negotiation on US cars

[The jiffle king]

I'm about to buy my first car in the US from a dealer and wondered if there was any guidance on whether/how much room for movement there is on price? I know each car is different and you should pay what you think it's worth, but this is on for about $23k, so looking for some steer if going in at $21k is seen as acceptable.
Thanks

[unrepentant]

How long is a piece of string?

[Matt Harper]

Would perhaps be more helpful if you provided some context (vehicle type, condition, color, availability). So, if it's high miles, unpopular color/trim that's been on the lot for weeks on end, it might be a different discussion to a low miles, high demand car that isn't even in his inventory yet.

As I'm sure is the case in UK too, many US dealers focus specifically on shifting vehicles they have in stock and concentrate on cost to change and/or what the buyer can stomach in monthly payments. The strategy is typically to get the customer to reveal "their number" first. "What does it need to be for you to drive this car out of here right now?"

I try to avoid that disclosure. My negotiation strategy is to ask, "What is the very best price you can offer me for my trade and what is the absolute minimum you will accept for your car - I'm not going to play any back and forth on this, so please give me your best numbers now. If they work for me, you have a deal - if not, I'll try elsewhere". In my experience, some dealers won't play it my way - and that's fine - but I always walk in those scenarios.

[belleair302]

I bought a cheapish runabout last year, wasn't much room to haggle and found the dealers were pricing them at a pretty low level anyway to get them off the lots here in Tampa Bay. I ended up paying about $400 off the sticker price and felt that the car was worth paying full price on. Buying new I would hustle more but used there was no real room to go much lower....I needed the car and it had great spec and mileage.

[pasogrande]

Have you tried TrueCar.com? They advertize pretty heavily here. I have been to their website, but not "used" them, so really cannot comment.

Wilf.

[unrepentant]

pasogrande said:

Have you tried TrueCar.com? They advertize pretty heavily here. I have been to their website, but not "used" them, so really cannot comment.

Wilf.

Their prices are stupid and they are actually being sued by a number of dealer groups.

I had a customer tell me last month that True Car said that the new $61k XF they wanted to lease from me should be $56k based on what other people in our state paid. We are the only dealer in the state and have not discounted a new XF more than $1500 this year (actually only have 2 left) so their advice was complete bks.

Here's the deal OP. What's the car worth that you want to buy? Is it good value at the price the dealer is asking? Can you afford it and is it the car you want to buy? Don't confuse price and value. If the answers to those questions are yes make an offer a little below what you want to pay and you'll probably end up with a deal that makes everyone happy and you'll have a new car.

Don't do what a friend of mine did. She decided she wanted a Toyota Highlander and asked for advice on Facebook. She was given a lot of bad advice such as "don't go in to the dealership until you have the price agreed etc.." Anyway she marched into the Toyota dealer and told the salesman which car she wanted. She also named a (silly) price and told him that she wouldn't pay a "cent more" (more bad advice from a friend on the internet"). The salesman asked her to wait while he went and talked to his manager. He then came back and said "sorry, we can't help you" and showed her the door. She was shocked and still was a month later when she told me this story at a dinner party. I told her that, whilst I would have tried at least once to move her to sensible ground I didn't blame the salesman or his manager. She now has a Nissan Murano that she doesn't like but which she paid the asking price for because it was a "great deal"..........

[LarryLamb]

I've only bought 2 cars in the US. The first was a Volvo up for $8995. Problem is us Brits, is you then have to add about 10% in Sales tax and registration to the DMV, which I find hard to stomach. With the Volvo, I offered full price they were asking, but 'out the door' so it would inlcude tax, registration, etc. Worked for me and I didn't have to pay anything, dealer sorted it all.

Second was a Mazda MX-5 a few months back. It was up for $12000 so I tried the same tactic. Dealer came back with his best price which was $12000 + tax and registration! Not a single cent off. I walked away and he let me. Bought privately in the end and had to stomach the $1500 or so to DMV

I guess this gets tricker the higher the value of the car as 10% becomes larger...

Puts you off buying and selling too often as you can't recover that cost.

[unrepentant]

LarryLamb said:

I've only bought 2 cars in the US. The first was a Volvo up for $8995. Problem is us Brits, is you then have to add about 10% in Sales tax and registration to the DMV, which I find hard to stomach. With the Volvo, I offered full price they were asking, but 'out the door' so it would inlcude tax, registration, etc. Worked for me and I didn't have to pay anything, dealer sorted it all.

Second was a Mazda MX-5 a few months back. It was up for $12000 so I tried the same tactic. Dealer came back with his best price which was $12000 + tax and registration! Not a single cent off. I walked away and he let me. Bought privately in the end and had to stomach the $1500 or so to DMV

I guess this gets tricker the higher the value of the car as 10% becomes larger...

Puts you off buying and selling too often as you can't recover that cost.

Not true. You get a tax credit every time you trade, as long as you do trade.

So if you buy a car for $20k and trade in a car for $10k you only pay tax on $10k. You also get a credit from the BMV for the tags you have paid for when you transfer the plate to a new car.

Sales tax is a hell of a lot less than the VAT that is included in the price of a car in the UK.

[LarryLamb]

unrepentant said:

LarryLamb said:

I've only bought 2 cars in the US. The first was a Volvo up for $8995. Problem is us Brits, is you then have to add about 10% in Sales tax and registration to the DMV, which I find hard to stomach. With the Volvo, I offered full price they were asking, but 'out the door' so it would inlcude tax, registration, etc. Worked for me and I didn't have to pay anything, dealer sorted it all.

Second was a Mazda MX-5 a few months back. It was up for $12000 so I tried the same tactic. Dealer came back with his best price which was $12000 + tax and registration! Not a single cent off. I walked away and he let me. Bought privately in the end and had to stomach the $1500 or so to DMV

I guess this gets tricker the higher the value of the car as 10% becomes larger...

Puts you off buying and selling too often as you can't recover that cost.

Not true. You get a tax credit every time you trade, as long as you do trade.

So if you buy a car for $20k and trade in a car for $10k you only pay tax on $10k. You also get a credit from the BMV for the tags you have paid for when you transfer the plate to a new car.

Sales tax is a hell of a lot less than the VAT that is included in the price of a car in the UK.

Ah, didn't realise that as I've only ever bought, not sold or traded in the US. It is true that sales tax is a lot cheaper than the 20% VAT in the UK,but it's included in the price of a new car so easy to 'forget' about it. The bad part is paying tax every time you buy a car, in the UK, there is no tax on used cars

[unrepentant]

LarryLamb said:

Ah, didn't realise that as I've only ever bought, not sold or traded in the US. It is true that sales tax is a lot cheaper than the 20% VAT in the UK,but it's included in the price of a new car so easy to 'forget' about it. The bad part is paying tax every time you buy a car, in the UK, there is no tax on used cars

Yes there is! Used car dealers in the UK operate under the VAT margin scheme. They pay VAT on their margin and obviously that's included in the price. Worse still, they don't get a deduction for repairs so if they buy for 5,000, spend 5,000 on repairs and sell for 15,000 they have to pay VAT on 10,000! The difference is that in the USA the sales tax is transparent and can actually be claimed against local income tax.

[LarryLamb]

unrepentant said:

LarryLamb said:

Ah, didn't realise that as I've only ever bought, not sold or traded in the US. It is true that sales tax is a lot cheaper than the 20% VAT in the UK,but it's included in the price of a new car so easy to 'forget' about it. The bad part is paying tax every time you buy a car, in the UK, there is no tax on used cars

Yes there is! Used car dealers in the UK operate under the VAT margin scheme. They pay VAT on their margin and obviously that's included in the price. Worse still, they don't get a deduction for repairs so if they buy for 5,000, spend 5,000 on repairs and sell for 15,000 they have to pay VAT on 10,000! The difference is that in the USA the sales tax is transparent and can actually be claimed against local income tax.

Well as a business, yes, likely they pay VAT as any other business would, but the buyer of the used car does not. And if you purchase privately, then there is no tax to pay. I'm specifically referring to the BUYER of the car, like the OP, in the UK he would have no tax to pay on a used car.

[unrepentant]

LarryLamb said:

unrepentant said:

LarryLamb said:

Ah, didn't realise that as I've only ever bought, not sold or traded in the US. It is true that sales tax is a lot cheaper than the 20% VAT in the UK,but it's included in the price of a new car so easy to 'forget' about it. The bad part is paying tax every time you buy a car, in the UK, there is no tax on used cars

Yes there is! Used car dealers in the UK operate under the VAT margin scheme. They pay VAT on their margin and obviously that's included in the price. Worse still, they don't get a deduction for repairs so if they buy for 5,000, spend 5,000 on repairs and sell for 15,000 they have to pay VAT on 10,000! The difference is that in the USA the sales tax is transparent and can actually be claimed against local income tax.

Well as a business, yes, likely they pay VAT as any other business would, but the buyer of the used car does not. And if you purchase privately, then there is no tax to pay. I'm specifically referring to the BUYER of the car, like the OP, in the UK he would have no tax to pay on a used car.

You're missing the point. If you buy a used car from a dealer in the UK you, the BUYER, are paying sales tax in the form of VAT but it's included in the price so you don't see it. In the US it's visible. If you buy privately you pay no sales tax in the UK and you pay no sales tax in the USA at the point of sale. It's up to you to declare the sale price to the BMV when you title the car and a lot of people lie..............

[dvs_dave]

Indeed. Unlike the UK, buying privately in the U.S. it's up to the new owner to declare the price paid when registering at the DMV and paying the sales tax accordingly. Lots of people are dishonest with this, but piss around with the U.S. tax authorities at your peril...

In terms of used car values I've always found www.cargurus.com a good resource for fairly gauging the market.