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Sunday, October 31, 2010

How to Buy Late Model Cars At Deep Discounts

Take your time when buying a car if at all possible. The bigger the hurry, the more you'll end up getting fleeced. The tactics and strategies we are about to suggest are far more effective if you control the purchase time-clock rather than the dealer. Here's what to do:

Once a dealership purchases a car, it anticipates holding that piece of inventory for 60 days or less. The goal of the dealership is to earn a 10% profit on every car it sells, so cars are typically priced about 20% above their initial purchase price. As you determine the next car you would like to purchase, do some research before you make your purchase.

Begin by comparing general prices through online sites such as http://www.autotrader.com/ , http://www.edmunds.com/ and http://www.kellybluebook.com/  about 3 to 4 months  before you are ready to buy your new vehicle.

Discover This Dealer Trick and Save Big Money

Dropping ads on trading websites is one dealer tactic to gain attention for their inventory and to determine what the consumer feels is a reasonable price to pay. For example, if the car is listed on the dealership’s own website at $23,900, the dealership likely owns the car for $20,000, and it may list a ‘Buy it Now’ price of $22,900 on Ebay while offering a list price of $24,900 on Autotrader.

This type of stealth marketing can be effective for the dealership for when the consumer does not do sufficient research, he or she may simply purchase the car on Ebay for $22,900 even though the car could have been bought through a salesperson for less.
 Timing Is Everything

Since the car industry operates on a 60-day inventory cycle time, dealerships begin reducing prices of their automobiles after the first 30 days if these assets have not sold. This is mainly due to applicable holding costs (and depreciation) as the dealership is paying interest on all of the cars that they have remaining for sale. Therefore, if you start monitoring the make and model that you want to purchase about 120 days in advance of your buying time frame, you will notice how the prices may drop by about 10% over a 60-day period.

If one of the cars that you have been monitoring appears to have been sold, then call the dealership and ask if that unit is still available. The dealership may advise that the vehicle has recently been sold and you can nonchalantly ask for its selling price.

When To Low-Ball A Car Dealer

What you will notice is that the original advertisement price was probably reduced after 30 days and after speaking with the dealership, it will probably be apparent that the final selling price was less than the lowest advertised price. It is also important to note that dealerships will, at times, take a loss on their inventory depending on the situation, so don’t be afraid to offer 20% less than the list price. The worst they can say is ‘no,’ but you could end up receiving the car for 15% less than their asking price.

In the event that the car has been on the lot for 60 days or more, dealership manages essentially have three options; they can further reduce the price, move the automobile to another dealership for new advertising, or sell the car at one of the national auto auctions (where they likely originally purchased the vehicle). In any event, selling the car to a consumer at a lower price than they own it for is sometimes the best-case scenario, as the added cost of transportation or auction fees could cause greater losses for dealerships than a reduced price. And they miss the opportunity to gain a happy customer.

How Your Timing Gets You The Best Price

Since the car business is based on commissions and monthly sales quotas, complete your research ahead of time and then go to the dealership on the last day of the month, just a few hours before closing time to make your offer. You will be amazed how quickly a salesman may be willing to make a deal and even give up some of his commission to make sure the deal is finalized.

Since salesmen typically earn much of their income from bonuses based on sales volume, they have little problem giving up part of their commission if selling one more car will qualify them for their monthly incentive bonus.

Don't Buy A New Car

Buying a late model pre-owned (used) car from a reputable dealer is the best way to save money. Here’s why:

* Today's cars are engineered to last much longer than they used to. Most dealers only sell pre-owned cars that meet far more rigorous standards than in years past.

* New car buyers take a huge depreciation hit for essentially driving the vehicle off the lot – 20% or more. You never get this money back.

* Lower insurance costs, particularly on collision coverage.

Avoid Trade-Ins

Another issue worthy of consideration is whether to trade in your current car. If you have the time and the means, avoid trade-ins at all costs. Better to sell your existing car individually and avoid giving the dealership more leverage/wiggle room in the overall exchange.

A clean purchase without the distraction of haggling over the "value" of your trade-in is far preferable. Sell your vehicle on Craigslist or other car trading post and walk into the dealer on your date of purchase free and clear. The salesman will have less opportunity to wear you down, and he will enjoy less maneuvering room. It reduces the angles he has to deflect your pressure tactics, which involve superior research and impeccable timing as suggested above.

Never Rush

Above all, remember to never be in a rush when buying a car. That's how car dealers get away with high mark-ups. All the blustering and negotiating in going toe-to-toe with a car salesmen can be an exercise in frustration if you haven't properly prepared.

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