So you’ve made the decision to buy a new car. Now all you have to do is buy one. You, obviously, want to pay the least amount of money you can to buy the car while the dealership you buy it from wants to get the most they can get from you. So begins your battle.
I recently helped a close relative buy their first new car. They got the red carpet service with me. All they had to do was figure out what car they wanted then I went searching for the best deal. I had done this a few times before with success so I knew how to work the dealership system. Once you learn some of the “tricks” you’ll be able to snag a great deal too.
First, go and test drive your cars to see what you want.
If you already know what you want, great, you can skip this step. However, if you’re not sure then you should be going to the dealerships and test driving cars to find out what you like. The goal here is to only test drive the car and find out exactly what car and options you really want in your car. You aren’t going to buy anything, and you aren’t going to try to haggle. There’s no need for that yet.
And while you’re at it you should check each dealerships site before you go in for a test drive because alot of the time they give out free giftcards just for coming in to take a test drive. So if you’re going in there anyway to test drive the car you might as well get paid for it.
I know what car I want, how do I get the best deal?
So, you know exactly what car you want. What do you do now? For my search I was looking for a brand new 2016 Toyota RAV4 SE with the navigation upgrade. I wanted it in a specific color combo of black currant metallic exterior with a black interior. So I know what I want, now what?
Now is when you use the internet to your advantage. What you’re going to do next is write up an email that outlines what you are looking for and send it to all the dealerships in your state, and or within a couple hundred miles of your location. This email isn’t going to specify that we want just the 1 specific color combo, but it will say that we want the SE model. We want to leave out the colors so you can have a better idea of what type of deal you can get. What you could do is put down a bunch of colors you would consider buying, but make sure to have a few of them.
Here’s an example of the email I was sending out to all the dealerships. To send out this email I simply went to the dealerships website and went to contact us and filled out their form and sent the message. Put in your real information and be ready to get a bunch of phone calls and emails. You can really ignore all the phone calls for now because they are basically a waste of time for us. When they ask you in the form you should let them know that you prefer to be contacted by email.
Example email sent:
“Hi,
Can you please help? I know what car I want. I just need someone to help me find it.
What is the lowest all inclusive “out the door” price you can give me on a brand new 16 Toyota RAV4 SE?
Please see what the car should have-
1- Price should be the lowest possible (lowest Total out the door price please)
2- It needs to be a brand new 16 RAV4 SE
3- Exterior colors can be BLACK CURRANT METALLIC, MAGNETIC GRAY METALLIC, SILVER SKY METALLIC, HOT LAVA, BLIZZARD PEARL
4- Things I want the car to have include: Smart Key system with push button start, Navigation System with rear view camera, Blind Spot Monitors on mirrors, CD Player
Please let me know asap.
I live in South Carolina. The car will be registered and driven in SC so please take that into account when you send me your best “out the door” price.
I’m looking forward to hearing from you by email or call.
Thanks”
So what I did here is ask for the exact model I wanted with the options I wanted but I gave them a few choices on colors. I also made it clear that I was looking for the best “out the door” all inclusive price. This is important because we want to be comparing our complete our of pocket expense when making this deal. Some dealerships will give you a price and then add on “dealer fees” or other fees you weren’t aware of when you got their price. When you ask them for the all inclusive out the door price it should be inclusive of all taxes, tags, and fees. This is what you’re paying for the car and not a cent more. That’s the number we want to use for negotiating.
I’ve sent out the emails and gotten responses. Now what?
So after doing this you’ll be getting a bunch of cars sent to you either by email or they will try and call you and tell you over the phone. What you want is the emails because that is written proof that you can use to bargain for a better price. You’re going to find that you got a wide range of prices for cars. You’re going to have to look closer at the car’s invoice to see exactly what options the car has and for what price. You’re looking for the car that’s the lowest total out the door price and it should also have the most off of the MSRP.
Some of the dealerships will send you something thru email immediately, and some others may not send you anything at first. That’s fine. You just need to find one to start with. Go through all of your emails and pick out the one or two that have the best deal. Then what you’re going to do is email back all those other dealerships asking them if they can beat that price.
Your email will go something like this:
“Hey,
I’m not sure if I’m paying cash or financing at this time.
Do you have something now or in the future that has a better out the door price than that which also fits the bill? I am shopping around and I have found one for $27600 out the door. Please let me know if you have anything that can beat that. I will copy/paste what I am looking for again for you.
Thank you
Hi,
Can you please help? I know what car I want. I just need someone to help me find it.
What is the lowest all inclusive “out the door” price you can give me on a brand new 16 Toyota RAV4 SE?
Please see what the car should have-
1- Price should be the lowest possible (lowest Total out the door price please)
2- It needs to be a brand new 16 RAV4 SE
3- Exterior colors can be BLACK CURRANT METALLIC, MAGNETIC GRAY METALLIC, SILVER SKY METALLIC, HOT LAVA, BLIZZARD PEARL, CLASSIC SILVER METALLIC
4- Things I want the car to have include: Smart Key system with push button start, Navigation System with rear view camera, Blind Spot Monitors on mirrors, CD Player
Please let me know asap.
I live in South Carolina. The car will be registered and driven in SC so please take that into account when you send me your best “out the door” price.
I’m looking forward to hearing from you by email or call.
Thanks”
I should note that I was getting prices ranging from $27,600 out the door to $30,100.
Now that I have a good idea of what the low range of prices will be for my car I can start to narrow it down some more if I so choose. Just understand that if you narrow it some more with colors and options it may take longer to find the car for the best deal, and/or you may not get as good as a deal as trying to look for any color. One reason for that is because of availability.
So my next emails to the dealerships went like this:
“Hey,
Please read what Im looking for as I’ve narrowed it down. I don’t want the Hot Lava. see below, and Thanks and let me know!
Hi,
Can you please help? I know what car I want. I just need someone to help me find it.
What is the lowest all inclusive “out the door” price you can give me on a brand new 16 Toyota RAV4 SE?
Please see what the car should have-
1- Price should be the lowest possible (lowest Total out the door price please) The less options the better as long as the options I want are in the car (see below)
2- It needs to be a brand new 16 RAV4 SE
3- Exterior colors can be BLACK CURRANT METALLIC
4- Things I want the car to have include: Smart Key system with push button start, Navigation System with rear view camera, Blind Spot Monitors on mirrors, CD Player
Please let me know asap.
I live in South Carolina. The car will be registered and driven in SC so please take that into account when you send me your best “out the door” price.
I’m looking forward to hearing from you by email or call.
Thanks
At this time I should note that I started this process in the middle of the month. The plan was to get a bunch of prices and be ready by the end of the month, which is when dealerships make their biggest deals to close out on some bonuses. These bonuses that the dealerships earn from hitting sales numbers is what makes these deals possible.
According to several dealerships that I spoke with over the phone I was getting a great deal at $27,600 out the door and I should take the deal and run. That price was under invoice (which is what the dealership pays Toyota for the car). So how can dealerships do this? How can they sell a car for a loss? That doesn’t seem to make sense.
How are dealerships able to sell cars for lower prices?
Here’s how it works. Each month the dealerships could have different incentives to try and sell more cars. An example would be something like hitting a sale number. An example I got from a person I spoke with at a dealership was that they may need to sell more cars this month to hit the 150 cars sold threshold for the month. Once they pass that threshold they’ll earn a bonus of $500 per car. That’s $500 per car!
This is why they can lose a couple thousand dollars on 1 car to you while still making more money. That car sold at a loss helped them reach the 150 cars they needed sold for the month which earned them an extra $75,000! That’s $500 X 150 = $75,000 bonus to the dealership. I think it’s pretty obvious to see why they would want to sell that car for a loss to you.
Now, the flip side of this is well why don’t they just sell more care for less so they can get that bonus? Well, that’s because they aren’t allowed to just drop their prices so they can hit sales targets. Toyota would not allow that. The only reason they can be allowed to lower their prices is to try and stay competitive.
They need that proof that another dealership is underselling them so that they can in turn lower their price. Then once one lowers their price you can go back to the other to try and make them do the same thing. The dealership will always needs that proof in order to lower the price so low, otherwise they simply can’t do it because the car companies won’t let them.
That’s why it’s important to be honest when you’re emailing them back and forth. Don’t just make up a number and hope that someone will undercut it. If it’s truly a low price that is real they will need to proof.
Here’s an example of an email I finally got a few days before the end of the month. I should note that this dealership was not giving me any good prices to start and I had ruled them out as an option for the best price. However, they came thru because they needed to hit their numbers (I guess) and they wanted the sale from me.
“I spoke with my GSM, Chris, about the Rav4 SE I sent you. He wants to make this easy for you. If you supply us the VIN and written offer of any of the similarly equipped SE’s that we have been talking about, he will beat their deal by $500. Please send me the information so we can get this locked down for you. We can have the one I sent the consumer sheet on rerouted to our dealership by collecting a non-refundable partial payment. I look forward to hearing from you!”
So now this is where I needed to have that proof. All I had to do now was find the email that gave me the $27,600 out the door price and forward it on to this dealership. That’s what I did. I had the price down to $27,100 out the door. This price was about $7,000 off msrp. I did give the other dealership a chance to counter with a lower price, but they were not able to do it so I went ahead and sent in the deposit for this new car.
A few emails back and forth and I saved a few grand. Yay!