Negotiating may not be your strongest suit, but if the advertised price on the new car you want to buy is a bit more expensive than you can afford, there’s ways and means of still buying it. Here’s how to get the best price on a new car.
There are certainly a lot of ways to get the price on that new car down, more so if you’re prepared to be flexible on what you really want.
This article should provide you with some of the ‘tricks of the trade’ and help you to save money on the new car you want.
Run Out Model
Direct Factory Outlets (DFO) don’t really feature in the car business. Each dealer is responsible for the sale of all of their current models when there’s a new one coming.
You’re sure to know when a new model is due – at least you should if you’re doing the necessary online research. Manufacturers will advertise ‘Run Out Specials’ a few months before the launch of a new model.
It’s a fact that to get rid of the old model, manufacturers need to discount them. However, there’s a fine balance between what they can achieve for the soon to be superseded car and the factory fresh new one. Some makers will even discount the new model to avoid price shock between the old and new.
Any number of dealers will also buy up big on the old model to achieve a higher sales result. Selling a higher number of the old model generally gives them a better allocation of the new model, so keep an eye out for that.
Choosing a run-out model won’t necessarily mean that the technology is outdated. An upgrade more often than not can mean little more than a new grille or bumper. Depending on how early in the model life the upgrade is can be just headlights, tail lights or just interior trim. These minor upgrade early in the shapes life can save you thousands off the retail price.
To take advantage of this run-out window, you’ll need to know when these new models are likely to be launched.
If you’ve done business with a local brand, the dealer will also give you a better idea of the new model launch date. Don’t be afraid to ask the question next time you’re in the showroom.
Buy Towards The End of the Month or Quarter
It’s a fact that new car dealers have sales targets. As they get to the end of a month or quarter, and they’re close to hitting the manufacturer target, they’ll be more inclined to do better deals than they are at the beginning of the month or quarter.
They’re usually incentivised to sell a certain number of cars each month, and those deadlines tend to come at month-end. So if you’re prepared to time your new car shopping until a day or two before, staff will be much more open to negotiating a discount to get that vital last-minute sale.
Consider a Pre-Registered car
Pre-Rda Car, Showroom Demonstrator – if you see these words in a new car advertisement, you’re likely to get a better offer than you would on a brand new car.
To hit monthly or quarterly targets and receive the financial benefit of hitting targets, a lot of dealers will report a new car as sold to their manufacturer. And then it’s a matter of on-selling these cars to the public. Dealers may well receive hundreds or even thousands of dollars when they hit their targets and it’s likely that if you know this and negotiate hard, you can get a share or even all of this money.
Depending on how the dealers operate this scheme, you may become the second owner in the logbook, you may lose some of the warranty time, but if you plan on keeping the car for a time, the financial benefit can be excellent.
if you’re prepared to accept these minor issues, you could save thousands on the list price of what is technically a used car, but effectively still brand-new, with just a few kilometres on the clock.
I recently purchased a 12-month-old Mercedes Benz AMG CLA 45 locally. It was the Dealer Principals car and had travelled 7,700 kilometres. Instead of paying $115,000 for a brand new one, I purchased this car, in showroom condition for $77,000. That’s a pretty big saving in anyone’s language.
Don’t Be Too Picky
“I want a Kia Cerato but it’s got to be metallic green!”
If that’s you, you’re probably heading to a brand new model potentially ordered from the factory to achieve your specifications.
If you’d accept a run-out model in a regular colour, you’re looking at saving thousands on the car. So it really comes down to being flexible. In run-out mode, dealers will have a lot of stock to sell and will negotiate with you.
Any new model is where dealers tend to make more money and will arguably not have a lot of stock and that’s when they’ll stick to the retail price.
I found that out recently with the launch of the 2019 Toyota RAV4 and particularly the hybrid version. The waiting time on a hybrid is about 3 months and accordingly, dealers know that they can make a high profit. Discount one of these? I don’t think so
Haggle on Your Trade-in
I’m just in the process of pricing a trade-in for a client. I’ve been offered $28,000, $29,000 and $30,000 so far. I do expect to get over $30k for this vehicle.
Negotiating a better price on your trade-in is a great way to reduce the change-over on your new car. It may be as simple as determining a potential dealer value and then selling it privately.
Alternatively, if you peruse Carsales.com.au they have a mechanism where a local dealer can price the car to purchase immediately.
My own experience with used cars is that selling privately is a great way to achieve the best price for your car.
However make sure that it’s prepared for sale – clean and tidy, minor repairs completed, RWC inspection. Don’t think that you’ll get over the odds for your car. Price it less than the top dealer price, but higher than the lowest price for a similar vehicle.
When I first started as a salesperson in the car business, customers would typically visit 3 or more dealers to get their best price.
Today, with all the online sources for research, statistics suggest that customers only visit 1 dealer per brand that they’re considering. In fact, 80% of new car buyers will have already determined what brand they want and will only visit one dealer of that brand.
In my opinion, it’s really beneficial to visit more than one dealer and again, the second dealer can be well outside your local area.
I’ve found that dealers who are remote from your suburb will try extra hard to nab a deal from another dealer.
As a car broker, I ask for prices from dealers as far away as Toowoomba and the Golda and Sunshine Coasts in Queensland.
I recently bought two new Mitsubishi Tritons from a dealer at Tweed Heads in NSW. They were the best price by a long way.
Use an Online Car Broker Like Car Business
A lot of people don’t like to haggle. I’ve heard “Give me your best price” more times than I can think.
Online car brokers such as my company have a higher level of expertise when it comes to buying a new car. I purchase hundreds of new cars a year and the dealers I deal with are always keen to get my business.
And I pass the savings onto my customers. New car dealers want to make an average of $2700 for every car that they sell. I want to buy new cars at the cheapest possible price. My fees are fairly low – $330 from you the customer and $330 from the successful dealer.
Some brokers will tell you that they won’t charge you any fee. The truth is that the dealer pays them their fee and that fee is arguably $1000 or more in most cases.
Larger companies will take an order from you at a price that you’re happy with and then tender your business out to their dealer group. These type of brokers make a lot of money and it’s not unusual for them to make thousands of dollars in the transaction, more than the dealer wanted to make initially
Research the Best Finance Deal
If you purchase a new car from a dealer, you’ll probably be sent to the finance manager to fund your car. These people are expert salespeople and before too long, you’ve bought a car and their finance and insurance plan too.
Don’t do this!
If you’re buying a new or used car, it’s best to negotiate your finance first. Typically you should be able to buy finance for 5 or 6 per cent whereas dealers will try to charge you the base rate that their preferred financier stipulates plus up to a 2% margin.
It’s pretty much like housing loans. The big banks charge higher rates. The smaller financial institutions charge a lower base rate.
The base rate charged by a particular financier can be different from another. It’s called rate for risk and it’s the financier who determines your risk profile.
The higher the rate over the base the dealers charge, the more money they make.
You’ll also see manufacturers offering a low-interest rate – anywhere from 0% to 4.99%%. Investigate this very carefully – low-interest rates come from a higher new car price. It’s best to carefully consider the offer from a new car price perspective, (without finance) and compare it with the finance offer.
Manufacturers and dealers aren’t your friends. They are simply businesses trying to make as much profit as they can from you
Downsize Your Car
What type of car do you really need? Did that television advertisement convince you that it would be great to take the family camping every second weekend?
That’s what manufacturer advertising is all about. They try to get you to imagine a different lifestyle to what you really need.
In my opinion, new car buyers don’t change the lifestyle they’ve been accustomed to over the years. Consider instead that the type of model that you’ve used for the last 5 years might just be what you need.
If you want to try that alternative lifestyle, rather than spending up big on that SUV, consider renting one for a holiday. That expense is so much smaller than buying a car that you ‘think’ may suit you.
Haggle for Extras
Do you really need paint protection, interior protection and rustproofing?
The dealer’s aftermarket or customer care manager will try to convince you that you do. I don’t think that it’s necessary. For my customers, I recommend just a couple of accessories. Styled carpet mats for both the front and rear floors are a good idea, a rear cargo tray for the boot area is almost a must and I particularly like window tinting.
Oh and don’t pay $700 or $800 for tinting. If you talk directly to me I’ll arrange it for you at $375 – better than trade price.
So that’s about it from me on how to get the best price on a new car. Remember what I said earlier. New Car Dealers want to make as much as they can from you – that’s the business they’re in.
If you give me your time and attention, I’m going to save you on average around $3000 on your new car purchase. You can put that saving towards a holiday, school fees, your fuel expense or even better your mortgage.
Give me a call on 0418 748 498 or email me to [email protected]. You can also visit my website www.carbusiness.com.au or drop in for a visit. My office is at 2/265 Oxley Avenue, Cnr Duffield Rd, Margate QLD 4019