Auto Loan Finance

Unit 3: Negotiate the Deal

Negotiate Costs
Finding a car you can afford means negotiating costs.  Here are tactics you can use when negotiating:

  • Never say yes to the first proposal. The first price the dealer tosses out in a negotiation will almost never be the best offer. So reject it out of hand. What's the worst that can happen? If they won't budge you can go to another dealer.
  • Make sure to flinch. The most common tactical mistake that consumers make is to remain calm in the face of a proposal. It's better to flinch—to appear shocked even if it's not really unreasonable. You might think a stoic demeanor looks professional, but in the car business it will cost you.
  • Never offer to split the difference in price. Always wait for the other side to split the difference. It gives your opponent a feeling of winning and, if you split the difference again, it'll be in your favor.
  • Save a small concession. Hold back something you're willing to give up at the end so the other side can feel the satisfaction of winning something.

Car Buying Mistakes

Car buying is a calculated decision. Avoid these common car buyer mistakes. 

  • Buying the wrong vehicle: Make certain that the car you buy is one that you can afford to drive—gas costs, insurance, and other maintained costs are expensive on large trucks and SUVs or luxury cars. If you cannot afford the repairs and maintenance, look for another car. 
  • Getting emotional in the showroom: Give yourself some time to sit back and make sure it's the car for you. If you can afford $20,000 and the car you want lists for $30,000, you might be able to negotiate the price down—but there's no way you're going to be able to buy it for $20,000.
  • Choosing a dealer by location: Determine your dealer's Customer Satisfaction Index, or CSI, which is a ranking generally maintained by individual automakers for the dealerships that sell their vehicles. The CSI is a reflection of how well an individual dealer satisfies its customers in sales and service.
  • Talking trade-in too early: This is another easy trap to fall into, because dealers love to play the trade-in game. Negotiate a satisfactory price for the new car, and then bring up your trade-in.
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