Confessions of a New Car Buyer – Getting the Best Price

After reading the popular MDJ article Confessions of a Car Salesman, regular reader Lisa went out with her new found knowledge to purchase a new car.  Here is her story along with some new car buying tips.

Thanks FT for asking me to write this guest post.

Myself and my husband were in the market for a new car (our 2001 compact car had 180K and was on it’s way out) and while we did some research on-line, the most helpful information was from Car Cost Canada, which we discovered through reading this blog.  And based on the information, we saved about $1200 on our car purchase – on a car that our salesperson said “never gets discounted.”

Our initial contact with the dealer was to test drive the vehicle.  We felt this was the right car, but you never know until you drive it.  As expected, we loved the car, so we started the negotiation process with the salesperson.

The initial offer he provided us was pretty laughable.  $200 off the MSRP.  We told him that we would think about it (and in our heads, we were already discounting that this was our perfect car!)

And what do I find on my favourite blog the very next day??  Car Buying Tips…Confessions of a Car Salesman….

So we signed up with CarCostCanada (and since we are CAA members, we only paid $30) and we were able to find the wholesale price of our car.  The great feature on this site is it permits multiple inquiries on the same car and it counts as one inquiry.  It was also an eye opener, we really thought there was more margin on cars, but we were wrong.  There was only about $2500 between the wholesale price and the MSRP.  It gave us insight on how much negotiating room we had.  Our intention was to ensure that we got a good price but not to gouge the dealer.

We were also contacted by a dealer that was affiliated with the site.  This was where the fun began….

The affiliated dealer was probably the person that pushed us to buy our car.  He emailed and called within 48 hours of requesting a report from Car Cost Canada.  He was very honest.  Told me that he doesn’t haggle, and that he would sell us the car at 4% above wholesale price.  I was willing to pay 5% so I was totally happy.  The only issue was he was located in downtown Toronto and I live in the suburbs, so I figured I would try the same pricing with our original dealer.  And this is how it went down:

Me: Hi, just wanted to call you to let you know that we have received an offer from another dealer that blows your offer away

Salesguy:  Really?  I find that hard to believe.  We don’t discount this car.

Me:  Well, have you heard of Car Cost Canada?

Salesguy (sounding a little dejected) : Yes…….

Me: Well I have the report in my hand.  I have been offered 4% above cost for the car.  And there is a $500 prepaid Visa card offer.  Can you match it:

Salesguy:  Let me call you back, I need to talk to my manager.

He called back about 1 hour later and agreed to the deal and he also gave me 1% off the GST to compensate for the reduction of the GST in January.  I asked him what the cost would be, and he wouldn’t give me an exact number which is typical.  He did give me a payment amount, which I was able to calculate the amount using an on-line Loan Calculator.  And based on what he told me, it was about $600 more than the agreed to cost.  More on that later…

So we head into the dealership and we start talking numbers.  I tell him that his numbers do not jive and he tried to tell me that the 4% markup was also on the PDI charges.  I had to explain to him that PDI was a fixed cost and should not be priced up.  I finally convinced him that my numbers were right.  From a monthly payment perspective, I think the difference was $10/mth but it was better in our pocket than the dealers!  He had to get his manager to approve the change.

Where we could have done better was the trade-in.  We looked up the black book value and it was valued between $2000-$3500.  He offered us $2000.  My husband counter-offered $2500 as we wanted to get rid of it and didn’t want to bother with a private sale.  He went away for about 10 minutes (by this time, there is a path worn between his office and his manager’s office!) He came back and told us that he couldn’t budge on the trade-in, but he was just informed of a new promotion – a $1500 prepaid Visa – an increase of $1000.  We took it right away.  Probably because at this point we were tired and hungry and wanted the transaction to be over with. (funny how the dealer didn’t mention the $1500 promotion before…)

At the end of the day, Car Cost Canada helped us make our car buying decisions and provided us leverage with the dealer.  My advice is to:

  • Be prepared before you go see the salesperson.
  • Use on-line calculators to calculate payment amounts.
  • Ask for the total cost and not just the payment amount, it makes a difference.
  • Also beware of any additional costs that they try to plug in.  There was a $299 “warranty” cost that we declined and that saved us $250, as we had to pay $50 for the wheel locks.

To recap, this is we got at the end of the day:

  • 4% above wholesale price
  • 1% off the GST
  • $1500 prepaid Visa (that we put down against the car)
  • = $1200 savings (off MSRP) and a brand new 2008 Cross Over Vehicle!

I've Completed My Million Dollar Journey. Let Me Guide You Through Yours!

Sign up below to get a copy of our free eBook: Can I Retire Yet?

FT

FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.
Subscribe
Notify of

This site uses Akismet to reduce spam. Learn how your comment data is processed.

20 Comments
Newest
Oldest
Inline Feedbacks
View all comments
Bernie B
4 years ago

Hi
Good article. FYI the links to CarCost don’t work. Cheers

Mark
6 years ago

As my lease is ending in a few months I am doing as much research as I can before being forced to make a decision, either buy my 5 year old civic or go to another lease/finance. After reading this article and the confessions article, I signed up for Car Cost Canada. Right off the bat it’s amazing to the dealer price. Always thought it was more but guess not.

As my lease is nearing its end, the local dealer is trying some lease pull ahead programs which have not been very good as of yet, but the information I’ve learned on this site I hope to use to my advantage when it comes time to make a decision.

Thanks.

Carcostcanada: Better Prices For New Cars? | BargainMoose Canada
11 years ago

[…] Myself and my husband were in the market for a new car (our 2001 compact car had 180K and was on it’s way out) and while we did some research on-line, the most helpful information was from Car Cost Canada, which we discovered through reading this blog.  And based on the information, we saved about $1200 on our car purchase – on a car that our salesperson said “never gets discounted.” Lisa […]

Thicken My Wallet » Blog Archive » Negotiations Without Tears
13 years ago

[…] There seems to be a correlation between the amount of preparation put into negotiations and the result. The less research and intelligence gathered, the more likely the unprepared will be taken. I may have linked to this post before but look at how the writer got the best price for a car by doing their research. […]

Confessions of a New Car Buyer - Getting the Best Price — Cardgames collection cards
13 years ago

[…] the most helpful information was from Car Cost Canada, which we discovered through readi source: Confessions of a New Car Buyer – Getting the Best Price, Million Dollar […]

Jim
13 years ago

Hmmmm. Sounds like you are affiliated with Car Cost Canada.

Save Money Online with Great Canadian Rebates | Million Dollar Journey
13 years ago

[…] CarCostCanada membership: […]

Confessions of a Car Salesman | Million Dollar Journey
13 years ago

[…] about how about MDJ reader got a great deal when buying a new car. If you enjoyed this article, get daily updates via E-mail or RSS […]

Weekend Reading - Jan 11, 2008 | Million Dollar Journey
13 years ago

[…] at Cash Money Life hosted this weeks Festival of Frugality.  MDJ submitted the guest post on how to save money when buying a car.  In addition, the article was selected as an editors […]