About 2 years ago, my wife and I learned the power to walk away when it comes to negotiations. We received a flyer in the mail about a car dealership that was have a big sale on used cars. It included a promotional code that could win you anywhere from $5 to $5,000. We knew we wouldn't win the $5,000 but we had a pickup we were looking to trade in so we thought, what the heck?
We drove to the dealership and were greeted by a very eager salesman. We were really looking at a couple different things. We either wanted a car that would get better gas mileage or an SUV that could carry more people and had 4 wheel drive. There is the ocassional snow where we live, which is not good when you are driving around in a pickup.
After test driving a few things, we decided to see what kind of a deal they could make on an Explorer. It was the same year as my truck with less miles and 4 wheel drive. It looked good (engine, tires, etc.) and we got a Carfax report, which looked good as well. We told the salesman, that we were looking to spend $7,000. We actually had $2,000 in cash and I thought we could get $5,000 for my truck.
They look at my truck and offer $4,000 for it. OK, so that makes a grand total of $6,000. We were very adament the whole time that we were not going to make payments. The salesman went to talk to his manager about the price. He came back with a piece of paper and wrote, "Market Value: $19,995, Sale Price $15,675"
Obviously we were not going to pay that, which I told the salesman. He went back to his manager. He then came back and wrote, "$11,000+TTL - $4,000 (for the trade) = $7,000" At this point I explained that I didn't have $7,000. I had $2,000. I said $7,000 because I thought they would give me $5,000 for my truck. But I only have $2,000 cash.
During this whole time, my wife and I told the salesman that we knew he needed to make his money so we would just go as we got up and started for the door. Each time, he would say, "No, let me talk to my manager again."
So back he goes and comes back with $3,000 + TTL, which my wife was starting to think was a good deal. I tell him no deal, I only have $2,000. His manager then comes out and the rest of the conversation went like this:
So, in the end, they went from $15,675 all the way to $6,000 on a vehicle who's Blue Book was $9,000. And on top of that, our promotional code was for $5 so we only paid $1,995 including TTL.
I learned a lot through that experience. It actually made me want to go to a dealership with strong salespeople as opposed to some place like Carmax where they do not negotiate. If you are willing to stay strong, you can get a good deal.