How to Buy a Car LIKE A PRO in 2024/2025 | Former Dealer Explains

Summary

In this video, a car sales negotiation unfolds between Ray, a customer, and Zach, a salesperson, as they discuss the purchase of a Toyota RAV4 XLE. Ray focuses solely on the out-the-door price, disregarding financing and trade-in details. Throughout the negotiation, Zach attempts to gather more financial details, while Ray stands firm on getting a substantial discount. After some back-and-forth, including market insights and a limited-time offer, Ray successfully negotiates a $1,000 discount. The video showcases key negotiation strategies, such as anchoring and focusing on the total price, offering valuable takeaways for prospective car buyers.

Takeaways

• 😀 Focus on the out-the-door price rather than monthly payments or financing options to avoid hidden costs.
• 😀 Always research market prices and competitor discounts before entering negotiations to understand the value of the deal.
• 😀 Be clear and firm about what you want (in this case, a discount of $1,500 to $2,000 off MSRP) and do not get sidetracked by other details.
• 😀 Use negotiation tactics like starting with a higher request than expected, allowing room for compromise.
• 😀 Understand that salespeople are trained to push for monthly payment details, but always steer the conversation back to the total cost.
• 😀 Be aware of urgency tactics (like the 10-day supply) used by salespeople to create pressure and justify higher prices.
• 😀 When negotiating, ensure all fees and taxes are included in the final price, so you are not surprised by additional costs.
• 😀 Salespeople may try to include free add-ons (like window tint or warranties) to make a deal seem more appealing, but be cautious of hidden fees or inflated pricing.
• 😀 Be prepared to walk away if the deal doesn't meet your expectations, as demonstrated by Ray when asking for an additional $500 discount.
• 😀 Always make it clear what you are willing to compromise on (in this case, Ray is willing to negotiate on the trade-in but stays firm on the price).

Q & A

What is the customer's main focus when negotiating the car price?

The customer, Ray, is primarily focused on the total out-the-door price, which includes the cost of the car, taxes, fees, and any additional charges, without considering financing or trade-in options at this stage.

Why does the salesperson insist on knowing the customer's monthly budget?

The salesperson, Zach, asks for the customer's monthly budget because it's a common practice in the car sales industry. It helps the salesperson understand the customer's financial limitations and what the manager might ask regarding the payment structure.

How does the customer respond when asked about financing or trade-in options?

Ray responds by saying that these factors, such as trade-in value or financing options, are irrelevant at this point. He is only interested in agreeing on the total out-the-door price before considering those aspects.

What is the salesperson's approach to getting the best deal for the customer?

Zach attempts to work within the dealership's pricing constraints and communicates with the manager (Johnny) to secure a discount. However, he also emphasizes the urgency of making a deal quickly, given the limited availability of the vehicle in their area.

How does the customer demonstrate knowledge of pricing and discounts?

Ray shows that he has done his research by mentioning discounts of $1,500 to $2,000 that he has found at other dealerships. This knowledge helps him negotiate a better deal and push for a larger discount.

What was the final discount offered by the salesperson?

After further negotiations, Zach is able to secure a $500 discount off the MSRP of the car. However, he emphasizes that this is the final offer and that further discounts would not be possible due to the limited supply of the vehicle.

How does the salesperson use the concept of 'Day Supply' to justify the pricing?

Zach explains that the 'Day Supply' of the car model in their market is just 10 days, meaning the car is selling quickly. This is used as a justification for the dealership's inability to offer a larger discount, as the car is in high demand.

What negotiation tactic does the customer use when asking for a discount?

Ray uses a negotiation tactic of starting with a larger discount request ($1,500 to $2,000) to set expectations high. This tactic forces the salesperson to offer a better discount than they initially intended, knowing that Ray is not willing to accept a deal without it.

Why does the customer insist on meeting with the manager, Johnny?

Ray expresses interest in meeting Johnny, likely because he believes the manager has a good sense of humor and because he wants to further negotiate the deal with the person making the final pricing decisions.

What role does the finance manager play in the car-buying process, according to the customer?

Ray mentions that he will discuss his financing options, including his pre-approval through his credit union, with the finance manager later. He prefers to finalize the pricing before considering the specifics of financing or trade-ins.