Negotiation Tools

CAN A FACTORY REBATE BE A NEGOTIATION TOOL?
QUESTION:

Todd,

Can a new car dealer use a factory rebate amount as a negotiation tool to haggle over the final price of the vehicle?
-Javier

 

ANSWER:

Great question!!!  Rebates come in many different forms.  Sometimes they are on a particular car and you get it if you are buying that car and others you may have to qualify for.  But never is a rebate negotiable, if you qualify for it according to the manufacturer you are entitled to get it and a dealership should never make this confusing. Dealerships are actually audited on this and will not get paid on the rebate if rules were not followed.  You can negotiate on everything else if you are shopping at a store that negotiates.

My recommendation is that you also shop at a dealership that does not use negotiation tactics to see what type of deal you can get. Chances are, you will end up getting the same, if not a better deal at the “non-negotiation store” and you will have saved a HUGE amount of time.

Sincerely,
Todd Helmick
Royal Automotive/Lexus of Tucson
Phone 520-795-0760

Preparation

CAR SHOPPING SURVIVAL: PREPARATION

“The man who is prepared has his battle half-fought.” –Miguel de Cervantes

Okay, so maybe comparing car shopping to a battle is slightly melodramatic, but it is important to recognize that a prepared shopper is a smart shopper.  Before stepping foot into a dealership, prepare yourself by doing the following:

Know what car you’re looking for

Not only know what car you want, but know everything about it.  The key to knowing what you’re looking for is researching the vehicle’s value, appropriate pricing for add-ons, and what other dealers are pricing the vehicle at.

                Research, Research, Research…

Kelley Blue Book (www.kbb.com) and NADA Guides (www.nandaguides.com) are great resources for vehicle values.  If shopping used cars, Kelley Blue Book will likely be your best resource.

When comparing vehicle pricing at different dealerships in your state, Edmunds (www.edmunds.com) or Auto Trader (www.autotrader.com) provide several vehicle options at different dealerships.  This is a great way to compare prices and get a feel for the value of the car you are looking to buy.

At Royal, we price our cars based on the market. With the power of the internet, we research the competition daily, so you can be sure that our vehicle prices are very competitive.  This means you do not have to be a good negotiator just to get a fair deal.  Royal has created a Fast, Fair, & Simple process that keeps the customer in charge at all times.  (Click to learn more)

Research local dealerships

Perform some background research on your dealership options:

Know what they stand for and how they do their business

Will you get the answers you need without getting a headache?

Look at customer reviews online

Do they have a good reputation?

Are past customers satisfied with their experience and the price they paid for their vehicle?

A great places to look at customer reviews is DealerRater (www.dealerrater.com)

Do some further research on their service department

How well was the vehicle reconditioned before you bought it?

Did they replace any worn out parts?

If so, did they use the top of the line, or cheap aftermarket parts?

   (*note: Royal is meticulous about using only the best quality parts)

Selecting your Dealer

A vehicle is one of the largest purchases you will make in your life.  For that reason, it is important to select the right dealer for you.  Here at Royal, we focus on being a trustworthy dealer by using our Fast, Fair & Simple process.

Our Fast, Fair, & Simple process means…

 

 

Here is a list of questions that you should ask each dealer before choosing where you will go.  For each question we have provided Royal’s answer to the right.

 

Making the Purchase

MAKING THE PURCHASE

When you’re getting ready to buy, there are a couple more points to consider…

1.       Do you like the sales person?

When deciding whether to buy your car, consider whether you like your sales person.  Purchasing a car is the perfect time to whip out your first impression skills.  If you don’t like the impression they give you, move on to another sales person or dealer.

2.       Avoid sales pressure!

Make sure the car is right for you!  If you’re torn between a certain make and model, feel free to go to the other dealership to look at the other car.  Don’t be pressured into buying a car on your first visit.  Remember, you want to do business with a sales person who wants to cater to your requests and has your best interest!

3.       Do the price, payment, and terms fit your budget?

Purchasing a vehicle is a big commitment.   Be sure to select a car and payment that fits your budget.  We would never want our customers to ruin their credit score by going into debt after purchasing their car.

4.       Decide if you will trade in your current car

After researching what your car is worth, have an idea of how much you would like to get for it. Knowing what the fair price would be for your trade is important.  Some dealerships inflate the trade value to mislead you and make you think you are getting a better deal for your trade.  But in actuality, they are adding that extra amount that they are “giving” to you to the purchase price of your new vehicle.

Also remember that the value of your trade-in should never change according to the vehicle you want to buy.

5.       What is the MSRP (“market value”) of the vehicle?

Be sure that the price of the vehicle you are buying is at a fair price.  Get the bottom-line price without haggling back and forth!

6.       How much money should you put down?

The amount of money you put down will affect your payments.  Ask your sales rep for clarification on the payments.

7.       You don’t have to buy a vehicle at your first visit to the dealer. 

Know your exit strategy so that you don’t make any quick decisions that you feel pressured to make.  SHOP WHERE YOU ARE TREATED THE BEST AND GET THE MOST INFORMATION.

 

 

6 Keys to Improving your Credit Score

6 KEYS TO IMPROVING YOUR CREDIT SCORE

1.      Never miss a payment (can save you up to 160pts!)

This is the easiest way to kill your credit.  If remembering to pay your bill is your problem, ask your credit card company about signing up for their automatic bill pay program.  If you cannot financially pay your bill, talk to the credit card company about setting up a payment program.  Also be sure to stop purchasing things with your credit card, and set up a strict budget to outline your spending and to plan your credit card payments.

2.      Instead of getting a new credit card, extend your credit limit on cards you already have

If you are someone who is likely to be tempted to go on a shopping spree if you were given a new credit card, then entirely avoid getting a new credit card!  Instead, extend your credit limit on the cards you already have.  And remember: now that you have more credit available after extending your credit limit, this does not mean you can, or should, buy on that additional credit!  Instead, reserve that amount for any emergencies that may come up (e.g., a home or car repair, a doctor bill).

3.      Never use more than 20% of your Available Credit

Not only does keeping your spending down help you avoid paying interest in the long run, but keeping spending down also shows that you have extra credit available.  This could help you get approved for a loan faster down the road and also qualify you for a lower interest rate in the future!

4.      Get credit cards that have cash back rewards to contribute to your balance

Cards that have a cash back rewards program are very helpful. As long as you responsibly purchase only necessary items with your credit card, you are essentially being rewarded for shopping!  Your cash back rewards can be put towards your balance, which helps you pay off your bills.  But again, be very careful!! A cash back rewards bonus can make it very easy to start spending just to increase your cash back rewards.  So be cautious

5.      Finance a vehicle (or any big ticket item)

Making payments on a large priced item shows that you are able to manage and pay off debt.  Financing your purchase for as long as possible will also help, as it shows that you can pay off a long term debt.  This way will make you pay more in interest, but you will have lower monthly payments and increase your credit score.

6.      Take out a small personal loan and repay it over a year on time

This is a great way to boost your credit score.  It shows banks and loan companies that you are able to pay off a loan, too, which can help you get approved for a loan with a lower interest rate down the road.

Leasing A Car

TO LEASE OR NOT TO LEASE

QUESTION: I have conflicted feelings about purchasing vehicles because I feel that after a few years I am wishing I could have the next best thing. I am considering beginning to lease cars instead of purchasing but have heard that doing so allows you very limited mileage. Is this true and do you think leasing would be the right choice for me?
ANSWER: You will be very happy to know that in fact leasing is the perfect solution for you! Many people share your feeling of always wanting the next best thing in a vehicle and they find themselves frequently buying and selling cars. The problem is when you first purchase a car it immediately becomes a pre-owned vehicle, which sets its price point way down. The next factor to consider is the mileage. You said you were concerned that leasing a car in fact costs more for each mile. This is not the case. If you own the vehicle then every 1000 miles you put on it, substantially brings down the selling price.
If however you choose to lease the car, then you are truly only paying for the use you get out of the vehicle and not loosing a large amount of money for what you have not used. When you sign a car lease you can prepay and sign up for exactly the amount of miles you want to use. This way nothing is unexpected. In addition when leasing all of the extra costs in purchasing a vehicle like mechanical expenses and warranties are not a factor. If you have a problem with the vehicle you simply bring it back into the dealership and the repairs are covered. You don’t have to worry about a warranty because you know when the lease is up you can either give the car back or buy it at a reduced price. If you choose to buy the vehicle then you have only paid for your use and can purchase it at the reduced price so you truly get the best of both worlds!
I understand the feeling of always wanting the new and hot thing on the market. As fast as technology is moving and trends are changing it is understandable that some people feel as if their new car is outdated after just a few years. So save yourself the money, the hassle and the regret of making this big purchase and lease your next vehicle.

PROS OF LEASING
- Only pay for the miles you use
- All repairs/ expenses covered
- Buy car at lease end for discounted price
- Have the top of the line model each time it comes out

CONS OF BUYING
- Monthly payments are higher than leasing
- Value greatly depreciates right after you purchase
- Buying a car with a loan is like putting money in a declining value savings account!

For a more comprehensive list of advantages and disadvantages of leasing, please visit the Federal Reserve Board’s comprehensive article “Keys to Vehicle Leasing”     >> Visit Site