Buying a new SUV is exciting at first. You delve into the research with tenacity, studying buying guides and manufacturer brochures. You identify the model you want; you visit the dealership, and then the realization of making a huge purchase kicks in. Instead of conforming to what the dealership wants you to pay for the model–sticker price–here are some lesser known tips you can easily employ to save money on your new SUV.
Research Market Conditions
After selecting which model you want to purchase, your next step should be to find out how much is its market value. The market value is what others in your area paid for the same vehicle. To find this information, you can use a resource like TrueCar.
With TrueCar, you enter the vehicle information, then your zip code. From there, it shows you a graph, outlining the price points of what others in your area paid for a specific model. To demonstrate, if you are shopping for a 2017 Chevrolet Equinox, the MSRP for it is $26,845. However, the TrueCar average, which is what many other buyers paid, is $24,393–based on my locale–representing a savings of $2,452. The graph breaks down into four designations for prices including exceptional, great, good, and above market. Your goal is to go into the negotiations with a price below market value, but realistic relative to what the SUV is worth.
Along with using TrueCar, shop around at other dealerships to see how much they are charging for the same model. This never hurts because if the dealership you are negotiating with learns there’s another place selling the same model for less, they might be more willing to make concessions to earn your business.
Another factor of consideration is financing. If you plan to take out a loan for the SUV, it’s ideal to research lenders and receive pre-approval offers before visiting the dealership. You can go with online lenders, your local credit union, or even use peer-to-peer lending. The goal is to shop around, receive a few offers then take these with you when you go to the dealership. If the financing team at the dealership offers you a higher interest rate on a loan through them, you can counter with the offers presented by other lenders.
Overall, think of research this way: the more information you gather on pricing, incentives, and financing, the more effectively you can negotiate with dealers.
Set the Tone
When you arrive at the dealership, it’s important to convey respect and a willingness to listen. At the same time, you don’t want the dealership to dominate the conversation or dictate the topic; a common tactic dealers like to use is to find out how much you want to pay monthly for a new vehicle. This is prohibitive to you as the buyer because it fails to disclose the price. If this happens, all you have to do is notify the salesperson you have a pre-approved loan for the SUV you are considering. This should alter the conversation away from monthly payments, as the dealer knows you are focused on buying in cash since you won’t be financing in-house.
Present the First Offer
As stated above, your first offer should be realistic. To illustrate, if you are wanting an SUV that costs $25,000, asking $18,000 for it makes the salesperson think you are not serious. Alternatively, you don’t want to set the bar too high. If you ask for $500 off the sticker price and receive it, great! You saved $500. However, the dealer might have had more wiggle room, so you talked yourself out of a thousand–or even possibly a few thousand–dollars of savings.
Therefore, you want to find a sweet spot. Learn what others in the area pay for the same model and set that as your ceiling. Using the example above, if the Chevrolet Equinox retails for $26,845, and the average price people are paying in your area is $24,393, that means there are buyers paying less than the average price for the SUV. With this information, you can float a reasonable offer out there–in this example, you can ask for $23,000.
Once you make the initial offer, gauge how the salesperson reacts to it. If they find the offer unappealing, they might roll their eyes, drop their shoulders or just outright say it. However, if they find the offer fair, they will ask to see the manager. In this case, don’t celebrate yet. It likely means you are about to receive a counter offer.
Study the Counter Offer
If the dealership doesn’t take your first offer, they will respond with a counter offer. This is beneficial in that it tells you where their thinking is on the price of the SUV. If their offer is much higher than the market value, it’s a firm indication they won’t negotiate fairly, promoting you to find another dealer. However, if they do offer a price close to the market value, then it’s a good sign.
Find the Common Ground
In this event, you can make your counter offer. It’s important to refrain from deviating too far from your initial offer, that way you create as much wiggle room as you can, and potentially save more money. A good rule of thumb, according to NerdWallet, is to increase your offer price in smaller increments (like $500) until both parties reach an agreement. Even when you both reach an agreement, it isn’t final until the written contract is signed. When you go to close your documents, it’s important to review them to ensure you are paying for the price you agreed on during the negotiation and there’s no hidden bogus fees they’ve tacked on hoping that you wouldn’t notice.
Ultimately, negotiation starts with research and knowledge. The more information you gather, the more confident you will be when you speak with a salesperson on how much you should pay for your next SUV. While the process might seem stressful initially, keep in mind you can save up to thousands of dollars, so it is well worth the extra time and effort invested.