buying new car strategy; when to mention trade-in?

theJeff wrote:

1. You haven’t bought a car until you sign the dotted line. That is just silly.

2. If you aren’t prepared to walk away, you will get gutted... your... entire... life.

Not sure what you are saying in point 1.

Are you saying the statement you wrote is silly or it is silly to think otherwise?

If it is silly to think otherwise, I agree.

But if you verbally agree to a price and move on to the next step, you can't go back and change your mind on that amount and be taken seriously.

And I agree with point 2. Be prepared to walk away.

So offer them a package deal that includes the trade-in and be prepared to walk away if you can't come to terms on the whole deal.

Don't give them a chance to walk away from the trade-in piece after you agree on the new car price.

hoo-ah wrote:

Donate the car to a church or whatever; take the tax deduction.

De facto: Donating cars is no longer tax deductible. It’s been a poor bet for several years (the allowable tax deduction is what the charity gets for it from their 3rd processor; if your car is really a clunker, this is likely just a couple hundred dollars...and you won’t find this out until long after you’ve given your car away). With the Trump Tax Cuts, that deduction isn’t even worth claiming.

RE Buying a new car: Your salesman will have a piece of paper, he’ll fold (or draw) four quadrants. One will have the price, one will have your trade in value, one will have the interest rate, one will have your monthly payment. He’s going to want to focus on everything but the price. You only want to focus on the price. You’ve eliminated the finance and payment boxes, don’t give him a shot at the trade in box. He does this all day every day. He’s smarter than you. If he wasn’t, you would have set up the purchase price with a non-commissioned employee before driving to the dealer.

sdfasdfdsfdfddf wrote:

I am going to buy a new car with cash (loan coming from local bank, so not financing). At what point do I bring up that I have a car to trade in (it's a piece of crap so I'm not expecting much and don't want to go through the hassle of a private sale)?

Dude, you are financing the car. Just not through the dealer.

Jeep Guy wrote:

RE Buying a new car: Your salesman will have a piece of paper, he’ll fold (or draw) four quadrants. One will have the price, one will have your trade in value, one will have the interest rate, one will have your monthly payment. He’s going to want to focus on everything but the price. You only want to focus on the price. You’ve eliminated the finance and payment boxes, don’t give him a shot at the trade in box. He does this all day every day. He’s smarter than you. If he wasn’t, you would have set up the purchase price with a non-commissioned employee before driving to the dealer.

" You only want to focus on the price"

That's totally wrong.

Never focus on just one thing.

Go to the bottom line.

Take my example of a $20K car and a $5K trade in.

Make this offer - take my car, give me your car, no money down, $200 payments for 60 months purchase (no lease).

That's a payment close and people say those are bad.

But that's $3K off and zero percent interest.

No discount and a 10% rate would give you a payment of $320/month.

1) If you’re financing a car for 5 years, you can’t afford it. Save up some more money. You’ll be upside down on that thing for the entire loan.

2) That zero percent interest isn’t really free. It just sounds free to people who are focusing on quadrant 4 (payment). My bank is offering 2.79% on auto loans right now. That’s roughly $1000 in interest on your $15000 loan for 5 years (assuming nothing down aside from the trade in). Since you’re just throwing numbers out, let’s say the manufacturer is giving $2000 cash back for “cash payers” or maybe the dealer would take $2k off the price (or some combination of that. Now your $20,000 car -$5,000 - $2,000 off + $1000 in interest to your bank (over 5 years, so real cost is less) is a thousand dollars less. But you wouldn’t see this offer as you’re focused on the zeros and the monthly payment.

Jeep Guy wrote:

hoo-ah wrote:

Donate the car to a church or whatever; take the tax deduction.

RE Buying a new car: Your salesman will have a piece of paper, he’ll fold (or draw) four quadrants. One will have the price, one will have your trade in value, one will have the interest rate, one will have your monthly payment. He’s going to want to focus on everything but the price. You only want to focus on the price. You’ve eliminated the finance and payment boxes, don’t give him a shot at the trade in box. He does this all day every day. He’s smarter than you. If he wasn’t, you would have set up the purchase price with a non-commissioned employee before driving to the dealer.

A lot of dealers have moved away from the four square because of FTC enforcement actions against payment packing. They are now using a "buyer's choice" form that will have all the out the door price except for any F/I products you might chose to buy. That way, you get an accurate monthly payment based on the "out the door" price before adding F/I products. Dirty dealers would give customer phony monthly payment numbers to make it seem like adding service contracts did not affect the monthly payment as much as it really did or just outright conceal that they were packing in extra F/I products.

Jeep Guy wrote:

hoo-ah wrote:

Donate the car to a church or whatever; take the tax deduction.

De facto: Donating cars is no longer tax deductible. It’s been a poor bet for several years (the allowable tax deduction is what the charity gets for it from their 3rd processor; if your car is really a clunker, this is likely just a couple hundred dollars....

Or... someone in need gets a car. That's how it works at *my* church, anyway... We even provide a "gift certificate" to the local garage.

It's a feel-good thang.

You are just reading this wrong.

Yes, you absolutely focus on one thing... AT A TIME.

Get the price where you want it. That keeps the dealer from robbing Peter to pay Paul.

Then, get the trade-in value you want. (I want to clarify something I said earlier: yes, I agree that you either need to be prepared to walk away with your own car, the dealer's car, or two cars, if you are sure that you can do significantly better on the open market. In my personal experience, I have asked the dealer to hold the car for 2-3 days while I sell my car, then show up with the money to make my down payment.)

But, I assure you, if you try to spin as many plates as you are trying to balance, you will break a lot of china. You do this once every few years; he does this every few hours. He is better at this than you are, period. Keep it simple and isolate one variable at a time.

sdfasdfdsfdfddf wrote:

I am going to buy a new car with cash (loan coming from local bank, so not financing). At what point do I bring up that I have a car to trade in (it's a piece of crap so I'm not expecting much and don't want to go through the hassle of a private sale)?

Only once you have settled on the price of the car.

As already said by people with experience buying cars as cheaply as possible.

1) Negotiate the price of the car you are buying.

2) Negotiate the value of your trade in.

It’s a card game. They want as much of your money as they can get. The trade in is a low card in your hand. So don’t mention it. Tell them you want to see what kind of deal you can get on the new car.

Before you go know exactly what you want to pay and what you want to get for the trade. Give them your lowball number then come up to your price slowly. Bring papers and a notebook computer to look at and type numbers into a spreadsheet. You’re just wasting time. Don’t talk much. Uncomfortable silence is your friend.

Always be ready to walk but be nice. Don’t be confrontational. They Might call you back to meet your offer.

Never ever express strong feelings about the car you’re buying. Be non emotional about it. Show as much interest in the car as you would if were a piece of toast.

The experience can be a lot of fun if you are patient.

Flounder wrote:

The experience can be a lot of fun if you are patient.

It is never "fun".

Negotiate trade-in value first, then talk down the salesman as far as you can then... Walk away. He will grab your num at some point and will call you offering a better deal (unless you already worked the guy over during the first negotiations). At this point tell him you are leaning towards a car you looked at from another dealership. He will offer a better deal yet, if not immediately then he will call back with it in a couple of days. Take him for a ride with this deal and then before finalizing negotiations tell him you want a bit more for your trade-in. They are planning to sell it for far more than they pay you for it so there will be room to barter.

Car dealers will throw every move in the book at you, don't feel bad toying with them. Every car on the lot has a minimum value the floor guus are allowed to sell for, they hardly ever have to accept that value cause people are suckers but they will every single time if you can push them to it. Unless you are worried it will get scooped up by someone else, never buy a used car from a dealer the first time you see it. Basically gauranteeing that you are being over charged.