Categories
learning

How to buy a used car for way below Kelly Blue Book price, part 2

In Part 1 of this series I shared some general used car buying tips that I gleaned from my own experience and reading a few articles on the topic. In this post, I get specific about how I used those general tips to get a great deal on my used minivan.

Preface: I spent several weeks looking for vehicles on AutoTrader and researching dealers on Yelp. I highly suggest you do the same before attempting to buy a car.

Goal: To get a high quality minivan from a reputable dealer at a great price.

How we bought a minivan for thousands under Kelly Blue Book

  1. I looked at tons of minivans for several weeks on AutoTrader and in person. If used minivans were porn I would have had a major problem… that’s how many I looked at. I drove around the area so many times I’m willing to bet that at least one dead beat dealer thought I was a private investigator.
  2. I walked off 20-30 lots simply because I didn’t like the salesperson’s attitude. You’d be surprised how many dealers allow their sales staff to be rude, as if you’re going to bully someone into buying something they don’t want?
  3. I took my eight year old with me to buy what I wantedPaul was awesome. He ran recon with me on every car on the lot. For the price of a Coke and some Starbursts he was a valuable asset. Plus, who doesn’t love jumping in and out of vans you’re not going to buy to find what’s wrong with them?
  4. We waited until the end of the month. We dangled that end-of-the-month carrot in front of the sales guys face mercilessly. We weren’t even out on the street on the test drive before I brought it up. As soon as he told me he was short a few sales I dropped the price in my head another $1000.
  5. I did the math while I waited. There’s a lot of standing around when dealing with a dealer. In that time, I looked up the van with all of the exact specs and mileage on the KBB app. Their list price was right at KBB’s price. I knew from my research that I could go at least 20% off of their asking price and they’d still make money. So I put that number in my head. Between Evernote, my iPhone’s calculator, the KBB app, and the AutoTrader app… I had all the information I’d need.
  6. When we got back to the dealership I asked the salesperson to go ask his manager for the absolute lowest offer they’d accept that day. He came back with a number about 10% lower than the sticker price and started to tell me about a few details. Basically, his offer was just enough to get all of their “out the door” fees back to the asking price. He was about $2000 off the price in my head, but I didn’t let him know.
  7. I looked at the CarFax report. I made a mountain out of a couple molehills. But I never responded to his offer directly, just made it clear it wasn’t what I was looking for.
  8. Then I made Mt. Everest out of a speed bump. He said that his dealership required he run a credit check, even though I wasn’t financing through them. (I paid cash) I decided this was going to be a sticking point and used it as a distraction from the numbers game– a way for me to take the power position AND get the sale price I had in my head. The salesperson told me it was a state law that they run a credit check. (It’s not, that’s ludicrous. The form next to the application was a standard disclosure for allowing them to use/sell my credit information to marketing companies.) So I told him that this was going to be a deal breaker, it wasn’t something I was going to do and there was no room for negotiation. He came back with the manager who told me the same thing.
  9. And then I walked away. Literally, Paul and I stood up and thanked them for their time. We shook hands and wished them well. Then we walked out the front door and went to our car. I told Paul that I just caught them in a lie and now I’d use it to get what I wanted… a better price. We sat in the car [I never park in their parking lots, always on the street] and waited a few minutes. Then, the salesperson came out of the building, got in the minivan, and started to drive it from the new car lot to where it was on the used lot.
  10. The buddy move. The salesperson parked the car, locked it up, and started to walk back to the office. I caught him about 50 feet from the van and said, “Hey, what was that all about?” He softened right up, clearly annoyed he’d just lost a sale. “Look, I’m not going to do the credit thing, but that doesn’t mean we can’t do this deal. It’s not a state law but probably a company policy. I know you want to do this deal and I want to see you get paid for it. If you can go print out the policy for me to read and convince your manager to sell me the car at ____, a total out-the-door price, we will have a deal.” He had worked at other dealers, knew it was just a policy, and agreed to make that happen. In other words, he took the bait.
  11. Read the policy. I’m not saying car salesmen aren’t smart, but they clearly aren’t familiar with policy language. When the salesperson showed me the policy in his handbook it said in 3 places that the general manager could authorize them to bypass the credit application for cash sales. So I told the manager, “It’s up to you. If you want to move this car off your inventory and you want to see your guy get a sale today, this is the phone call you’ll need to make. But if you can’t make this happen I’m gone. The exact same van is on lots at ____ and ____. Somebody is going to sell me this van in the next 2 days, I’d like it to be you.” This was all totally true. I was going to walk if I couldn’t get him to budge on this issue. And those other lots really did have the same van. I knew I had them at this point because the salesperson was standing right there. I used the buddy move to put the manager in a position where he had to make the deal happen. If he didn’t make it happen the salesperson had his boss to blame, not me. Cute, eh?
  12. No surprise. Three minutes later he comes back and tells me that I don’t need to do the credit check, but will need to bring in more ID to satisfy a state law that forces them to verify my identity.
  13. Closing time. I looked at the sales guy, “OK, so you told him the price and everything? We’re good now?” He looked at me in terror. They were on the ropes at this point– time for the knockout. “No, I didn’t get a chance to do that yet…” “I told ___ that if we could take care of the credit check thing and you’d do an out-the-door price of ____ we’d have a deal. Will you take that?” [I lowered it another $200, oops. :)] He stuck out his hand and shook on it.
  14. Paperwork, schmaperwork. I spent the next hour doing paperwork with their secretary. Wam, bam, thank you ma’am.
  15. The net result. I got the #2 choice minivan I wanted for my family. The dealer moved a car that’d been on the lot for 3 months. The salesperson got a sale and will get paid Tuesday. My sale price was 22% below Kelly Blue Book for the exact spec/miles. My sale price was 49% lower than the asking price on the same minivan in 2 locations within 2 miles. My eight year old son learned the power of negotiation.
Categories
learning

How to buy a used car for way below Kelly Blue Book, Part 1

After a couple months of research we were finally able to purchase a great used minivan while getting a good deal from a reputable dealer.

General used car buying advice

Preface — Download the free Kelly Blue Book app for your phone. In order to beat the dealer in real time, you’ll want to have access to the data when you are shopping.

Goal— This plan is loading you up on leverage so that you can be in the offensive position when it comes down to negotiating price.

  1. Start with a class, not a specific make/model/year. In our case, we were looking for something that seated 7 people that was 3-7 years old. As you get deeper in the process it’ll help to know the basics about your class. Which car is most desirable in that class? Which is least desirable? What are the best features in that class for those years? On and on.
  2. Use AutoTrader.com and Yelp. Once you have #1 figured out, create two searches on AutoTrader and set them up to send you a daily email. Do one search for the cars you are most interested in within 25 miles. Do another search for the entire class within 75-100 miles. This will notify you when something you really like is close, so you can go over and take a look. But it’ll also give you an idea of what cars are going for in your class within your area. (Lots of dealers have several locations and move cars around so their lots look fresh.) Save the ones you like the most. This will make it simple to go back and compare, plus if you use it long enough you’ll see which cars in your class move the fastest and at what price. For Yelp, get to know the dealers reputation in your community before you see their striped tie on the lot… just type in the name of your city and “used car” and you’ll learn all sorts of things about the dealers who look awesome on AutoTrader.
  3. Avoid tent sales, sales events, and anything attached to the name “Giant” or “Super.” If you don’t believe me, leave your checkbook at home and go visit one. It’s every slimy sales guy/tactic at one place trying to out-sell the other slimy guys. From a strategy perspective this is how dealers move inventory quickly at higher-than-normal prices OR ridiculous financing. These events put the seller in the power position and you, the buyer, in the weaker position. Have you ever gotten a good deal at a carnival? I didn’t think so. 
  4. Sunday and after hours are your friend. In our area (San Diego, CA) most of the lots are closed on Sunday. And most lots are closed by 6 PM during the week. If you want to get a closer look at a car you might be interested and want to avoid the people in ties this is the best time to do it. Everything looks nice on AutoTrader. Just do a few recon missions to see who carries what and at what quality. Most smaller lots and a lot of big name dealers buys their cars at auction. Then they spend $1000 on them to spiffy them up at a nice profit. But a few of the name brand dealers keep the best trade-ins and then fill their lots with some auction stuff. Get a close-up look and you’ll spot the winners from losers right away.
  5. Keep the deal simple. You won’t be able to do the math in your head if you start talking about financing, trade-in value, etc. You only want to talk about “out the door” price. (Including all their fees, sales tax, etc.) So take care of your financing ahead of time, sell your car on Craigslist– just do whatever you need to do in order to simplify the deal to an “out the door” price.
  6. Buy at the end of the month. Salesperson paychecks and quotas are measured on the last day of the month. If you are walking onto a car lot knowing you can buy when you find the right car, knowing what you can spend, and are willing to negotiate, and willing to wait another few weeks if you need to– you have about as much leverage as you’re going to get in the last few days of the month.
  7. Don’t go alone. Typically, dealerships assign one salesperson to each buyer on the lot. So having two of you and one of them is a big, tactical advantage. When the salesperson starts showing you cars the second person can open up different doors and see the price or give you a quick opinion. I took my 8 year old son and he was perfect for this job. He and I worked out little looks and gestures for when it was time to move.
  8. Test drives are free. You ultimately won’t know what you like until you get behind the wheel. If a salesperson is douchie about it just walk off the lot. (Most require your drivers license. If they ask to run a credit check in order to test drive, it’s time to bounce.) It’s not like they really think you are going to buy a car without driving it. Test out if you like where the controls are, if things move like they are supposed to, if everything works, etc. Any reputable dealer is also fine with you taking the car to a mechanic to get it looked at. (Usually this is under $50)
  9. Don’t fall in love. If you’ve done your research you’ll know that your #1 – #5 choices are likely available at various lots. Until you sign on the dotted line you need to be prepared to walk away. In fact, walking away is your best leverage point. You have everything the salesperson wants, your money. And only you can decide when the sale makes sense.
  10. Character matters. Be willing to walk off a lot and miss out on your #1 choice if the dealership is shady. Even at the best dealerships, service is going to go down drastically from the moment you buy the car. So if you feel weird about the guy in the tie talking to you– know that he’s the nicest guy at the shop. If you don’t like him you’re really not going to like the service department or anyone else. There are thousands of dealers and millions of used cars available. Just trust me, if you feel weird… walk away.

In Part 2 of this series I’ll share our actual experience with getting a deal 22% below Kelly Blue Book price and nearly 50% cheaper than similar dealer list price for the exact same used minivan.