Thanksgiving is almost upon us, and now is the time…
An old friend from college recently came to me in a hurry for car-buying advice. His wife unfortunately totaled her Nissan Sentra. (Thankfully, she was not harmed in the accident.) They were aiming to update her wheels in another year or two after they both complete their graduate degrees, but good ole’ Murphy came along and ruined it for them. The insurance company gave them a few thousand dollars for the vehicle. After combining that money with some savings to buy her another, newer used car their budget is $10,000.
My friend asked me, “What can I buy for that?” I recommended the Toyota Corolla or Honda Civic because he could buy a model in the early- to mid-2000’s and still get a nice enough ride. He found a Mazda 3 hatchback they liked, but they faced an obstacle at the dealership – negotiating the right price.It’s the beginning of a new month AND a new year, which means there’s little incentive or pressure to slash prices. How in the world could he twist the salesman’s arm to give him a deal?
That’s where I came in. I told him that they must just have too much in the car to let it go for less…(meaning they probably paid close to the asking price on a trade in and put some money into the car prior to resale). Otherwise, I didn’t see a reason for them not to negotiate a $1,000 or so off the price. Afterall, used cars are typically marked up pretty heftily.Both my friend and I searched for comparable cars online in the area and didn’t find much. I think the deal he has found is a good one, but at $9995 it’s at the top of his budget and doesn’t leave much room for tax, tags, doc and processing fees. So I suggested he go back to the dealer and tell him he’d take the car at full asking price if includes all of the fees. This is what we call an “out the door” price.
Out the door pricing is always your best option, especially if you have a tight budget. In my opinion, this also prepares the buyer before heading into the finance manager’s office because if you’ve already rolled the extra fees into your purchase price, then that relieves some of the pressure you might receive for an extended warranty, scotch-guard protection, and other (often unnecessary) add-ons.I’m not sure what route my friend has taken, but I’ll update the blog once I get the full story. Stay tuned!