Know the value of the car:
In all honesty, dealerships try to rip off every customer that walks in to buy a car. After all, they are a business and their only aim is to maximize profits at the end of the day. But if one has the proper knowledge of the actual market value of the car, this can prove to be very helpful in striking a good deal. Therefore, before walking into a dealership, it is a smart move to conduct thorough research about the car’s market value and any discounts that the particular dealership or car manufacturer is providing.
Smart Bargaining:
As previously mentioned, bargaining skills are essential while purchasing a new car. Dealership employees are professionals who deal with hundreds of customers daily and therefore, they are used to the basic negotiation tactics. Having the proper knowledge about the car, its features, market value, and other necessary information is imperative as it gives the dealership the impression that you are a serious buyer who has done his/her homework and forces the dealership to get into a negotiation with you where there is a higher chance of the buyer getting the car on their preferred terms.
Understanding the different prices and applicable charges:
Most people get confused between the different terms that dealership employees use such as Ex-showroom prices, Extended warranty services, On-Road prices, and so on. Having the proper understanding of all of these terms gives the buyer the upper hand because these are the areas where dealerships keep their profit margins the highest. Some of the important terms to know are:
Ex-showroom prices:
Ex-showroom price is the actual cost of the car from the factory and this price includes all taxes and overhead charges such as transportation charges. Dealerships have different profit margins on these prices and they usually vary between 3-6%. The profit margin on each car is different depending on the model, make, variant, and other factors.
Regional Transport Office (RTO) charges:
Anybody who has bought a car previously would know that a road tax and registration fee are charged on every motor vehicle. The RTO charges are non-negotiable and there are no profit margins for dealerships. While one can pay these charges themselves by visiting the transport office, most dealerships offer this service which makes the process less hectic. Just remember to collect all relevant documents from the dealership if you opt for their services regarding the registration and road tax payments.
Insurance:
Having insurance for your car is compulsory and usually, a 3-year insurance plan from a third party is purchased along with a 1-year ‘Own Damage’ cover. Dealers have about a 1% profit margin from the insurance sales but it is possible to negotiate the charges with the dealer and lower them.
On-road Price:
The on-road price is the total sum of all the aforementioned charges. This includes the price of the car, insurance, registration and other taxes, extended warranties (if any), and any other additional costs that may have been applied. The price you pay to the dealer before they hand over your new car is known as the On-road price.
Conclusion:
Buying a new car is one of the most exciting times of one’s life and everyone wants to get the best deal on their favorite new car. Therefore, by following the abovementioned tips, one can drive down the original asking price of the car quite a bit and drive off with style and some big savings on your new shiny purchase. Just remember to be smart about negotiation and do your due diligence before walking into a showroom. Knowledge is power, and the knowledge about your desired car is your greatest weapon that will enable you to negotiate the price to fit your budget.
Do dealerships get a cut if I buy a car from a bank?
Usually, dealerships get 1% of the total loan amount as their margin when one buys a car through bank financing.
What is the best negotiation tactic for a buyer?
The best tactic is the ‘Take it or leave it deal. If you’re closing the deal on full cash payment in one go, chances are that the dealership will give you the car at your quoted price because they’re getting the full sum of money altogether.
