How I saved $6,000 on a car purchase?

My girlfriend selected a car that she wanted to buy for $42,000. I asked her if she can wait for a few days, 1 week later I bought the same car at $36,000.

All I did was follow a few simple steps of negotiation. Listed below are the steps you can also follow to save huge amounts of money when you buy a car (I saved $6,000 on a car purchase using these simple steps).

Step 1: Document your requirements exactly 

I documented exactly what I needed – Make, model, color, accessories. I listed everything so that there is no discussion required with any car dealer.

This is very important. Time is of essence – visiting any dealership will take a couple of hours, and however determined you are you will not be able to do more than 2-3 in an entire day.

While on the internet you can easily reach out to 15 – 20 within an hour.

Step 2: Find all the dealers in your area

Again, internet is your friend here. Go online and search all dealers in your neighborhood.

I suggest to think of neighborhood as something really broad – would you not drive 300 miles if you can save $2,000? If yes, then search for dealers in your city and neighboring cities.

Caste your net wide – you do not have to drive 300 miles later but it does not harm to know what the price difference is. May be the price difference will be enough to warrant a drive.

The only thing to keep in mind is: stay within your state. Handling out of state registrations might be something you would like to avoid.

In my case: I was living in city ‘X’ and visited a city ‘Y’ weekly for work – this was a 300 miles drive each side.

I went on the manufacturer website and found all the dealers along the 300 mile route. (It was easy for me to pick up the car from anywhere on the route.)

Step 3: Ask for quotes

Next, I requested a quote by email from each of the dealers. I avoided phone calls. I just asked them to send me a quote by email.

Optional Step: Depending on how many quotes are you getting, you might wish to try emailing/ calling them up, BUT keep the interactions to a minimum.

Bobby: Hi, I would like to purchase a car (car make, model etc)
Other person: Sure sir, let me connect you.
Other person (2): Hi, my name is Joe, I am in the sales department here. How are you?
Bobby: Very well, thank you. I would like to purchase a car (make, model)
Joe: That is a great choice, when can you come in?
Bobby: I would like a price quote first
Joe: I understand. I will give you the best price if you can come in for a test drive
Bobby: I have already test driven and now just need the best price
Joe: By when are you looking to buy?
Bobby: Immediately
Joe: Great, we have an exact same car on the lots. If you like you can come in today and we can fill in the paperwork
Bobby: I need a quote first
Joe: Blah Blah blah
Bobby: I need a quote first
Joe: Blah Blah blah
Bobby: I need a quote first

From now on, whatever Joe is saying is noise… I will continue to ask for a price quote. I have no other business on my mind.

Step 4: Pick the best and ask others if they can beat it

Out of all the quotes you receive pick the best one and circulate it to the rest of the dealers.

In my case, I reached out to about 25 dealers and received about 11 quotes. The best quote was $38,000.

I circulated the $38,000 quote to the 10 other dealers asking if they can beat it.

Step 5: Repeat

I heard back only from 4 dealers and one of them offered me $37,000. I then circulated the $37,000 to the other 10 dealers (all those who provided me with a quote except the one who provided $37,000.

This time a dealer responded with $36,000. I circulated the $36,000 to the other 10 dealers once again – no one responded.

I went to the dealership and got the car for $36,000.

Tips

The best time to buy the car is year end. Second best is quarter end. Third best is month end.

Every salesman (and dealership) has monthly and quarterly targets. So they are willing to give higher discounts at those times.

In addition to the targets, at year end there is additional pressure to clear the backlog of ‘soon to be old’ models.

SUMMARY

  1. ‘Time’ – You do not have time to visit as many dealers in person as you can do online, that is the precise reason the sales person wants you physically in the dealership.
  2. Prefer an email to a phone call and a phone call to a meeting. Walk into a dealership only when you have struck a deal.
  3. Know your requirement well and document it precisely. Do not fall for the trap where the sales person says “Come in and I will take care of you” or “Let us get over the phone to figure out what you need”.
  4. Contact multiple dealers (preferably 15 – 20), ask for quotes, try to get at least 6-8 quotes, pick the best quote and circulate it to all others to see if they can beat it – repeat the process for as long as required.

You can read my view about buying vs leasing here: Buying vs leasing a car

 

5 thoughts on “How I saved $6,000 on a car purchase?

  1. Great article!

    “I went to the dealership and got the car for $42,000.” – you meant to say “for $36,000”, right?

    What helped me with negotiations is asking for the “out the door price”. The sales person loses enthusiasm immediately as they understand they won’t squeeze much money out of you. This speeds up the process a lot.

    I also found TrueCar very helpful. In my case I ended up saving about $2,000 but that was for a car twice as cheap as yours.

    Best,
    Sergey

    • Thank you, Sergey.

      Corrected the typo (it is indeed 36,000) – thank you.

      Yes, asking for the OTD (Out The Door) price is a great idea.

      $2,000 on that price range is great, looks like you did all the right things.

      I also had corporate discount available to me (it was called FEP – Mercedes-Benz Fleet Employee Program) but I realized that once I do my 5 steps, the FEP was useless – I can get the best possible price in the market by making the dealers bid against each other.

  2. Hi Bobby,

    Thanks a lot for sharing your experience, which is timely, as I myself am in the market for a car.

    Cheers,

    Joe

  3. The best way to save money on a car is to purchase used. A good balance between discount and performance is about 3 years / 30k miles.

    I have only purchased a new car once. I got my initial quote from carsdirect.com and shopped it around at 3 local dealers. None of them could match the price, so I purchased it from them. In addition to saving money I also saved time and got exactly the car I wanted.

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