This story was shared with us recently, a great example of getting the most out of your money when buying a car…
Jason M. from Florida was in the market for a new car, his 2000 Toyota Camry was nearing 200,000 miles on the odometer, and had seen its better days. Jason is a single guy, 25 years old, great credit (credit score of 755), and was looking to get the most car for his money.
Time to decide
Already having owned a Toyota Camry, he was very open to the idea of getting another. Still, he did his homework. He utilized a site called Edmunds to research the new 2010 Camry along with many of its competing models (Honda Accord, Nissan Altima, Chevrolet Malibu), eventually deciding the 2010 Toyota Camry LE was for him. He liked the reliability rating coupled with the attractive styling, resale value, and gas mileage the car had to offer.
Do the research
After deciding on the car he wanted, he proceeded to do further research into what the true market value (or TMV) was for the vehicle he chose. He found that other people were paying in the neighborhood $21,200 for this car, with a sticker price of $22,650, that’s a savings of $1,450 if he were able to successfully negotiate this deal with his local Toyota dealer.
At that point he needed to figure out what amount of money would be a fair trade-in price for his current car, since it was not a “clunker” and did not qualify for the CARS rebate system. Again he turned to Edmunds and found out that a 2000 Camry in good condition with nearly 200,000 miles was worth about $3,000 on trade. Since this car was paid off long ago he could apply this amount directly toward the price of his new car.
Off to the dealer
Having finished his research, Jason headed down to the Toyota dealer and took a red 2010 Camry LE out for a test drive (they had plenty in stock). He really liked the car, a great upgrade from the 2000 model, he thought. After the test drive and checking out all the features the car had to offer, Jason was ready to go in and “work out the numbers” with the salesman.
Now the fun begins!
Jason knew what he wanted, by doing his research beforehand. He knew his current car was worth $3,000 on trade, and others were paying around $21,200 for the exact car he was looking at buying that day. But he also knew the dealer wasn’t going to just offer that to him right away, so he had his work cut out for him.
They both walked over and sat down as the salesman’s desk, and went through the whole process of collecting his personal information, and the details on his trade-in. After one of the guys at the dealer took his car for a quick drive, they went back to “work on the numbers”.
After several minutes, the salesman came back with a piece of paper in his hand, with some things written on it, and he said “ok, so here’s what we can do”. They wanted to give him $2,200 for his trade-in with the price of the car being the full sticker price of $22,650. If he took the first thing they offered him, he would end up paying $2,250 more for his new car than he should’ve. So did he take it, NO! He knew that you never take what they give you, you do your research and know what you can get, then negotiate to achieve the deal you want.
Here’s the deal I want, take it or leave it
At that time he told the salesman exactly what he wanted, and basically said “take it or leave it”. There were plenty of other Toyota dealers around with plenty of Camry’s to choose from, if he didn’t get the deal he wanted he could’ve just gone to another dealer. He even had it written down on a piece of paper, which he pulled out of his pocket and handed to the salesman.
The salesman looked a bit befuddled, and said “I don’t know if we can do that, let me check with the sales manager”. He came back a few minutes later with some more numbers written down on the paper. Their “final” offer was to give Jason $2,500 for his trade, and discount the new car by $500. Which brings the price down to $22,150, which is still almost $1,000 more than what Jason found to be a fair price for the car.
At that time he could’ve just said, “ok we have a deal”. After all they said that was as low as they could go on the new car, and as high as they could go on the trade-in, right? Yes that is what they said, but Jason knew what he wanted and stuck to his guns. He said to the salesman “well, maybe I’ll check around and see if another dealer will give me what I want”. That’s the last thing a salesman wants to hear when he’s that close to making a sale!
Jason started to get up and head out the door, at that time the salesman quickly told him to wait, and that he needed to go back and talk to the sales manager again. Guess what? They gave him what he wanted, the new car at $21,200 and $3,000 for his trade-in. Wow, so much for their “final” offer!
“Final” is not always Final
The salesman told Jason that’s as good as they could do, not because it was true, but because most people fall for that line. Most uneducated buyers would’ve just said “ok, it’s a deal”. But not Jason, he knew better. And he saw it through to the end and got what he knew he deserved.
Do your research and save
In this case, Jason saved $2,250 ($800 more on his trade-in and $1,450 off the price of the new car) by doing his research and knowing what kind of deal he could GET, not by taking what the dealer wanted to GIVE him.
Thanks to his good credit score, he ended up obtaining a loan for the car through Toyota Financial with 0% financing for 3 years, which turned out to be a great deal for him. The savings he was able to achieve by getting the special 0% financing is out of the scope of this article, but still another great money saver, and probably a topic for another day.
Next time you are in the market to buy a new or used car, try to mimic what Jason did and you will most likely save a bundle as well.