How the Best Car Deals Are Made

best car dealsMany people think the way to get the best car deal is through shrewd negotiations and hard bargaining with car dealers.

Not true. That’s old outdated thinking.

The best deals are the ones that are given to you, with no negotiation required, by automakers and their “captive” finance companies.

You see, dealers control only one factor in a car deal — price. And that’s only to a limited degree because he (the dealer) must work within his relatively small range of potential profit, which can vary between about 4% and 12% of MSRP depending on brand and model. There are also holdbacks and possible sales bonuses that reduce his cost but a dealer cannot sell cars for little or no profit without going out of business.

The best car deals are those that are incentivized by car manufacturers, combined with contributions from dealers. Car companies can control all factors in a purchase or lease deal — price, rebates, factory-to-dealer cash, interest rate,  lease money factor, lease residual values, and lease mileage allowances.

With this wide range of control, car companies can, and do, offer limited-time special deals that automotive consumers could not possibly negotiate for themselves. Without such help from the parent car company, dealers could not sell or lease cars on such attractive terms.

We often hear car buyers brag that they’ve just made a new-car purchase for less than dealer invoice price. They may not be aware that they’ve been given “help” from the car manufacturer, possibly in the form of a hidden factory-to-dealer rebate. Actually, in those cases, negotiation skills may be useful because a dealer is not obligated to give away all his factory rebate. This is especially true when buying luxury car brands, such as BMW, because luxury car companies don’t like to be viewed as “discounters.”

In summary, to get the best car deals, look for the limited-time promotional incentivized deals that include rebates, bonuses, low (or 0%) interest rates, or special lease offers. These are almost always good-to-excellent deals — and better than any deal you could negotiate on your own.  However, the “catch” is that only selected models and styles may be available with the special terms. If you are flexible in your choices, you can take advantage of these deals and save some serious money — with little or no work.


Free New Car Price Quotes
You can get free price quotes on any new car or truck from Edmunds.com.The quotes will automatically include any cash-back rebates or incentives that are currently available.

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