Need a new pickup or other truck type for your business? Sometimes the advice we’ve “always heard” about something turns out to be only partly right, or not right at all, and in fact can end up hurting instead of helping our cause.
Advice on negotiating the price of a new truck falls into this category. Here are three “surprises” that might turn some of the things you’ve heard in the past on their head:
Surprise #1: Offering to pay cash will NOT get you a better deal.
Most biz owners are conditioned to believe they can squeeze out a better deal on almost anything by offering to pay in full, immediately. That might be true for most things, but when it comes to buying a new truck, it could be a big mistake. According to Jonathan Rivers, of the website BillShrink, what dealers don’t tell you is that they often receive fat bonuses for arranging financing.
Thanks to those kinds of behind-the-scenes incentives, dealers have dumped the old adage “cash is king” and developed a new saying: “cash is trash.” Says Rivers, “You are more likely to negotiate a lower selling price by financing (and enabling the dealer to collect his bonus) than by paying for the vehicle outright.”
Surprise #2: The “dealer invoice” price might NOT be the dealer’s real cost.
Common wisdom says that truck buyers should check the “dealer invoice” price for any vehicle they are considering. The invoice price is what the dealer paid the manufacturer for the vehicle (including all options). By contrast, the manufacturer’s suggest retail price (MSRP) is the “sticker” price that includes dealer markup.
But for most vehicle makes, the published invoice price is not the true dealer cost because of something called “dealer holdback.” Holdback is a portion of the sale price, typically 2-3 percent of either the invoice price or MSRP, that the manufacturer returns to a dealer, usually on a quarterly basis as a way to boost the dealer’s cash flow.
Surprise #3: You are not always destined to pay all “delivery” charges.
One of the “other” costs of buying a new business vehicle is the so-called “destination charge.” This is a non-negotiable fee set by the manufacturer that covers the cost of shipping the vehicle to the dealership. It’s a fixed number, regardless of whether the dealer is 10 miles or 10,000 miles away from the factory.
But here’s the surprise. While this may also be called a “delivery charge,” under no circumstances should you pay a destination charge AND a separate delivery charge that a dealer tacks on. One charge is required; the other is just padding and you should ask that to be erased.
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About the Author: Daniel Kehrer, Founder and Chief Content Officer of BizBest Media, is a senior-level leader in digital media, content development and online marketing with special expertise in startups, SMB, social media and generating traffic, engagement and leads. He holds an MBA from UCLA/Anderson and is a passionate entrepreneur (started 4 businesses), syndicated columnist, blogger, thought leader and author of 7 business and financial books.