Fabulous Financials

THE ART OF NEGOTIATING
…when buying a new(er) carIn November 2003, I purchased a fully loaded 2004 Honda Accord EX. I can’t explain it, but for many years this was the car of my dreams. I looked at many other cars, but that shiny black Honda with the tan interior was just calling my name (lol). I know buying brand new wasn’t the most financially prudent thing to do, but I did it and I don’t regret it. My previous car was 12 years old with over 175,000 miles, and I plan to keep this one until the metal dissolves into heap of black dust!!

So here’s the story (and some tips) from “SingleMa’s Car Buying Experience.”
::WARNING:: This is a long post but I hope you find it useful.

These are the exact steps I followed. I think all of them were beneficial, but it only works if you’re not in desperate need for a car because the entire process takes time. Helpful Tip: Do NOT wait until your car leaves you stranded on the side of the road before deciding to replace it.

1. Get your credit straight. Shopping for a car with jacked up credit will get you raked over the coals. Imagine paying $600/month for a Chevy NOVA while your neighbors pay the same thing for their Lexus. No offense to anyone who’s ever owned a NOVA, but DAMN!

ok, back to my story…

1. I sought financing FIRST. I went to my credit union and completed an online application. I chose a credit union because their rates are usually more competitive than the mainstream banks. Within 3 days, I was pre-approved and they sent me a blank check that was valid for 60 days. Helpful Tip: The dealers “may” have better financing and it’s ok to consider theirs too, but it helps to already have your financing in place for leverage during negotiations. If you decide to go with dealer financing, do so AFTER you’ve agreed on price.
2. I went to three dealerships and test drove several different cars. I knew I wanted a Honda, but I like to cover all my bases. I considered an SUV, a Beamer, a Mazda 6, and a Camry. Other than the Beamer, which was out of my comfort zone on price, none of them compared to the Honda (in my opinion). It had the smoothest ride, the sleekest look, the best safety features, and the price wouldn’t put me in the poor house. After a 20 minute test drive, I was hooked! This confirmed my long lost love for a Honda. Helpful Tip: Before you test drive, the sales person will ask to see your driver’s license. Standard procedure, so that’s cool. Show it to him (note: I’m not assuming all car sales people are men) but don’t let him take it out of your hands. He’ll try to make a copy of it and give you some B.S. line like this is the law (why do people get scared when they hear that word?) yada yada, but it’s all CRAP. There is a law called the Patriot’s Act that requires businesses to confirm identity, but this is NOT required to test drive a car!! Never let the dealer hold your driver’s license. Stand firm and say “NO! I’m licensed to drive and that’s all you need to know.” If they continue to press for it, LEAVE. They will use your personal info to run your credit, which they will use to determine what you can afford and how to plan their approach to make the highest commission. Ya didn’t know a business could pull your credit without your social? HA! You’d be amazed. They only need 2 or more data points (i.e. name, address, employer, phone number, ss#, etc.) and your consumer history is in their hands. Is this legal, hmm? Can it be done, YES!
3. After a few test drives, I decided on the make/model I wanted with the ‘must have’ and ‘like to have’ features. Trust, there’s a difference. Take a notepad if you have to. I also noted the sticker price of the car and the prices of the added features. Helpful Tip: Invoice and MSRP are two different things…learn it! Deciding what you want should be up to YOU, not the salesperson, not the finance company, not your friends, etc. The sales person will tell you what they have “available” on the lot and the finance person will tell you the maximum “they” can finance for you. Also, do NOT be a monthly payment buyer. Choosing a car based on the monthly payment you think you can afford is a setup for disaster. Before you know it, you’ll be upside down on the loan, life will happen and you’ll no longer be able to afford the payment, or the allure of that shiny metal will soon wear off and that payment won’t look so nice. Therefore, it is better to consider your own needs, how long you plan to keep the car, what the car will be used for, the quality of the car, safety features, how much value it will hold over its life, and most importantly, total cost of ownership (i.e. cost of car, cost of financing, taxes, tags, insurance, depreciation, gas, maintenance, etc.).
4. After I decided what type of car I wanted, I went home and started my web search. Don’t ya just love the internet? It’s a wealth of information at your finger tips. During my web search, I stumbled upon a site called carbuyingtips.com and used it for guidance throughout the entire process. I found this site to be extremely helpful because it tells you about all the dealer scams, the junk fees, and it also provides you with a nice little spreadsheet midway the page to help you determine a reasonable price you should pay for the car. Helpful Tip: Do NOT make spare of the moment decisions while you’re at the dealership!! The salesperson will give you the “come back to my office so we can talk” line. They’re trained, they’re professionals, and they want to make a sale RIGHT NOW. They also prey on your emotions when you get excited about the car you just test drove. Do NOT do it! Simply say, “no thanks, I have to go home and thinking about it.” Take his card and peace out!
5. Then I did some comparison shopping at the Honda website, cars.com, edmunds.com, and autoweb.com. Market research is important for you to determine the most reasonable price. I also used this spreadsheet to run the numbers and come up with the maximum cost I was willing to pay.
6. Then I went to a dealer’s website (it doesn’t matter which one - choose any one but preferably in your region) and found the contact info for a internet sales rep. Almost all dealers have them. In an email, I told the internet sales rep exactly what I wanted (provide as many details as you can - the more, the better). I also asked if they had it in their inventory and the sales price. Helpful Tip: Dealers have sales reps whose primary job is to respond to internet inquiries. Be patient and be thorough. Do not provide any personal information but give them just enough about your desired purchase to let them know you’re not spam and you’re not wasting their time. Also, if they do not have the car you want in their inventory, do NOT let a dealer get a car for you from another location. Why pay the transfer fee? Go get it yourself! Unless you have a special request that must come directly from the manufacturer.
7. If the price they wanted was above the price in my spreadsheet, I negotiated entirely via email. To let him know I was a serious a buyer, I was even willing to show him my spreadsheet to justify my counter offer. I let him know that I would be paying for the car with cash, and this usually moves the negotiations along so you can seal the deal. Helpful Tip: Keep all communication in writing. They will try to get you to come inside the showroom but tell them NO!! Some phone calls may be necessary but I don’t recommend them. This way, they don’t know who you are. They don’t know your race, your sex, your financial status, etc.. So in essence, this minimizes potential discrimination and any unfair ASSumptions. Let your written words speak for you.
8. After getting the best offer from dealer #1, I contacted other dealers (you should contact at least 2 more) and asked the same opening questions. When they offered me a price, I made note of any cost in my spreadsheet that beat the previous offers, but if they were higher in any other areas, I started playing the other dealers against each other. I even showed one of them proof of the other dealer’s offer. He wanted me to fax him a copy, but I was cool with that. Sometimes, no matter what your other offers are, a dealer will only go so low in price. That is what you want because this is when you know you’ve gotten them down to fair market value.

After doing all of the above, choosing where to buy my car was easy. Now on to the hard part…

9. I selected a dealer and went to meet the salesman in person. With me, I took my pre-approved check, my market research, my previous offers, and a few other docs*. When the salesman came out to the showroom, he was shocked that it was me he was talking to through email. After the initial amusement, he kept asking me if I was a lawyer and tried to break me down with flattery. I love a compliment just like any other woman (especially if you’re calling me fabulous LOL), but I just smiled and redirected the conversation to my car. It wasn’t until he showed me his price on the sales contract that I told him I had a trade in. Helpful Tip: Avoid the small talk if possible. Stay focused! Getting too personal makes you lower your guard, which could result in irrational and emotional decisions. Also, if you tell them upfront that you have a trade in, they’ll just pad the price of the car to wash out what they CLAIM they’re giving you for your trade in. It’ll be a very high number so you can think you’re getting a good deal on your trade when you’re really not. It’s B.S. and I call it when I see it. Wait until you agree on price to talk about your trade-in.
10. *Other docs I took with me were printouts for the estimated value of my trade-in. I used kelley blue book and NADA to get the estimated value of my trade. Helpful Tip: Have more than one estimated value from more than one source.
11. Back to the dealer…with agreed upon sales price already established, I asked what they were willing to give me for my trade-in. They’ll be pissed because you didn’t tell them up front but who cares. They might take their sweet time inspecting your trade-in and come back with some BS (read: UBER low) number. They wanted to give me $150. LMAO! PULEEZE!! Tell them you’ve done your research and you know your car is worth $xx. They’ll ask where you got that number from (I showed them a printout with the HIGHEST value) to which they responded “that price is ridiculous!” They even claimed the value I presented was for private sale only so I would NEVER get a dealer to pay that much for my scrap (lol - that’s what he told me for real). Helpful Tip: Be prepared for that outburst, so be sure to get private sale, retail sale, and trade-in values.
12. I then asked if they had a counter offer because their 1st offer was “ridiculous” and too low. Use the same words they use, but turn it on them. Then they countered at $250. I checked my lowest value and made a mental note that it was $500. Ok, so we were still $250 apart from the lowest I’d be willing to accept. Helpful Tip: When negotiating, words are not always necessary. Body language speaks volumes. If the offer on the table isn’t acceptable, express it with as few words as possible and wait for a better number.
13. I stood firm and was willing to walk. I told him this after flashing my pre-approved check for effect. These were my exact words, “what you see here is cash money, I just need to know who to make the check out to.” Then the sales person will fake like they have to get permission from their sales manager. I love this!! I prefer to talk to the decision makers anyway. Don’t waste my damn time!! I told him to handle his bizness but make it quick because my time was precious. It didn’t hurt that it was the end of the month either. Dude needed to meet his quota. Furthermore, I wasn’t taking $250 for my car! Helpful Tip (added, thanks MzNewAgenda!): Don’t be afraid to walk away. Dealers are more flexible when they see you have options. You’d be amazed at how accommodating they become if you’re not pressed.
14. The sales manager came into the office and told me they couldn’t offer more than $250. My response: blank stare, no flinch, then “ok, thank you for your time. I’ll try the dealer down the street,” while screaming in my head, “DAMN DAMN DAMN I want that car!” As I started buttoning my coat, he stopped me and said “well hold on, we’ll see what we can do.” He left to make a quick phone call (so he said), then came back to tell me they have auctions on Tues/Wed evenings for old junk cars they take as trade-ins. Ok, I was a little offended that they first called my car scrap, then considered it “old junk.” Well, I never…!! But then again, the shoe DID fit. *shrug* I still wanted at least $500 for my junk too!! Helpful Tip: Patience is a virtue. Do not accept what you originally considered unacceptable. Competition is a lovely thing!
15. Reluctantly, I agreed to take $250 for my trade with an agreement to receive the difference if the car sold for a higher price at auction. In the agreement, I also wanted a copy of the actual bill of sale from the auction. I went back the following Thursday and found that my car sold for $550, and they wrote me a check for the $300 difference. Helpful Tip: Evaluate your risks. The car may not sell for very much at auction and it may not sell at all, but at least you know you’re getting the fair market value for your trade-in. If the junk dealers at auction don’t want it, then you know it was really junk (lol). Be firm with what you want, but flexible enough to consider other options. Get all agreements in writing, and most importantly, follow through!

It took me a span of approximately 2 months to do all of this. I was willing to pay $22k with $500 for my trade-in. In the end, I paid $20k for a car with an original sticker price of $26.5k and received $550 for my trade-in that had an original offer of $150. That’s a $6.5k savings and $400 profit!! This post is already too long, so I won’t even go into details about the FREE weather resistant mats and the $100 gas card I received because they didn’t have time to “properly” detail my new car before I drove it off the lot.

So in summary, here are a few things to remember…

and last but not least…

BTW, I apologize for the late post. SingleMa had the day off so she slept in this morning. I hope this post helps to make up for my tardiness.

Stay Fabulous!

Peace & Blessings
-SM