New car buying trick few know about

Wouldn’t it be nice to buy a new car at a price you know is the best in your area, with no haggling. There are a number of steps to accomplish this feat, but it is a little known trick and has worked 100% of the time for me.

I know, one of the first recommendations on all Personal Finance sites is to never buy a new car. The depreciation, as much as 15% in the first year, is so great, that it doesn’t make financial sense. Let someone else take that depreciation hit. But I have discovered and used a consistently successful strategy that allows me to purchase a new car at 10% to 15% less than the typical savvy new car buyer will pay, and it requires no negotiation to pull it off. This has offset that initial depreciation and I get a new car.

Although there are a lot of steps, they are relatively simple and work with cars that are in high or low demand. It will work much better if you live near or are willing to travel to more dealers. I live in Northern California, so have access to a very large number of dealers for any brand.

The steps, in order:

  1. Decide what car you want to buy. Probably pretty obvious, but in this case it’s particularly important to know the exact model AND exact options you want on the car. You can have some flexibility with options and colors, but be aware that it will be harder to compare prices between dealers with more options. Do your research using the manufacturer’s website, edmunds.com or Consumer Reports to understand the options and their costs. You should obviously go to your local dealer and do a test drive to be sure it is the car you want. Don’t feel bad that you will be contacting the internet sales rep soon and not the one that met you on the lot.
  2. Create a document with your requirements. You will be pasting this information into emails or web forms. Be sure to include:
    1. A statement that you are buying within the week (very important) and mean it.
    2. Make
    3. Model
    4. Year
    5. Options you are willing to pay for
    6. Interior Color
    7. Exterior Color
    8. Cash or loan needed. Ideally you pay with cash or get a loan elsewhere to remove another variable for comparison. Do NOT negotiate the payment, negotiate the final price.
    9. Email address for contact. They will spam your email a little bit after this transaction, so if that bothers you, use a disposable email address. If you really want to keep things moving fast, you should give them your phone number. I’ve done this in the past and found they do not abuse that number, but you could have a different experience. I actually don’t give my number anymore. If they require a number I will use my real area code and a number of 999-9999.
  3. Do not mention a trade, even if you have one. Let that amount be decided at the dealer after you’ve agreed on the price of the new car. Remember, you are trying to eliminate too many variables so you can compare dealer offers.
  4. Make a list of as many dealers as you can that sell that make of vehicle. Search the web for “Toyota dealers San Francisco Bay Area” or “Largest Toyota dealers”. Visit the websites for the dealers. You are looking for a way to contact the “Fleet Manager”, the “Internet Manager” or just a link that says “Contact me about this car” or “Get e-price”. It’s important to get as many dealers as possible and be willing to travel to get the car. This can be a hassle but you’ll get better savings with more dealers competing. It’s becoming far more common to have to use a web form to “contact me about this car”, where it used to be an email address for the internet or fleet manager. They both work fine.
  5. Paste the information from above into the web form or email and submit it to the dealer requesting a quote.
  6. You will normally be contacted by about 80% of the dealers within days unless it is an obscure car that is hard to get or they just don’t have a way to get it.

Some facts on my history using this method:

  1. I’ve used this method for over 25 years and have always far surpassed any price that I could have gotten through Costco, TrueCar or an independent broker. Typically a 10 to 15% savings.
  2. I’ve only negotiated once in those 25 years buying 8 cars for myself and family and that was because the dealer nearest me wanted to come close to matching the best deal I got from a dealer 100 miles away. I was able to avoid the travel.
  3. I will sometimes get a different price from different dealers on the EXACT same car with the same VIN. A dealer in a low cost area will charge less since they will trade with the dealer in the high cost area to get the car for you. This is why you want to include rural dealers outside the large urban areas.
  4. This was a tactic I originally read about from a former dealer in a book 25 years ago. Back then, I had to send snail mail and wait for phone calls, but it still worked even then.
  5. While it seems like dealers would hate this or not contact you or want to negotiate, that has never been true for me. They have fleet and internet managers that sell cars for smaller margins since it doesn’t require a salesman in a dealership. They invariably give me their best price since they don’t want to waste their time and they know I’ve contacted a bunch of their competing dealerships.
  6. I’ve never leased a car, so that adds some complexity. It may also work, but your goal is to compare dealer prices, so you have to be sure the lease terms are the same across dealers.

While I’m posting this here, I’m constantly amazed at how many people do not follow these recommendations for various reasons. I’m guessing they don’t really believe it will work or it’s just too much hassle. So, please let me now if you try it and it works for you. I have only done this in the SF Bay Area and Sacramento, so I’m just assuming it will work elsewhere.

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