The Best Car Deals for Your Money
December 26, 2009
The best car deals don’t come easily, they take some planning and work, but they can save you thousands of dollars off of new car prices. A friend recently shared one of the best car deals I’ve ever run across and I asked if he could explain the process so that you could use it to save money when you buy a new car.
There are actually two components to the strategy you can use when buying a new car, auto incentives and dealer bidding. He only used the dealer bidding approach because car values for the Honda CR-V were high enough the dealers didn’t have to offer incentives. Here is his explanation of how you can get some of the best car deals when shopping for a new car. (Note: The auto market has changed a lot since he bought his car about a year ago so the incentives strategy may no longer be effective.)
Best Car Deals – Auto Incentives
The basic premise is that dealerships often get rebates that are not advertised to the public. The way it normally works is that a dealership will get $1000 per car sold in a given month if they hit a certain sales number…say 100 cars. These incentives are not made known to the public but published in an industry newsletter called Car Buys. Knowing this as the consumer is a major advantage.
The buying process should always occur near the end of the month. As the consumer you don’t the exact number of cars that dealership has sold that month but you can tell them you know about the incentive. They will be much more willing to take a loss on your sale if that gets them closer to 100 car quota which will get them $100,000.
Best Car Deals – Dealer Bidding
In my case Honda was not offering any incentive for the CR-V because they had no problem selling them. However the other half of the process, which is key to getting the best deal, worked really well for me.
The idea is to call prospective dealers (talk only with their sales manager or Internet manager which may take a couple of phone calls) and tell them you will be buying a car in the next few days. Tell them that you do not like to haggle over price so you plan on sending them an email detailing the make, model, trim and color of car you are interested in and that you understand you’ll be dealing with their current inventory.
Explain that they will then email you back their most competitive offer. Make sure to mention that other dealerships are also involved so the most competitive offer should be submitted otherwise they run the risk of not making the sale.
Once all the offers are received (give a deadline) you will call the each dealer, starting from the highest bid, and give them one chance to beat the lowest bid. If they want to participate great. If not, no biggie they just miss out on the chance of making an easy sale.
Dealer Bidding Process
I used a list of dealers within about 150 miles of me. Most had no problem participating and only one wanted me to call him after I had all the bids so he could beat the lowest price…I just told him no thanks.
Once I received all the emails I started making calls. There was a pretty significant difference between the highest and lowest bidder but I wasn’t really pleased with the bids. The best bid was just around invoice. I fully expected the first dealer to just pass on beating the price since there was a big difference in the bids. To my surprise the highest bidder took about two seconds to match the lowest bid.
I eventually talked him into actually beating the bid. I then called the next highest bidder with my new low bid. I even took $500 dollars off that price because the dealerships didn’t want to go too low below the original lowest bid. The next dealership beat that price as well. Each time I took another $500 dollars off the new low bid which really drove down the price.
Getting the Best Deal on a Car
Eventually, I got to the last call, the original lowest bid. Once I told him the new lowest bid he said that it was a “loser deal and the dealership would not make any money on it.” I was more than satisfied with the price so I really didn’t care if he could beat it or not. He said that it was highly unlikely but he would call be back.
When he called back he beat the price by $200…I couldn’t believe how far the price had fallen from the original emails. I asked for an email to confirm the price and wanted to make sure that there would be nothing extra added to the cost when I would go in to purchase. He assured me that would be the final price (tax, destination, etc., all included).
When I arrived they had a salesman waiting for me to start the paper. I asked if we could see the car first (he was surprised by that not really knowing how we came to the price). Checked it out, loved it and spent about a total of 30 minutes in the dealership going over paper work. Easiest way to buy a car while getting the best price.
That’s the end of my buddies description of the process he used when shopping for a new car, hopefully you’ll find it useful the next time you’re in the market for a new car. I asked him some follow up questions after he emailed me the explanation, I’ll share the questions and his answers tomorrow.
All posts by Ben Edwards