Car Rebates

 

Make sure you keep the rebate and/or incentive – make that part of your offer. For example, “Here’s my offer: $200 over invoice and I keep all rebates and incentives.”
Phrasing the offer
When you make your offer, you can do it as simply as the offer above: Here’s my offer or … here’s the deal. It doesn’t matter if the salesperson tries to dissuade you. Be firm. Insist he take your offer to his sales manager. Some customers have even walked with the salesman to the sales manager’s office for emphasis that they want to buy a car TODAY.
I will usually make my first offer somewhere between invoice to $150 over invoice (depending on what I learned during my research) knowing I am willing to go up to $500 over invoice. Despite having been a vehicle salesperson, I don’t enjoy the game when I’m on the buying end – so I keep it short … not more than a couple trips by the salesman to the manager’s office. I know that more time can mean more money out of my pocket. They know I mean business – meaning they know I plan to buy a car now  –  if the deal suits me.
If your first offer is your only offer (and it’s a fair offer) and you will not negotiate further, tell the salesperson that when you make the offer: “I have one offer to make. If you accept it, I buy the car.” If they counter anyway, walk away. If they come chasing you down on your way to the parking lot to tell you they’ve decided to accept your offer (or they might wait to phone you at home), you’ve still won.
Remember you don’t have to buy from the first dealership you go to. If they aren’t willing to make the deal you want, move on to one that will.
After the offer is accepted
Once the dealer has accepted your offer, you are entitled to look at the invoice, which will then be pulled from the dealer’s files for you to see.
How can I be sure it’s the real invoice?
You don’t want a copy of the invoice to look at; you want the real thing, which will have triplicate carbons attached and have the manufacturer’s name and address imprinted at the top.
Now that you see the buying process can be straight forward without a lot of game playing, let’s get down to the work that must be done before you hit the dealer’s lot.
Some buyers know exactly what they want with little to no research needed – they like their neighbor’s Mazda 6 or they’ve always been a Ford truck man and always will be. Maybe they’ve seen a car advertised on TV or read good reviews about a certain car.
I seldom do more than 30 minutes research before I buy and that’s mostly to find out manufacturer incentives and  loan rates – because I’m stuck on a certain car, and as long as it keeps giving me low maintenance costs for the 160,000 to 200,000 miles I own it (I’m on my 4th one now), I won’t be changing. If I do decide to switch, I’ll put several hours into researching the next brand and model.
If you aren’t sure what you want – begin by reading and researching. Consumer Reports, Edmunds, car magazines on the newsstand, newspaper and TV ads are good places to begin. Learn what cars are in demand but short supply, what cars are overproduced and not moving, what cars hold their value, which cars have better safety ratings. Try to stay away from cars in high demand and short supply as you can buy them only at a premium price. You can get free online price quotes from dealers in your area to make comparisons.
Test drive cars you are interested in. I like to test how the car drives in town and at highway speeds, acceleration, in traffic, on steep hills, braking, emergency stops, ease of parking, comfort of the ride, noise levels, and power. Also check out gauges and what they tell you, seat and mirror adjustments, control devices, trunk size. Write down the information on the window sticker (including the VIN #) so later you can get the invoice price off the Internet.
When you test drive, even though you are up front about not buying today, the sales department will not want to let you get away. If the salesman you are talking to can’t get you into the sales room, he will try to find a way to get another salesman involved. That’s the “turn them over” tactic, and some customers have gone through an additional 2 or 3 salespeople before escaping. Their motto is: Don’t let the customer out if he is still talking. So get out quickly because you aren’t interested in buying a car today.
Talk to owners of the cars that interest you.
What do they like about their car?
Dislike about their car?
Where did they buy their car?
Were they treated well by the dealership?
Where do they get their car serviced? If not at the dealership where they purchased, why not?
What repairs have they had to do?
Would they buy the same vehicle again?
While you can buy your car at one dealership but have it serviced at another (a warranty is a warranty), if the service department has to choose whether to fix your car or the car that was purchased there … well, you know it won’t be yours. I would prefer to buy and have my vehicle serviced at the same location.
A good service department can save you countless hours of time and frustration. I learned this the hard way many years ago when I didn’t check out the service department before buying. They could not manage to get a 10 minutes job completed after leaving my car all day on 3 different occasions, and that routine was repeated with every service request I made. It wasn’t until after I wrote the Better Business Bureau, the manufacturer and my congressman with copies to the dealership that I succeeded in getting even sub-par service.
How do you learn about the service department? Just step into the waiting room and ask the car owners about their service experience. They will be happy to tell you whether it’s been good or bad and whether the service people are courteous. It’s also a good way to learn more about the cars that interest you.
Did you know that nearly half of a dealership’s money comes from the service and parts departments? Providing you plan to get your car serviced where you buy it, you can let that be known during your buying process. An at-invoice deal is more attractive if you will be using their service department.
It costs money to keep a car on the lot. The manufacturer will build perhaps 6 months of carrying charges and advertising fees into the invoice. (It’s called Holdback.) After that the dealer starts paying out of pocket. So the car that has been sitting on the lot 6 months may be one the dealer is anxious to sell. On the other hand, what if the car has just rolled off the delivery truck, and you want to buy it? The dealer has not had to finance the car and can profit by not having to use the holdback in the invoice. Technically holdbacks belong to the dealer, but some dealers are willing to give up part of that money to make a deal, which could enable you to buy a car at invoice or even under invoice.
What about a car that has been sitting on the lot 18 months to 2 years? The dealer is certainly anxious to get rid of it, but the manufacturer is no longer offering sales incentives or rebates to move previous year’s models. They will have to sell at a deep loss to get rid of it or find a rookie buyer. Generally, stay away from these because it is difficult to make a good buy, plus the car already has deep depreciation since it is one to two model years old. A car lose 20-30% of its value when you drive it off the lot! Yet – if this car has been rated excellent for maintenance and safety, you like the way it looks and drives, and you plan to make your last drive to the junkyard – then investigate buying it for thousands of dollars under invoice. I have seen buyers do just that. The dealer has been too proud to sell the car at a huge loss, but at the point it has set there for 2 years and they are still financing it, they may bite the bullet and take the loss.
The car I am driving now I bought not only at the end of the model year, but that model was being phased out and had $3000 in rebates. I preferred that model to the replacement model coming out, and I always plan to drive my new car to the grave – it’s or mine, whichever comes first! – so I was very happy with my purchase. However, I note that my car does not hold its trade-in value because it is a phased out model – but I will not be trading it, so that doesn’t matter to me.
How do I know the invoice price before I make my offer?
Thanks to the Internet and car magazines it is easy to find invoice prices. But I prefer a report available from Consumer Reports for $14. Consumer Report’s information is very complete and accurate, but the additional information that makes them worth the money is they publish all the incentives available on the car – including the incentives you wouldn’t usually know about – like the under the table dealer incentives. Their report – like all reports – may not match the real invoice to the dollar, but it will be very close to the one the dealer will pull from his file.
To see what Consumer Report’s information service offers, visit their new and used car service page.
Carry your printouts with you to the dealer. First, they’ll know you’ve done your homework so probably won’t be an easy target. Second, you can refer to your printouts as you go through the buying process; if the dealer tries to tack on other costs, you can refer back to your printout. Any costs that aren’t on the manufacturer’s invoice can be refused or negotiated.
A free site you can check is Edmund’s. One interesting feature they have: they show the average cost consumers are paying over invoice for the car. (Remember: that’s not the amount you want to pay! You want to pay less.) You may find you are eligible for an incentive that the dealer isn’t advertising. For example, one manufacturer offers a $500 cash bonus to college students and recent graduates, a $500 cash bonus to active military personnel, and a $500 cash bonus to members of the American Quarter Horse Association. (Dealer participation may vary.) Another nice feature on this site let you look at reviews and specs on the car.
Remember the great minivan buy my daughter made? The offer that was accepted was $200 over invoice (her one and only offer), but then she discovered her husband was eligible for a $500 manufacturer incentive for having just finished his master’s degree. That brought their price to $300 under invoice. The salesman happened to think to ask. Better to know going in what those incentives are – your salesperson might not ask if you are a member of the American Quarter Horse Association!
Markup trend is changing
In the last couple of years, there has been a trend for some manufacturers to put less markup on their cars – in the range of $1500 to $3000 on cars priced under $25,000…as you will see reflected in current dealer invoices compared to MSRP. I also see a trend for more money going to the dealer as holdbacks and incentives from the manufacturer. When you see large holdbacks and dealer incentives on your report, you should not hesitate to make an “at invoice” offer – or even less – and set your final price at $200 to $250 over invoice instead of $500 over invoice. In addition, remember to keep all consumer rebates and incentives for yourself. Those rebates and incentives can amount to thousands of dollars and bring your true cost of purchase considerably below invoice.
Contrast buying from the invoice price up with the salesman’s technique of: “How much can you afford for a monthly payment?” and “What kind of down payment were you planning to make?” Never, never give away your financial information since you don’t plan to negotiate from the top down anyway. Just say you don’t care to talk about that until after you’ve finalized the price of the car.
When you deal from the bottom up, you eliminate all the ploys the salesman uses to get you to fall in love with the car and buy it at any price, like the puppy dog sale where the customer is encouraged to take it home and try it out in his driveway – where all the neighbors can admire it and he can fall in love with it. Or the “make a deposit and we will hold it for you” – like it’s the last car in the world! (Have fun getting your deposit back without buying the car.)
Dealer Rip-offs (whoops! I mean add-ons)
Take a careful look at that price sticker in the car window. Are there additional charges that have been added by the dealer? Some after-market possibilities are: paint protector, pin striping, security system, upgraded wheels, stereo system, window tinting, premium floor mats, and fabric protector. Do you want these items? Are you willing to pay the price charged? Is it in line with what after market companies would charge?
Some dealers may mark up the add-ons exorbitantly. For example, a $100 security system may be marked up to $600, or a few dollars of pin striping might be $150. (I have taken a roll of pin striping tape out and added it in 15 minutes to a customer’s car.) Call around to after-market providers and determine the true cost of these add-ons; then you can make a reasonable addition in your offer to cover them (providing you want them). If you don’t want these add-ons, ask to see the same vehicle without them. You might be better off to stay clear of dealers who make a practice of heavily marked up add-ons. Some dealers are finding this a crafty way to increase profits. Clearly it you pay $700 for an after-market item that would cost $200 somewhere else, you’ve given $500 to the dealer.