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.
How to negotiate a car deal and get to the bottom line.
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
How to Negotiate a Car Deal: Dealer fees
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.
This Post Has 5 Comments
Mike I loved your story and knew that people can research and get a good or great deal on their own. But like most customers when they get a fair price like I did on a trade you let your guard down. Mike go into yelp type in Honda North Danvers MA and you will read a 5 star review from me Jack Leahy. But my story really was based on the outcome Inflated price on window for a 2016 honda accord lx 19669 discounted to 18669 first offer on paper was 17500 then I offered 17100 which they accepted only
to get home and found the car advertised for 16199 remember there first offer was 17500 They up it 17500 less 16199 1301 higher i went back and told them what i found and got a check for 901 I was lucky but I could give them a 5 star review
and say they offered a 16199 car for 17500 I can’t believe I got the check I would have given a bad review and they knew that without me telling them. I am honest and truthful and that doesn’t work with dealers buying car is stressful Jack Leahy
Loved reading all the info you have provided on this site…….
I was always told it’s best to buy at the end of the month, quarter…because the dealership has more leeway on the purchasing price. Is this true?
Thanks Stephen. It’s true the end of the month is a good time…. some of the time. But it’s just not a sure bet. There are too many variables. We can chat on our call you scheduled some more. – Mike
This is a really good story and I had to read it more than once to understand it, and even now I don’t think I completely understood it. But I am so glad there are people like you who take the time out to write this out and set it up as a business. I really think you should franchise this idea but I can imagine how much difficulty that can be. Having been ripped off (yes I use that word) by car dealerships because of my naivete and trust, it hurts a lot. Not just financially, but emotionally. I am a college professor and I learned my lesson the hard way and so now I always tell my students to make sure they do really good research and take someone with them when they go to a dealership. Thank you again for this website and the book.