Imagine if there were just 7 simple steps to help you save THOUSANDS of dollars on your next car purchase?
Would it finally turn that dream car into reality?
Help promote and expand your business?
Save you time and money on Servicing ageing cars?
Give the kids that extra leg-room they keep fighting over?
Or maybe it is just time to change..
No matter what your reason.. By successfully using these 7 Tips, you too will be able to negotiate like a pro and save thousands on your next car purchase!
Our Lifestyle and Motoring needs are constantly changing and are not what they were even just 5 years ago…
With the sweeping introduction of almost industry wide Autonomous Safety Features, the first Stage 4 High-Tech Autonomous Valet Garage and the popularisation of In-Car GPS Navigation, Infotainment Features (like Apple CarPlay and Android Auto), the ever growing connectivity and practicality that New Vehicles offer is increasingly difficult and unwise to ignore.
So you’ve made the decision to buy a New Car, Congratulations!
Everyone who has visited a Car Dealership more than once knows the feeling of being led, guided or even pushed to make a decision then and there.. You know you’re not ready. They know it too…
Welcome to the “Road to a Sale“.
So… How do you beat it?
These 7 Tips will give you the inside knowledge and understanding to transform the way you buy cars!
1. Set a STRICT Budget and STICK to it!
The EASIEST way to save money is to Stay in Budget.
ASIC’s MoneySmart Cars APP is one of the easiest Tools available to everyone to work out how much you can afford. It turns an uninformed Buyer into an INFORMED Buyer.
Know your limits and stick to them, overextending yourself can quickly turn into you handing back the keys of your New Pride and Joy!
There is more than just the price of the car and registration to consider, this tool helps you breakdown each and every cost you could face. ASIC’s MoneySmart Site has a host of other powerful Tools and Calculators to help you.
Now I am not about to go too in-depth on the many benefits of how effectively using Budgeting Tools like this can transform your life, however I encourage you to do yourself a favour and take the time to understand your Financial Position before deciding to purchase a New Car or apply for Finance. These Tools and Calculators can save you Thousands and prevent difficult financial circumstances from occurring.
Applying for Finance is a key step in many Car Purchases, and just as there are many Brands and Models to consider for your next car, there are also many different ways to package and finance a Vehicle. Hire-Purchase, Novated Lease & Personal Loans are some popular ways to finance a Vehicle however we recommend consulting with a Professional to personalise and tailor a package that works for you and your financial situation the best.
Independent Brokers like Chad Arenson at Fuel Asset Finance are going the extra mile in securing the best package possible by taking a hands-on approach to personalising a package for you or your Business.
Independent Brokers have arguably the most incentive to present the most competitive package, they negotiate with Banks and Lenders on your behalf and are only successful if they are able to consistently beat the Banks and provide tailored solutions to their clients.
Thankfully, you do not have to fill any applications to get an idea on what your rate or payments could be, many brokers are more than happy to provide a Free Quote to help out, even while you are early on in the process or still working out your Budget and what Car you would like.
Information is Power and by using the knowledge and network of the Independent Broker, you can often secure a more personalised package & rate suited to your Budget.
2. Know EXACTLY What you Want!
Redbook.com.au – Ever wanted to know what your Trade is worth? If what the Dealer is telling you about the car is true? Part of the CarSales Network, Redbook comprehensively covers the Australian New & Used car markets including all Makes, Models and Engines sold. Ever. Great, Hey?
Simply enter the Make, Model and Year of Car you’re interested in and off you go!
Pick from THOUSANDS of cars! See what previous year models are Trading or Selling Privately for, Original RRP & List Prices, Factory Options, Depreciation and much more!
CarAdvice.com.au – CarAdvice is arguably the #1 Resource for New Car News, Reviews, Comparisons and Advice on all things Automotive for Real People, not other journalists.
Easy to navigate, well written, comprehensive and easy to understand, Brisbane Based Entrepreneur Alborz Fallah created more than just a website, but rather a community for people to share their passion and knowledge which has only continued to grow even after his sale to Nine Entertainment.
With a mission like this –“We love cars. We love to drive them, discuss them, write about them, film them and rate them. Not as some abstract exercise in motoring journalism, but for real people, with real needs, real aspirations and real financial constraints.” it’s hard not to love them!
CarsGuide.com.au – You wanted choice right? CarsGuide is almost a blend of RedBook & CarAdvice in one!
News, Reviews, Advice and Guides, CarAdvice has all of this and so much more.
They have a fantastic pricing tool to give you an idea on what a car could be worth in just seconds. This is very valuable in determining if a potential new car will hold its value or not as you can quickly see the current Used Values.
Click here or the image to price any Make & Model sold in Australia!
3. What to EXPECT at the Dealership...
Now here comes the fun part; Welcome to the “Road to a Sale”. The key to success at the Dealership will come down to how well you can handle the Road to a Sale.
Understanding the process the Dealerships and their staff use is vital to securing the best price from even the most inexperienced of Sales Departments. We can condense the Road to a Sale into 12 Key Steps.
These are the 12 Key Steps that the Salesperson will be walking or pushing you towards taking with them. Each step that you take together improves the Dealer’s likelihood of retaining excess margin in the deal all the while reducing your power to leverage a better price.
This is why it is important to limit your time spent at the dealership. They build value in the Dealership Experience and are experts in using this value to part dollars from your wallet!
*Offered depending on Step 2: Needs Analysis
Many use the Dealership Network to perform research on their next New Car, which as you can see from the quick introduction above, can cost you THOUSANDS!
Luckily, you have already completed all of your research online! You have compared Reviews and News on your chosen car and have watched the New and Used Market for a while. You have a definitive budget based on what you can actually afford and not half your pay!
Doing this much has already saved you thousands of dollars on the average customer. Dealerships now have ZERO leverage over your purchase. You might be asking about a Test-Drive at this stage, DON’T and let me tell you why;
This industry secret that I am about to share with you will dramatically improve your leverage and negotiations with the Dealership!
Subject to What?
Subject to Test Drive – Offer – Used by savvy Customers to secure an out on the purchase of your New Car.
An Out – Expression – Used by savvy Customers to opt out of the purchase of a New Car without losing your Deposit.
Not quite ready to commit?? This simple clause is a checkmate. Often used with a Lowball offer, this tool will allow you to leverage your buying power at the dealership and negotiate a better deal.
A great tactic is to Lowball the Dealer with an “unreasonable” offer. Now the offer that you will present will always be knocked back by the Dealer, even if they can do the deal.
You will not continue to negotiate, even though they will try to close you then and there. Right now there is no particular car, model, colour etc. on offer, just a Concept and Your Intention to purchase. It is vital that you use these exact words when moving to this next step, you’re not asking them for a deal, You are setting the Tone and Pace of your purchase;
“That’s okay, I intend to purchase and have some specifics in mind. If you’re open to doing a Deal and have 5 minutes to spare, I’m happy to Talk.”
4. Be Explicit in EXACTLY What you Want!
Congratulations. You have successfully flummoxed the Dealer. Caught like a Deer in Headlights they will stall and flounder for some Ground.
They may offer you a coffee or walk you into a private booth or office, almost certainly the Salesperson will have to refer to their Manager. They’ll be working out a plan, which inventory they may have factory bonuses and support on or have been in stock for too long…
So how do you navigate the complex & hidden system of Manufacturer and Dealer support to work out if you have a Good Deal? What is a Good Deal? What you and the Dealer may Define as a Good Deal could and probably will be very different.
This is why it is easiest to start off simply. Remember that you are there to buy a car for yourself, not the one they want to sell you. Be explicit in exactly what it is you want!
Include the Colours, Engine, Transmission, Wheels, Safety Options, Comfort & Technology Features etc. that you want.
Dealers will call these your “Must Have’s”. A common Negotiation Technique is for the Dealer to cut down your Must Have’s and compromise on the car you want. The easiest way to handle this is by using this simple objection;
“A Good Deal is the RIGHT Car, at the RIGHT Price. I’ve described the right car, and I will buy at the right price.”
This puts it simply, the only option is to Sell the RIGHT Car, or they won’t be Selling you anything.
5. You're NOT There to Buy... Yet!
It becomes all too easy at this stage for the Dealer to take the upper-hand. Now that they know what it is you want, they will attempt to leverage this to close you and compromise on your “Subject to Satisfactory Test Drive” clause.
For the Management Team, any Clause on the Contract is Risk and in order to get the Best Deal you must keep this Risk in Check and come across as Genuine as Possible.
Be firm and persistent in keeping the Clause and they will eventually allow it. They are trying to get you to Buy while you are there to Commit at the best deal possible.
It’s time to pull out your Credit Card and prepare to Negotiate with the Dealer. It may seem odd that pulling out your credit card is of any meaning, however it is a clear way to increase your leverage and show Genuine Intention to Purchase.
6. How to Handle ANY Negotiation...
You’ve made it to the last 100 yards, congratulations. It’s not a dash or race to the finish however.
To ensure you have reached the Best Deal they are likely to offer, you have to stick it out and persist in your Counter Offers.
I will now breakdown the key steps to follow in order to successfully handle any Negotiation;
1. Start FIRST! You must make the first move to set the expectations for the Negotiation.
2. Service Plans! Many Brands offer Fixed Price or Capped Price Servicing. This is almost always worth including in your offer. Consider 3, 4 or 5 year plans. Ask about the Inclusions and Exclusions and what the cost of the plan is.
3. Counter Offer off your Original Offer! Not the Dealer’s Counter Offer, they will attempt to adjust your expectations.
4. Remember Right Car at The Right Price! They will attempt to compromise on your Vehicle’s specification. DON’T.
5. Keep it Simple! Just the Car and Servicing. They will offer Aftermarket and Accessories instead of a Discount.
6. The Finance Close.. Be wary of the Dealer’s Finance Offers. Seek external advice and consider comparing with an Independent Broker or your Bank. Ask for “Subject to Finance” if you are Financing the Purchase.
7. The ULTIMATE Negotiation Technique
By now you will have come close to an agreement on Price, the Dealer will eventually tire of trying to maximise the Deal and will start Damage Control to try retain profit in the Deal.
Once they are in this Damage Control Mode it will be plain to see that they will not give up any more ground or margin easily. This does not mean there is nothing left on the table!
In the 5 Years I spent Selling Professionally in the Automotive Industry, this has been the one technique that I have witnessed to have an extraordinary success rate at securing an even lower price;
You must lure the Dealer to a Buy or Bust offer.
Buy or Bust – Offer – The Dealer’s attempt to close negotiations with or without purchase.
But how do you do it?
Simple!
You politely and enthusiastically persist in your Counter Offers until the Salesperson or Manager has to draw the line somewhere, and then you try again. They will have to stop giving ground and will try to end the negotiation.
Once you have elicited this offer from the Dealer, you can be rest assured that you have successfully approached the tail end of where the Dealership is comfortable in doing Business.
The goal now is to take this opportunity and counter offer once more (within reason!) highlighting the Subject to Test-Drive clause. You very well might sign a contract Subject to your Drive here and now, and congratulations if you do! Though it is highly likely they will reject it… And if they do, this is exactly what to say;
“That’s no problem. I’m still interested in purchasing the car but have not yet taken it for a drive, how about you take a look at my offer and the figures again while I go for a Drive and see if there is any further room to increase my budget?”
Congratulations!
Not only will this almost certainly prompt the Dealer to hand the keys over for a test-drive, perhaps even over-night, but will also elicit a Counter Offer upon your return.
In this Final Stage of Negotiation it is critical to stay reasonable, you both want a similar outcome and are so close to achieving that now.
If they have not made a Counter Offer, the best thing to do is to Counter Offer close to their Last Offer and explain that it is as high as you are willing to go Today, even if you are willing to go further.
This is now your own Buy or Bust offer! It is highly unlikely that the Dealer will lose a deal over a small amount of money, so they will almost always cave and accept the offer.
You have successfully beat the Dealer!
If they do not accept the offer, you have all of the information you need to get the exact same Deal from the next closest Dealer!
Check and Mate – Happy Buying!
But what if I don't have time for all of this???
Of course if all of this is too time consuming or difficult, you always have the option of turning to Industry Professionals like My Car Guru Australia or a Car Broker to negotiate on your behalf.
These Businesses take a commission from the Selling Agent as well as often request an establishment or tender fee from the Client so ensure that you ask what these Fees total. Remember that these come out of the Deal!
Depending on what you are buying and your own negotiation skills, using an Industry Professional could secure you an even better solution than what is possible on your own so they are well worth considering!
Thank you for reading the first of a new Fortnightly Series designed to help you save Thousands on the Purchase and Life of your next car!
If you find this useful, you can subscribe here to receive exclusive access to Savings and Member Content. Once a Month you will receive Absolutely Free; Member Only Offers, Discounts and Content that will maximise your Savings on the Purchase & Life of your Car.
If you have any questions, comments, feedback or requests for future Topics please let me know in the comments below!