How to buy a new car?

[C_Topher]

OK, I have had 3 BMW cars and 1 BMW motorcycle, but have never paid more than 10K for a car, much less bought a new one. When buying a used car, you see the car in the lot (or front yard) and you negotiate the price, pay the money and drive away. I really like the 1er and the idea of being able to check the options to build MY car. So, here is my question....

Leaving trade-in and financing out of the picture, how do you negotiate the price of a new car? Do you negotiate from the base price and then add options (and negotiate them separately), or do you assemble your desired car and options on paper and then negotiate a price from there? Or is there a 3rd way that I have not thought of?

Thanks in advance for your experiences.

[Khobin~]

well the first step in negociating a car deal is to bend over...

Seriously though, when it came to buying our Gallant, we walked in to look at it, and after driving it we sat down, told them what number we wanted, how many payments, and stuck to it...in the end they gave in, and even had to knock off an extra $1000 after they realized the #'s they'd given us didn't line-up for financing.

The best feeling was paying the car off already and saving another 4-5k in interest:drinking:

However, I have a feeling that the dealer(s) here in Edmonton won't be negociating too much on the 1'ers with the demand that's going to be there for them

[128er]

Yea...you should go to the dealer and look at their inventory, if you see a car there that you like, they will be more willing to negotiate on their inventory. You are gonna have trouble getting it much below MSRP if you build your own.

[S2K]

always...and always negotiate up from the invoice price.

[imported_wizalex]

In general for any new car you can find the invoice price of the vehicle. Use this to negotiate off of, never the MSRP. If you're thinking BMW for your new vehicle consider spending $500 on a round-trip ticket to Germany to pick it up ED (European Delivery) and save yourself several more $K. If your dealer tries to give you bullshit that they don't negotiate off invoice nor do ED, tell them FU and go somewhere else.
--Alex

[Gene Hanscomb]

or option group. Then when they tell you they have a different color (the one you really want), groan and stamp your feet. Then they will appease you by selling it to you for near invoice. That has worked on my last three cars. It works in Lawrence all the time.

-Gene Hanscomb

[IrvRobinson2]

Originally Posted by C_Topher

OK, I have had 3 BMW cars and 1 BMW motorcycle, but have never paid more than 10K for a car, much less bought a new one. When buying a used car, you see the car in the lot (or front yard) and you negotiate the price, pay the money and drive away. I really like the 1er and the idea of being able to check the options to build MY car. So, here is my question....

Leaving trade-in and financing out of the picture, how do you negotiate the price of a new car? Do you negotiate from the base price and then add options (and negotiate them separately), or do you assemble your desired car and options on paper and then negotiate a price from there? Or is there a 3rd way that I have not thought of?

Thanks in advance for your experiences.

the best way to negotiate is from invoice price and up. It doesn't work with all the dealers, but it's worth trying. Always leave the trade in and financing part out, until the final price is negotiated.

[C_Topher]

Thanks for all of your replies. I had read about the approach of finding dealer invoice and negotiating from there (http://www.carbuyingtips.com/ - looks like spam but as far as I can tell, it is not, but is packed with information), and I realize that there may not be much negotiating room on the 1er.

But where do the options fit into this negotiating process? With this car a person might reasonably spend $3k on options alone; does one pay full price for them or are they considered in the "dealer invoice" and negotiated as such?

[imported_MPower]

Originally Posted by IrvRobinson

the best way to negotiate is from invoice price and up. It doesn't work with all the dealers, but it's worth trying. Always leave the trade in and financing part out, until the final price is negotiated.

While I certainly agree that knowing the invoice price is a great thing to know, many dealers, especially in California, run for the hills when they hear that "i" word. In my experience, you almost doom yourself with the dealership when you try to negotiate off of invoice. In high demand areas (which the entire state of California is), dealer can let yourself walk away every time knowing that eventually you will have to come back.

Therefore, I like to beat around the bush when negotiating my car deals. So, here is my guide for buying a car:

1. Do your research. Already stated, but needs stressing. The more you know about the prices of the cars, the prices everyone is paying, and what the dealers are paying, the easier it will be to get the price you want. Too many times someone will walk in, ask a price, the dealer will say no and because they dont know enough believe what the dealer says.

2. Walk the lots and search the inventory for the car that works for you (options and all). Remember that the price you negotiate depends entirely on (and includes) the options. So if you build a car online at bmwusa.com with the options you want, the negotiations will start at the final MSRP price stated on the website. Dealers are much happier to negotiate the price of a car when they know that they already have a car on their lots that you like. It means that they are much more likely to get a sale in the next few days than in three months. If you cant find the car you want on their lots, have them search the area for other dealers that may have that car. The closer the dealer is the better. In some circumstances, dealers will lie to you and tell you that they have to charge you a thousand dollars for shipping to get the car down to their lot. Ive had dealers do this many times and only once did this come up. They are lying. You shouldnt pay a thing. That said, if a close by dealership has the car, they will gladly make the trade and have someone drive the car over.

But it is important to get the right car. You make the salesman very happy (i.e. much more likely to deal) when you have the car sitting right there. You can also have them search their incoming shipments from the factory. Usually these cars are already accounted for, but it gives you another opportunity to find the car you are looking for.

3. No matter how you are going pay for the car, say you will pay cash. The thing that every dealer wants you get hooked on is a "monthly payment". It is the biggest negotiating tool the dealer can use against you. See, monthly payments have a lot of factors that they dont want you know about like interest rates, terms, down payment, etc. (it might sound like I am stating the obvious to some of you, but I think that there could be others who still dont know and could be buying their car for the first time). When you say that you are going to pay cash for the car, you eliminate all those factors except the price of the car.

4. Think "auction". You have a predetermined price you would like to get. Chances are you wont get the price, no matter what the salesman says. So make sure you know what your limit is. Be firm on the limit. The dealership wants you to crack on your limit. Depending on the car (and for the 1er this stuff may not apply early on as you may just have to accept MSRP), I would say that 2500 off MSRP is very reasonable. Remember, knowing the invoice helps a lot. Ask the invoice price right off the bat, but, remember, dont say invoice. A salesman gets annoyed when you think you are smarter than him.

5. Be willing to walk away. Here come some very important rules: be willing to walk away; no deal is a "once in a lifetime" opportunity; the car will still be there tomorrow; someone else can get you the same car; you dont owe the salesman any favors. The intricacies of the actual negotiation vary, but it is important to understand that you wanting to buy the car today hurts you badly in the negotiation. Patience is deadly. The longer you wait, the more you walk away, the more likely the dealer will eventually give you a number that you like.

EDIT: I almost forgot this one, and it is very important, the deal is NOT done until you sign on the dotted line. Even if a dealer brings a car from another dealer, even if you negotiated the price et al, even if everything is set, you can ALWAYS walk away. There are no contracts here that say that you have to buy the car once the dealer gives you numbers that you like or that once they find the car for you, you have to buy that car. Remember, be willing to walk away.

6. Talk to the Finance Manager. When things get slow, ask for the Finance Manager. What the dealership wants you to believe is that the salesman is going back to his boss (the FM) and is begging him to give you the numbers you want. What they are actually doing is talking things up for about 15 minutes then saying yes or no to your deal and probably adding a grand to your numbers. When you get the FM in with you, you have the numbers in front of both of you and there is no beating around the bush. A dealer always wants to sell a car, especially you can get them to look at how much they will make on the dealer. Remember, a BMW dealer will make a profit on a car even if they sell it to you at invoice. More likely than not they will take your money now than never at all. However, that can not happen if you arent willing to completely walk away.

7. Talk terms. Now, clearly you werent going to buy the car with cash; if you can, that is awesome and makes for an easy buying process. At this point you probably have an idea what sort of payment you are looking for. Bottom line is to get the numbers in front of you. Most dealers use a four-box grid for this process. This is designed to hurt you. It varies from dealer to dealer but the upper left-hand corner states the price of the car (which we have already negotiated, cunningly), the upper right hand corner states the term (lease/finance, 24/32/36/42/46/52/60/72 months), the lower left-hand corner states a trade-in and/or down payment (sometimes dealers only put trade-in here and keep the calculated down payment to themselves), and the lower right-hand corner states the monthly payment. Remember, they want you to look at the monthly payment box. Key is to see all the numbers: term, interest rate, down payment, price of the car, price of trade-in, etc. If you focus on monthly payment, the dealer can stretch the term to any number of months to get that payment to what you want. They can also inflate the down payment. The monthly payment does not determine whether you are getting a great deal or not.

For some, this is probably overkill and stating some obvious things; for others, I hope, this will help to explain a few things about the buying process. Last thing I can offer is this excellent reading:

http://www.edmunds.com/advice/buying...g.feature..3.*

It is an article about a journalist who went undercover at a couple of dealerships to learn their secrets. It describes a couple of things that I mentioned here (the four-box grid, for example) and should really help illustrate some of my points. Good luck!

[Lips]

Nice write up. I may try a few of these out during my negotiating process.

[InsaneSkippy]

Great info MPower, that should help a lot of people.

[theslik1]

A couple of other things, mostly psychological.

1) If a salesman sees the "O" face while you're looking a car you're probably doomed. :tongue:

2) One other trick I use is to try to take some physical control of the deal environment away from the salesman. When any salesman says "follow me" I politely refuse by stating I'm looking at other cars, talking to the wife, etc, and that I'll catch up with him. I then wait a measured five minutes and then go back to the salesman if he hasn't already come back to me. That throws them off their game a little, remembering that it's their house. That alone helps them exert a lot of control over the deal.

[Khobin~]

Everyone stresses not to negociate based on financing?... well that's not always true...personnally I like dealing with the bottom line, if I'm financing the car it comes down to: what's the payment? what's the term? How much interest? And if I trading-in, what am I "actually" getting for the car?

Like everyone has said, I do my research on the pricing, rates, terms, etc...

For instance, when we bought the Gallant we knew what term we wanted and what payment, and how that worked out for a total price and that, before we walked in, and stuck it, told the guy what #'s we wanted(well actually we stated a lower # because of the negoicating), they came saying they couldn't do and gave us a longer term, to which I also slapped him in the face and said "no, that's the term, and that's the payment". After a bit of going back and forth we got the term and # we wanted.

Now maybe it's it's a bit quicker to get what you want by going of price and later on figuring out the terms for finanicing, but at that point, you're still leaving them room to play with the finanicing on you, if you don't know what interest rate you should be at, what term is good, how residuals and downpayments effect it all, etc...

So in the end it all comes down to doing you're research and being prepapred...trust me, I know because with the first car we bought together we didn't do all the research before hand and got raped...hard...but at least we learned with a 10k car and have been a lot smarter on the ones since:thumbup:

[yankees25]

Try to go to a site like bankrate.com beforehand to search financing alternatives, or better yet, join up at a credit union if you have one available to you through work. Don't let the dealer be the only source you have for financing when you enter the dealership. They get kickbacks on the backend from their 'preferred' lenders. There is a reason they are preferred....

Hell - on the Mazdaspeed 6's, Mazda American Credit was offering an additional $1500 off if you financed with them. However, they'd sock you with a 8.5% interest rate in return. So most would take the $1500, finance with MAC, and instantly refinance with their own institution for 6%.

[VitaminT]

Very good info. On my last purchase I had to use the walk away. Even if I was willing to come back and pay what they wanted later, I had to be willing to say "thanks for your time and sorry we couldn't work something out". Not 2hrs later they called as said they were willing to do X price which was more than half of the difference.

I can't say that it will work every time but in this case it was a matter of giving up $600 to have the car gone today.

Also, for me, and maybe most people negotiating and holding firm on what you want the car for is difficult when I am in the middle of being excited about a new car.

[GAL]

All info given is good, I personally have owned over 250 cars, used and new. Like most, doing research is good, knowing what the dealer paid, is good info , but there is one cold hard fact I have learned in my 42 years of buying cars , if the car you are wishing to purchase is new, and very desirable , forget getting any hugh discounts, if any. I'm not saying that there isn't any deals out there, but most often if a car manufacturer feels they have a hot car, they will most certainly bleed every penny they can out of it until the market needs are met. That comes from experience!!!!!!! I am expecting to purchase 135i, and will most likely pay close to sticker price,if not sticker, they don't have to give discount's or special incentives, when they have waiting lists!!!!!!! I have known some dealers to put a premium add on costs to popular cars, don't pay it, put your walking shoes on. The dealer is hoping the "got to have it factor" is so strong, you will pay anything to be the first to get it. My advice is wait !!!!! I really don't believe BMW will put any premium add on's for the 135i. The dealer in my area doesn't believe in doing anything of that nature.
But truely I am expecting to pay sticker or close to it, and nothing I have seen or heard from my local dealer changes my opinion. Good Luck To All !!!!!!!

[Crashspeeder]

well, i know i learned a lot

[QuInn1]

its better to lease the car because the interest rate is lower and so is your monthly payments and at the end of the lease if you want to keep it you can or sell it to your buddy for more than what u would pay if you decide to keep it and you'll make a profit. You will end up spending less money on the total price of the car if you decide to keep it after your lease is up oppose to trying to buy the car from the start.....just a thought.

[Imola.ZHP]

^ leasing is tricky, you MUST do your research and understand all aspects of the lease...

Great info in this thread, I learned some stuff myself...

If I decide to order a 135i, I'll look at the option of leasing it. I dont have the income to support a payment higher than I have now, and it doesnt fit in with my other financial goals in life. I'd like to finance if there is a good rate, but its starting to get a little steep. I'm locked in at 3.90% right now from BMWFS, so its going to be tough for the finance department to get me to sign on the dotted line. No matter how much I want the car, I have other goals in life and I'm not willing to sacrafice them for a car...

With that said, my other advice would be to wait until the new release "hype" is over. Not only will dealers and salespeople move more on the 1's, but BMWFS will run better lease and finance rates...

[thp]

Get money ready ( CU loans, lease, etc ). Get salesman recommendations from guys at the local BMW club and research invoice price for car + options. Negotiate fair price with salesman ( 1k over onvoice? ). Try to do ED and save another 2-3k. Join CCA 1 year before to save another $500.

Walk out happy with you getting a good deal and the salesman getting an easy sale.

[imported_MPower]

Here's a tip that many dont know about BMWFS that will help you greatly when buying your next BMW. This only applies to buyers who have bought or leased a BMW through BMWFS in at least the last three years. There are preferred finance rates for repeat customers that you can get if this isnt your first go around. It is an initiative that was implemented nationwide as of last year. I am a bit fuzzy on the details but if you have financed or leased a car through BMWFS within a certain time period, you get at least a 1% reduction in the interest rate. This will only apply to some. If you bought a BMW five years, you wont apply. Again, I forget the specific date but, regardless, it is worth asking about. Also, I believe that the preferred rate can only be used for lease or finance terms shorter than 60 months. Play with the numbers. I know that for my MINI (because I financed through BMWFS), I could get the preferred rate but the payments made more financial sense for me if I went to a 72 month term. Back to the negotiation process, this is where having all the numbers in front of you really comes into to handy because you can track everything and find the numbers that make the most sense for you.

Additionally, if you return to the same dealer that you bought your BMW from, they should offer you some sort of rate incentive. This is a grey area as it is never a clear-cut program but I know that, at least, dealers are given the ability to adjust the interest rate for repeat customers. This is something that has to go on through the negotiation process.

[Imola.ZHP]

^ sweet!

Thanks for the info, didnt know that. BMWFS should love me...