This article is reprinted by permission from NerdWallet.
Buying a vehicle is more difficult than ever.
Shoppers have long been accustomed to negotiating discounts from the figure on the window sticker. In today’s shortage-driven market, though, many dealers say there is no room for negotiating the cost of a new or used car. In fact, buyers typically arrive on the dealer lot to find a broad assortment of add-ons and fees attached to that asking price, inflating the final tally by thousands of dollars.
Some could be extras such as window tint or floor mats or protective film. Some could be fees to cover the cost of advertising or preparing a car for sale. Some may be boldly labeled “Added Dealer Markup.”
What will the dealer negotiate on? Which fees are mandated by law? How do you find the best deal?
Your most powerful bargaining strategy is to not negotiate those individual extras at all.
Instead, ask the question that reduces the number of moving parts to one: “What’s my out-the-door price?”
Negotiating the out-the-door price:
- Reduces confusion by allowing you to focus on a single number.
- Reveals all costs, hidden fees and add-ons.
- Allows you to make apples-to-apples comparisons of offers from different dealers.
- Protects you from negotiating on the monthly payment, a favorite tactic at dealerships.
- Avoids last-minute surprises when you review the sales contract.
- Helps you set a budgeted price and adhere to it.
What is the out-the-door price?
Simply put, the out-the-door price totals all the pieces of a car purchase and gives you one clear price. It represents the number on the check you’d have to write to take the car home.
If you don’t know the out-the-door price and negotiate instead on the purchase price of the car itself, or — worse yet — the monthly payment, you may be shocked when you see the total amount you have to pay. That price might have been pumped up by a number of late additions to the contract.
Here’s a review of the costs included in a typical car deal:
- The negotiated price of the car.
- Destination charge, if the vehicle is new.
- Sales and local taxes.
- Documentation fee (the dealer’s charge for making up the sales contracts; in many states it is capped by law).
- Registration costs.
Any equity you have in your trade-in would reduce the out-the-door cost.
Pretty simple, right?
But here’s the thing. Sometimes a dealer includes additional items in a sales contract, such as an extended warranty, antitheft devices, dealer add-ons (such as mud guards) or hidden fees that they consider part of the deal, but you might not. The dealer may be quite upfront and list “market adjustment” or similar language right on the sticker as well.
Related: Here’s a buying opportunity for smart used-car shoppers
It’s hard to keep track of all those items and to know what …….