Buying for the Right Price

Last week, I gave you a breakdown of my selling process. Hopefully, that taught you a few things to help you get the most for your cars when you are ready to part ways with them. Now we get into the fun part of it, which is getting the most for your money when you are buying a car.

I'll summarize it in these key steps:

1) Research

2) Know the Out-the-Door Price

3) Test drive and evaluate

4) Get their offer

5) Make your offer

6) Be ready to walk

Let me start by saying I'm no mechanic, but I do know my way around a car and try to do a good bit of my work myself. So I have a good idea of what a car should sound like and where potential issues may be hidden from you. If you do not, then I highly encourage you to look at vehicles with someone you trust who can inspect the car. If you are going to buy from a private party, you want to make sure you pay a mechanic to do a pre-purchase inspection. As a seller, you should be willing to accommodate that to any buyer, and as a buyer, you should expect that to be part of the process. If you are buying from a dealer that you know and trust, then by all means skip this process, but know that there are plenty of shady used car dealers out there, so be careful.

Research first, define what it is you want, and start searching. As you look at various automobiles start to note key distinctions and prices. The purpose of this is to give you an idea of the market. For me, as I narrow things down and before I'm ready to go talk to any dealers I will have a list of other equivalent options in the area that I can also consider. This will give you confidence in your asking price when you go in and show that you are knowledgeable.

Now, that you have done your initial research and are ready to go look at one, or maybe a few it is time for focused research! Check Edmunds.com, Kbb.com, Carfax.com, and any other reseller to learn what specific cars are being sold for. Here you are looking for a range and your target price should be at the bottom of that range. Figure out what the price is you want to pay, taxes, and some amount of documentation fees, these will vary, but usually figure around $400-600 is fair for plates, tags, and documentation. Total all those up and that is your out-the-door price. You want this price to be specific, say something like $10,523, this is your OUT-THE-DOOR price, this is the only price that matters. This shows you have done your math and once again, know what you are talking about. Also, know where you are flexible. Are you willing to come up with some amount of money? Where are you flexible and what would you like?

Research, CHECK

OUT-THE-DOOR Price, CHECK

Go for a test drive and evaluate. Be sure to take the time to examine the vehicle and note anything that may adjust your price. You probably have a smartphone and you will have some time to make adjustments to your price if you note anything. Ideally, if you buy this vehicle, unless you know about it ahead of time, there should be no check engine lights or anything like that popping up. If the test drive does not go well, do not waste any time and just leave. Do not try to let them convince you to buy the car.

Assuming the test drive went well, it's negotiation time. Tell them to go ahead and give you their best out-the-door price, do not tell them anything, let them make the offer. Do not talk financing or anything, just out-the-door price.

They will come back with a price that is moderately lower than what is listed and this will tell you what their fees are, make note of them. Now pull out your calculator, run your numbers, and tell them what you were thinking. Let them know what the car is valued at and this is your price. Chances are they will not like that. They will try to negotiate you up. Now it will determine if you are where you want to be or if you feel they are willing to move.

If they will not move anymore you have 2 options. 1) You can go up just a little bit, remember I said to know your comfort level. 2) It is time to walk. Thank them for their time, and if they change their mind, they know how to reach you. Just like that leave and move on to the next one, or just wait. They may chase you out the door, they may come down a little more, or they may just let you leave. Be ok leaving, this is critical to getting the best deal for you. If there is a sense that you are willing to negotiate and not leave the dealer will hold firm to their price. Once you leave, you show that this deal does not matter to you and you have other options.

The bad part is now that you have probably left there are 2 things. Either you will start all over with a different vehicle, or they will call you back in a day or two to offer a better price. Hopefully, this is the one you want.

How did this all work out for me? The vehicle pictured above is a 2017 VW Jetta, 5-speed. When I visited I did not realize it had an upgraded exhaust, air intake, and dark tint. This probably played into my favor as my son, who will eventually get the car, loved it, but my wife and I were not big fans of it all. After my research, I knew this care was worth around $9,500-10,000. It was listed for over $12,000 and was on the lot for 2-months already with a little movement down in price. The dealership was over an hour from my house and I confirmed the vehicle was still there in the morning before our trip down. I had no trade-in (which always helps) and it was a pure cash offer. I did not plan to disclose that, but the salesman pulled that out of me and I'm not one to lie. Quickly the salesman asked if I wanted their best price, I think he could sense that I was a negotiator and they came back with something like $12,000 out the door. I used it to understand their fees and then told them no way, that is not even close. Now, of course, they wanted my number, which in my head was out the door at $10,200, based on my updated calculations, I adjusted it to $10,500 and made my offer.

As always, the salesman then takes it back to the manager, who then comes out to show me other Jetta sales that align with their pricing. I told them I did not care, this was my price. Here is the range from all the sites I noted above and here is my price. They told me there was no way they could do that and I shook their hands, thanked them, and left with my family. Then on Monday morning, they called me to take my price. The funny thing was that I was prepared to come up a little bit more, but I didn't even have to, I now had to get back down there to pick up the vehicle, which was not ideal, but they offered to drive the vehicle up to me.

All was done, I got the price they wanted ($1,700 less than their initial offer) and I freed them of insurance and advertising of a car on their lot since I gave them nothing to have to turn around and sell.

I hope this was helpful to you and if you have a car buying story I would love to hear about it. Just share it over email or in the comments below.