Friends & Family Discount vs. Year-End Discounts

Q

I am interested in purchasing a Chevy Silverado crew cab (my husband wants to purchase a Colorado, but I don’t know how we’re going to fit five golden retrievers, two adults and one child with lots of hockey gear in this vehicle!!)

My ¬†question is cost. Because of a friend, we are able to participate in the GM Family First plan and can receive the GM discount on a vehicle. What would be the best cost-efficient method for getting the best price? Because it’s the end of the year, I was wondering if I would get a better deal by negotiating the price of a vehicle vs. using this GM discount. What do you think?

I know GM had offered up to $8,000 in rebates over the summer towards a truck. I was wondering if they may offer that incentive again in order to move out the 2011 models?

– Chris
Saint Germain, Wi

A

You,ll need to know exactly how much your friend’s employee discount is worth to know whether or not you’ll get a good deal on it. Regardless, I usually advise people to negotiate purely on the cash price of the car (rather than on payments), and look for a figure just over the dealer’s invoice minus any factory rebates, cash-back, etc. (That money comes from the manufacturer and doesn’t affect the dealer’s profit.) Generally, if a dealer is giving you a discount below invoice (not counting rebates), chances are it is making up the profit somewhere else, usually “aftersale” (dealer-installed accessories, financing, extended warranties, etc.). It’s important to remember that dealers are in business to make money, and they’re not any more willing to accept an unfair deal than the consumer is.

Anyway, if the GM discount takes the price of the vehicle below the invoice cost, that’s probably her best bet. It can’t hurt to have an honest discussion with the dealer about how the GM discount works — if all the money comes back to the dealer from GM, it doesn’t affect their profit, so they may not try to hit you hard for aftersale add-ons, or they may even cut you a little more discount. If a customer shows genuine concern that the deal is fair — that she gets a good price while the dealer makes a fair profit — you’d be amazed at how well the negotiation can go. Bottom line, get the complete price from your friend with the discount, and then take that price into the dealership to see if they can beat it. Because it’s end-of-year sales time, many dealerships have new discounts that could exceed employee deals.

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