POST OF THE DAY
Buying and Maintaining a Car
Re: TMV and Dealer Price

Format for Printing

Format for printing

Request Reprints

Reuse/Reprint

By BuildMWell
July 22, 2004

Posts selected for this feature rarely stand alone. They are usually a part of an ongoing thread, and are out of context when presented here. The material should be read in that light. How are these posts selected? Click here to find out and nominate a post yourself!

All I can do is to tell you how I approach a used car purchase. Let's assume that when you total up the retail price of the car in Edmonds and at NADA.Com, you arrive at a retail price of $8600. That is not what you should pay. The $10,500 price on the car is just a "starting point to get you thinking "high".

Now, look at this from the dealer's point of view. Let's assume that you do not buy that car. What is he going to do with it? He wants your money so that he can go out and buy another Ford Focus to sell. He can get all he wants at the auction at wholesale, which is almost exactly 60% of average retail. Thus, he can buy that Focus or another like it for $8600 X 0.60 = $5160. But, he would never sell it to you for that price and certify it. He has some costs to consider and obviously, you want him to make some money on the deal. So, the only question now becomes, "How much do you want him to make?"

I consider halfway between wholesale and retail to be a decent deal both ways. So, ($8600 + $5160)/2 = $6880. That is what I would be expecting to pay plus the real value of certification...say $300. So, somewhere around $7200 would be a pretty good deal for you and for the dealer. He should not really be insulted by that offer no matter how much he squeals, squirms and bellyaches when you make the offer. In fact, you could honestly be insulted that he would try to sell you a $7200 car for $10,500! Who does he think he is trying to fool? You aren't a sucker!

So, I believe that you can easily buy the car for $7200. The question still is, "How much do you want the dealer to make off of you?" This is where the game gets to be fun!

You could offer him $4100! That is $3100 under the "fair price" of $7200. When he balks...and he will since wholesale is $5160...you can tell him that you are doing to him what he was trying to do with you. He wanted $3100 too much so you want $3100 too little. In all honesty, that is what is really fair. However, I would not do that.

I would split the difference between $7200 and $4100 and offer him $5800! That is $600 above wholesale. You have now "flipped" the game on him. He is trying to get your offer up while you are forcing him to try to keep you from walking out the door. However, he now knows that you are a serious buyer...you know what you are doing because you have made him an offer that he could accept.

The rest is up to how long you want to sit there and dicker with him. You are not going to go over $7200 and everything under that figure is money in your pocket. By the way, he will probably want to "split the difference...$10,500 + $5800 = $16,300 the average is $8100. You will have him down to below the retail price before the real negotiation even starts. You can counter at $6500 and include the certification as a consolation prize. If he refuses, thank him and start to leave...I bet he will see things your way.

Have fun with this. It is your money...not his. Go into the dealership knowing what you know. Stick to your guns and negotiate...you can never be criticized for trying to save your hard earned bucks. The car is just a chunk of steel and plastic to the used car salesman...he wants your dollars more than you know. If he can "turn the car" quickly, he will have another one to turn that much quicker. He makes his money by turning over his inventory as fast as possible...not by making a killing on each sale. If he can make a real killing by finding a sucker...he just likes that even better. Don't be a sucker.

He knows what his car is worth to him...$5160. If the certification is worth $300 to him I would be surprised...thus he has to get over $5600 plus a fair profit. You decide what that is...you are in control...he is not. Do not be cocky...do not abuse your power. Just quietly make offers and listen to the salesman's spiel. He has to do it...it is how he has been taught to play the game.

Remember, there are lots of real nice Ford Focus Cars available to you. Check the Internet...I bet you can find over a hundred all over America. He knows that too.


Become a Complete Fool
Join the best community on the web! Becoming a full member of the Fool Community is easy, takes just a minute, and is very inexpensive.