The Negotiator Magazine

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After this matter has been resolved, the salesperson will write up the final deal on a prepared form listing extra costs that were never discussed for such things as vehicle transportation, dealer prep, and a "processing fee." Although you may reasonably be expected to pay the transportation cost which the dealer has paid, the other two charges represent pure dealer profit and are usually negotiable. Most dealers perform minimal services on new vehicles, and their $100-$200 "processing fee" should have been reflected in the amount you previously agreed to pay for the vehicle. If you are lucky, you may be able to delete these charges. At a minimum, you should work hard to eliminate one and reduce the other. By listing them on the pre-printed sales contract, dealers hope buyers will accept them without question, and most actually do so to their disadvantage.

IV. VEHICLE NEGOTIATING: ROUND THREE

Only after you have agreed upon the final price you will pay for a vehicle should you mention any trade-in you may have. If the salesperson knows that you have a trade-in when you are discussing vehicle price, he/she is likely to inflate that cost so he/she can look generous with respect to your trade-in. By negotiating the final vehicle cost before raising the trade-in issue, you can determine what the dealer is really giving you for your trade-in. If you have a late model vehicle of a make sold by this dealer, they may offer you low retail value. You can easily ascertain this figure through www.autotrader.com which lists several million used vehicles for sale. If your vehicle is older or of another brand, they will plan to sell it through an automobile wholesale service and only offer you the wholesale value. If you review ads for similar vehicles in your local newspaper and think you can get significantly more than you are being offered in trade, you may wish to sell the vehicle yourself. You have to decide whether this effort is worth the extra amount of money you are likely to obtain if you sell the vehicle on your own.

V. VEHICLE NEGOTIATING: ROUND FOUR

After you have negotiated the final terms for the purchase of your vehicle, you may relax and think the deal is done. If you are contemplating dealer financing for your purchase, your assumption regarding the end of the bargaining process will be sadly mistaken. Most dealers make substantial profits through their own finance departments or through the sharing of finance charges with loan companies to whom they refer customers. Dealers generally charge customers well above the prime rate for vehicle loans. Even if the prime rate is five or six percent, they may charge ten, twelve, or fourteen percent, providing them with a tidy profit.

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July 2005