smart guy and even he was confused.
Remember, I confirmed with him that he was willing to pay $4,385 more for the vehicle because it had 20,000 less miles and much more equipment than the other. I could have made a deal at that number with the BMW dealership. Doctor Dave was happy and my work would have been done. I already got him $1,500 more for his trade and found him a vehicle he liked better than the previous.
But I wasn’t done yet advocating for Doctor Dave.
It was the end of the day, so I knew the dealership was about to close. I knew that the vehicle would not be sold that night. I called the manager and told him that the doctor was going to be making a decision that night and pick up the car the next morning at 11AM.
It was between his dealership and another one. I told him why we thought the trade-in was worth more than they offered. I provided him with the research I had done and made him an offer of $21,000 out the door.
I knew that would have been an awesome deal and I was expecting him to meet somewhere in the middle. He gave me the usual, “We aren’t making any money at that number” so I continued to refer to all the research I had done and why we think $21,000 is fair.
In the end, he agreed that $22,000 was the best he would do.
At the end of our conversation I told him that I think my client was probably going to go with the other vehicle at the other dealership but I would let him know in the morning.
While I know my client wasn’t considering any other car at that point and while I could have made a deal right there and then, I knew there was still more skin in the game. When I tell my clients I advocate on their behalf, I mean it. It’s a bit like poker. I never show my cards and bluffing is a part of the game. This is how to negotiate a car deal.
My client was buying this car and I was going to try my best to get him the best price. That’s what I promise my clients. My loyalty lies with my client.
In the final proposal the dealer offers a $100 broker fee. I never told him I was a broker.
He realized I knew too much. I am NOT a broker. Brokers are usually paid based off the sale price of the vehicle by the dealership. They often will work with the dealership that pays them the most. My loyalty lies with my clients. My service is unique.
$21,899 is a good deal. Notice $25,977 for the trade in?
Everyone else was telling me $22,000.
I called the finance manager again in the morning and told him we were willing to do $21,500 but if not Doctor Dave is headed with a check over to the other dealership.
He agreed to do it for $21,500.
After all was said and done, Doctor Dave threw me an extra hundred dollar tip for the service I provided. That’s the exact amount the dealer wanted to pay me. But I would never jeopardize the integrity of my business to make a quick buck.
You see there is a lot of work that goes into making these deals. Not all are the same. I wonder what you think about this story.
Did I do the right thing by bluffing?
Can you tell the difference in the quotes?
How much more did my client pay for this vehicle compared to the Tucson?
What if my client bought the Tucson and sold his BMW to the BMW store?
It was tough to explain to my client. One of the reasons is because I had them figure the numbers without the balance owed on the BMW.
I like to negotiate the deal one thing at a time. In my opinion, that’s the best way to do it. It’s also the most difficult and timely way to do it. Negotiate from the sale price down. Then negotiate the best number for the trade and then financing.
Here is how I got to what I thought was the best deal.
The high end value of his trade was $24,000 in my opinion. The best deal online for a similar vehicle to the one he was buying with miles and features was $19,999. So I figured if we could get a difference of -4,000 we would be getting a great all-around deal. $19,999 – $24,000 = -4001
Notice the difference in dealer fees. One dealer was charging $599 and the dealer we chose was charging $899. Typically, these are fees the dealer doesn’t negotiate but that doesn’t mean you shouldn’t consider that in your decision making.
Most dealerships do not show these fees online. If you are looking at two vehicles priced $500 apart, do not assume the lower priced one is the best deal.
This is one of the reasons why I say the internet is useless when shopping for a car. You have to contact the dealership. The sale price is only one small part of the overall deal. Always consider dealer fees, financing and trade in values to get the overall best deal.
If you made it this far, shoot me a comment or send me a message. I’d be happy to answer your questions or talk more about the hassle and haggle associated with how to negotiate a car deal.
A car dealer not honoring internet price, is a very common phenomenon. Today I am talking about it.
If you want us to help save you time and your sanity while doing the car buying thing, just schedule a free strategy call.