After soliciting a bunch of friends for advice on purchasing a car, our first interaction with the world of auto dealerships went surprisingly smooth.
We ended up following a process to reduce unexpected hiccups and ensure we were adequately informed for our purchase. Here's what we specifically did, end to end:
- Get a paid-tier Consumer Reports account to check out analyses and reviews of the cars you're considering, and otherwise read a range of reviews to find out what features owners like or don't like. Consumer Reports also has recent data on how far below MSRP people are getting each specific car.
- Test drive the cars of interest to make sure they work for you. (We thought a RAV4 Prime would be perfect until we discovered the headrests are force-tilted way too forward for our taste, and there was no easy way to address the problem)
- Figure out exactly which trim and features you want.
- Email every dealership in the Area with the exact specs of the car you're looking for. Most dealerships don't have an email address on their site but you can find a web form. Tell them you're excited to buy and you're soliciting offers from multiple dealerships, and you'll take the best offer you get within the next few days. Tell them that the entire negotiation will happen over email. Be polite and friendly and upbeat but also firm. (also, use a throwaway email address for this so you're not spammed for eternity)
- Seriously, email like 15-20 dealerships. It doesn't take much time, and you want to get a sense of where the market is at. More data points are better, so email that place that's 100+ miles away even if you never plan on going there. Most places will refuse to put a concrete offer in writing and would prefer you to make the first move, so you want a lot of them.
- Make sure to ask for the "out-the-door" (OTD) price including all taxes and fees so you're making a fair comparison between dealerships.
- Put all the concrete offers you get in a spreadsheet with the price breakdowns (base price, discounts, taxes, OTD price), MSRPs, and specific features of the closest car they have to what you want.
- Once you get some concrete offers, take the lowest one and send that to all the other dealerships, saying "this is the best offer we've seen so far; can you beat it by enough to make us go with you instead"? For extra authoritativeness, send them a cropped screenshot of that column in the spreadsheet so they see you have a spreadsheet full of offers.
- Repeat the previous step until you've reached what seems like the bottom.
- Wait a couple of days and see if anyone budges. Sometimes as the end of the month approaches and everyone's trying to hit their quotas, they may be willing to pull something out of their back pocket. We got an extra $1200 off by doing nothing for two days.
- Get the winner to confirm the exact OTD offer and VIN number of the car before going into the dealership. Have literally everything worked out before you come in.
- When you come in, don't let them try to deviate from the deal you agreed to at all. Stay friendly, stay firm.
Some things of note:
- The dealerships that offer "easy no hassle no haggle" pricing almost always have higher prices than what you could get by negotiating, unfortunately.
- Car salespeople are better negotiators than you. They literally do this for a living, and they know far more about the market than you do. They're masters at controlling frame. The best counter to this is to get them to negotiate with each other instead of with you, and get them to put everything in writing so there's a paper trail. Doing everything over email also makes it easier for you to control the frame. You're not on their home turf, and you can think before responding.
- You can go on the DMV site and see exactly what fees you will owe for a new car. Say no to literally any other fee.
- Anything the dealership offers you as an add-on (eg "gap insurance") can be bought more cheaply somewhere else if you really want it.
Weirdly, it still took three hours to buy the car once we arrived in person, even though we had agreed to everything up front. I think the dealer still had to run the standard theater of four-square offer sheets with bright colored markers and the endless parade of forms designed to overwhelm you and grind you into submission, except that because we had finalized everything upfront the process was defanged to the point that it seemed silly. They realized the futility of continuing to try to get anything out of us, but they still had to turn the crank.
All that said, it's terrible that this aggressive predatory system still exists. I'm sure people who are less willful or less well informed get crushed by this system all the time. I'd love to see the CFPB force all car offers to be in a simple, standardized, and easy to understand format the way credit card offers are.