Following a read of Royce’s guide for negotiating with car salespersons, as mentioned in the first post, I did some research and test drives to determinemy first choice for a car. That turned out to be a Toyota Corolla.
It’s fuel economy is one of the best, so money is to be saved there — especially if the price of gas is going back up and staying high (as seems to be the case). It’s also known for being a reliable vehicle that holds its resale value well. All this at a reasonable price, whichseems to make it a good value for someone who just wants to get from Point A to Point B.
The trigger for acting at this time was the car industrys obvious desire to jumpstart sales during a recessionary time and, in particular, a July promotion from Toyota Canada featuring 0% financing on selected models.
Just so I wasnt walking into the dealership blind (and to avoid getting bogged down in minutiae), I used the Build and Price toolon Toyota Canadas website to price a model with the desired options and accessories. The incidentals of freight, delivery, excise taxes, fuel credit, and GST/PST were also shown. In addition, I used the online tool for getting pre-approved for credit.
The specified model was the 2010 Toyota Corolla CE with automatic transmission and air conditioning. The MSRP came out to $22,031.05 (taxes included). With 0% financing over three years, the monthly payments would be $611. Next step was to talk to some sales reps and see how much of a discount was possible.
Instead of negotiating down from the MSRP, Royce recommends negotiating up from the dealers invoice price. So I did a bit of asking around and was told the dealers margin on the model was about $1,300 (I dont know for sure if this was true, but thats what I went on). Thus, if I allowed the dealer to keep up to $500 of the margin, that meant trying to get a discount of $800 from the MRSP.
As Royce also recommends, I decided not to trade in my existing car. Negotiating the price of both the new car and trade-in can complicate things and gives more of an edge to the dealer. Besides, you can usually get a better price for your existing car through a private sale.
To be continued ….