So I ended Part 2 with a dilemma:
Are the extras included in the Limited model worth the extra money, especially on a limited budget?
As I noted, there was about a $4000 difference between the sticker price on the Limited we looked at, and a base model of the same color with comparable miles. The difference between the “True Market Value” of the two vehicles, however, was slightly less, at $3600. Still, that’s a decent chunk of change to pay for what essentially amounts to bells and whistles.
Dealer Trip #3
But we really liked that Limited. The sensible part of me thought it would hold value better in the long run. The stupid part of me liked the sunroof. So much so that we came back to Big Burbs Toyota to test-drive it two days later (we had driven the base model, initially). This time, Anthony had let me know he would be there, and asked me via email when we might be coming by, but we dropped in unannounced again (mainly because going at all that day was a “we’re-in-the-neighborhood”, last-second decision), and 15 minutes before the dealership closed. I felt like an unconscientious jerk. Oh well, let’s drive a car, right?
There’s something that happens when you actually get in a car that overrides the logical part of your brain that insists that “Limited = Base Model + Extra Options”. It’s this “Stuff Lust” part of our being that has been furiously fed and well-groomed by a lifetime of advertising exposure that scrambles to the forefront of our consciousness, saliva flying everywhere, and yells emphatically “No! This car is more than just the sum of its parts and you really have to HAVE IT! This is the ONE!”
The reasonable part of me – of both of us, I think – was able to stave off the rabid consumers within, and not make a ridiculous and impulsive decision. And if I’m being honest, I’m hyperbolizing this inner conflict. Do you really think a guy who assembles entire spreadsheets of research would fall in love with a car the moment he laid eyes on it, and then overspend his budget to get it? Plus, I had already decided – much to my wife’s chagrin – that no matter what happened, we weren’t buying a car on that trip. So we went home to sleep on it. That was a Saturday.
Part 3 // Buying
Figuring out how to get the car we want, for the price we want…
We wanted to head back to Big Burbs Toyota on Tuesday evening, but Anthony wouldn’t be back in until Wednesday. We wanted to throw him a bone and not make him have to split a deal with whoever might sell us the car if we went in on Tuesday. So, Monday and Tuesday were spent game-planning.
I knew I was going to have to have them come down a lot in order for us to afford the Limited model. My answer to the question “Is the Limited worth $4000 more than the base model?” was “Doesn’t matter, because we can only afford $500 more than the base model, so let’s see if they’ll go for it.” Problem was, their sticker price was already considerably below True Market Value. Unsure of how to approach this, I reached out to some former car-dealer friends:
They had some helpful insights that basically amounted to: “If price is the only thing keeping you from buying that car from that dealer on that day, let them know that, and they can figure out whether it’s worth it to them to make it work.”
I knew from the Carfax that this specific Limited had been purchased at auction in Georgia, so I asked a car auctioneer friend what he thought the dealer might have paid for it. He came back with numbers that ranged from $300-900 above what I had planned to be my first offer, and $1,100-100 below what I was hoping could be my final offer. I told him what I had been hoping to buy the car for, and he replied that, while it probably “ain’t gonna happen”, those numbers were from auctions in the Northeast, so they may have paid a bit less. He left me with what was likely a well-intentioned but misguided shot of optimism: “But you can TRY!!! Never know!”
I had also been feeling Anthony out on price via email:
I think we were hoping to figure out as soon as possible whether the Limiteds were going to be a realistic option for us. My biggest concern right now is that they’re out of our price range as marked, and they’re more expensive than the 2011 Hyundai Tucson that [my wife]’s parents are offering to sell us. I know you guys have them marked down already, so I’m just a little unsure of how much you’ll be able to work with me on price.
It really depends on which RAV4 we’re looking at. Some of them I think have some room for us to negotiate, while others are priced as low as we can get them. But if it comes down to a couple hundred bucks, there’s typically room to work on any vehicle.
I think we were looking mainly at [the Limited we drove], but if we have a better shot at a different Limited coming into our price range, we would be open to other options.
And he replied:
[That Limited] should have some room to work, and it’s the last day of the month so we’re trying to sell as many cars as we can.
So I thought, if “a couple hundred bucks” was what it might “come down to” on “any vehicle”, and this particular vehicle “should have some room to work”, and it’s the last day of the month, then surely I can at least start out pretty far apart, right? This was the mentality that I carried into Wednesday, prepared to ask a car dealer to take what could potentially be over a $1000 loss on a car.
Dealer Trip #4
I keep linking to True Market Value without really explaining what it is. I do this in the hopes that you will follow the link and read about it yourself, saving me the chore of having to explain it here. However, if I had taken a moment to actually read it myself, carefully, I might have caught this excerpt:
Now, I wasn’t guessing. I knew the TMV for the car, and I knew the price was already $2300 under that. I was just prepared to attempt the equivalent of getting a big fish to bite on a hook with no bait. So when we rolled into Big Burbs Toyota, I wasn’t feeling exactly confident. I wasn’t nervous, per se – just that general anxiety that comes with any crap shoot. Anthony was with another customer when we arrived, so we sat down and waited a minute. In the meantime, he gave us some paperwork to fill out for my wife’s trade-in.
[NOTE: He also asked if we wanted to see if Toyota Financial might be able to offer us a better rate than what our credit union had pre-approved us for. I said “sure”, but after seeing the info that I would need to enter on the form that I would be submitting (for what he assured me would be a “soft hit” inquiry that wouldn’t hurt our credit scores), I got a little apprehensive about him knowing what our monthly income was prior to negotiations. So I said I wanted to hold off for now.]
I had received some conflicting advice on how to handle the trade-in. I had read that it was bad strategy to negotiate a trade-in price first, since the dealer would then factor that number into how low they would be willing to go on the price for their car. I had even read about people parking around the block from the dealership so that they couldn’t see the car they planned to trade-in (and in case you’re thinking that’s ridiculous, every dealership we visited knew exactly what car we arrived in and where it was parked, for whatever it’s worth).
On the flipside, one of my ex-dealer friends had advised the opposite: Get the trade-in offer, negotiate what you want, and get what they agree to in writing. Then talk price on their car. It’s basically two sides of the same coin – whatever they agree and/or concede to initially, they’ll try to make back in negotiations on the other. I think that’s the mindset behind the “Don’t even tell them that you’re planning to trade-in, even if they ask” approach. The idea is that you’re not letting them count on a second chance to make profit back.
I wanted to get as much as I could for my wife’s 2006 Saturn Ion 2 quad coupe, so I let them go ahead and appraise it, and Anthony eventually returned with a price breakdown. I knew from both edmunds.com’s aforementioned TMV and Kelly Blue Book that I should be able to get $3000-3900 for her car (and I really wanted $3500), so when Anthony breezed down the right-hand totals column and I saw $1800 for trade, I knew I now had two tough negotiations to get through. But I made a mistake…
MISTAKE ALERT: If you really want to get $3500 for your trade-in, don’t let your first response to their offer of half that be “I was hoping to get at least $3000″. Even if you realize what you’ve said right away and try to recover with “I mean, I know I could probably get $3500, so that’s kind of what I was hoping for”. Too late. You’re not getting a penny over $3000, if you’re even that lucky.
Anthony jotted down “$3000-3500” next to the $1800 and said “Okay, I’ll see what I can do on that.” Then we talked price, and of course, their sticker price was on the sheet, so I tried to phrase my initial offer to not really sound like an offer, but in the hopes that he might give me a loose counter that would let me know how much he was going to be able to work. This is what actually happened:
ME: Yeah, so, I think the number we were kind of shooting for was [my planned initial offer, $3500 below their price].
ANTHONY (looking confused): Okay… after trade? [His confusion was likely due to the fact that, if they agreed to give me the $3500 I wanted for the trade in, that would mean I was “shooting for” their asking price.]
ME: Yeah… No! Sorry, before trade.
ANTHONY (eyes widening, inhaling deeply… and then exhaling): Okaayyy… Well, I’ll have to, uh… I’ll have to see what my manager thinks… about this. Um… I’ll… be right back.
We waited for what felt like 10 minutes but was probably only five. I had read all about how you’re supposed to walk around and act like you’re not waiting on them, but we had our 10-month-old son with us, so we weren’t super mobile, nor did I really buy into the posturing games. After a few minutes, though, I did decide to take him outside and let him bang on a “Customer Parking Only” sign for a little bit. I came back in and Anthony returned with his sales manager, who introduced himself (but I honestly wasn’t paying attention to that part), shook our hands, and then looked down at the papers he was holding. He smacked them with the backs of his fingers, and then gestured to indicate the information they contained, saying:
I mean, I can give you $3000 for the trade, but after that… I mean, we’re literally thousands apart here… I mean…
“Where did you even get that number?”
That one stung a bit, even though I should have seen it coming. I vaguely remember using the words “ballpark”, “starting point”, and “meeting somewhere in between” in my explanation, and I recall him saying something about what they “already have in the car” before giving a half-hearted “really sorry” and walking away. It became immediately clear that I was not going to be given any kind of counter-offer. I reiterated to Anthony that we could probably go up to [my “final” offer amount – still $2500 under their price] – I even upped it by $500 – but it seemed like the conversation was, for all intents and purposes, over. He mentioned that he did have some of the base models available if that was something we were interested in, but he was sorry they couldn’t make something work for us. We thanked him and left, feeling
derejected and just a little embarrassed. Remember that part about “But you also don’t want to make your offer so low he boots you out of the office“? Yeah…
When I got home, I had an email from Anthony, and I thought maybe this was the oft-mentioned “Next Day Phone Call” that the dealer sometimes makes after you “walk away”. I mean, it was the last day of the month, the car had been there for 40+ days… Maybe they were desperate and reconsidering? Not exactly. He just wanted to throw the numbers back at me in the form of a monthly payment, compared to the monthly payment we had just finished making on my wife’s car, and note that Toyota Financial might even be able to get us a better rate. This is the “See? You really can afford our price! Now come back and let’s talk about it!” technique. I replied and said that even if they could get us 0.3% lower, their price would still need to come down $2000. I didn’t get a reply.
So where did we go from here? Well, I had every intention of telling you, here and now, but this has run long already, so at the risk of losing whatever “readership” I even have, I’m going to conclude Part 3 //
Buying Trying, and ask that you pretty-please stay tuned for an unexpected Part 4 // The Conclusion, which is bound to contain more mistakes, and maybe even a spreadsheet!
Thanks for reading.
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