Finally you got your corner office, and commuting by bus makes you feel like in hell. It is time to get a car and replace your subway tickets with leather seats. Buying a car is a rite of passage, but the car dealership is no more than a casino where the house always wins. Let us put you back in balance for once.
The golden rule is never to look at the sticker price since it is pure psychological manipulation. Dealerships use something called MSRP (manufacturer’s suggested retail price) as a psychological anchor, trying to make your mind believe in its validity. However, the true tool of mass negotiation is the invoice price, or the price at which the dealership buys the car from the manufacturer. You can learn this easily from websites like Edmunds or TrueCar. Thus, you gain the upper hand.
Second, arrange your financing before approaching the dealership. Appearing there without any financing arranged beforehand is equivalent to showing up for a game of cards empty-handed. The finance manager will instantly recognize your weakness and try to squeeze the maximum from you, providing you with a loan shark’s interest rate. Arrange your financing in advance and immediately gain control of the situation.
The next point is silence. Your offer should be based on the invoice price and should be followed by silence. Awkward silence will drive the salesperson nuts and make him/her reduce the price. Allow that to happen and check your e-mail while they think about their answer.
The Four Square worksheet is the standard trick used by dealerships to play with numbers to confuse customers with their bad math. They shift numbers from trade-in value, down payment, and monthly payment to the price of the car to fool you by making you believe that this is the total price you are going to pay. Insist on negotiating the Out the Door price, which is the total price that you pay including taxes, title, and all other doc fees charged by the dealerships.
If you are trading in something, then treat it as an absolutely separate transaction. Do not talk anything about it until you have negotiated the price of your new car. In the end, they will give you a very good deal on your new car and rip you off on the old one. It is what they usually do and you should be prepared for it. Watch the pea in their shell game carefully.
And the last rule: never hesitate to walk away from the negotiation table. This is the most powerful weapon you have. Walk out of the building and see how fast they will “talk to the manager”.