You Can Save Thousands of Dollars by Ordering a New Car from the Factory
Let’s face it, 2021 hasn’t been the best year to buy a new or used car. The chip shortage followed by the inventory shortages for both new and used cars has driven pricing up exponentially this year. In fact, some used car prices are rivaling the prices for new ones.
However, if you’re still on the hunt for a new car, but your local dealership is low on inventory, then you can order one to be built for you from the factory. And while you might think that ordering a car will cost you thousands of dollars more, it can actually save you thousands of dollars if you follow a few important steps.
1. Negotiate the price of the car before placing the order
The first step to saving money on your factory-ordered car – according to Zach and Ray Shefska at YAA – is to negotiate the price. That’s right when placing an order for your new car, whether it’s a normal factory configuration or a custom one, is to negotiate the price from MSRP with the salesperson before placing your order.
Timing is everything, so make sure to talk about the pricing before you place the order and not when you take delivery of the actual vehicle. YAA notes, “If you don’t negotiate with them, the assumption is that the deal is at MSRP and your leverage (once the vehicle is on the lot) is lesser. Especially in a market where inventory is scarce.”
2. Don’t order any accessories
When you order a car to be built from the factory, a lot of times the dealership will tack on extra accessories when the car arrives. For example, they may install mudguards, wheel locks, and window tint to your car as part of a mandatory “protection package” that they usually install on every new car on the lot. Dealerships typically do this when they receive the new car from the delivery truck and send it to the service department for its “pre-delivery inspection” (PDI).
The service receives a repair order (R.O.) from management that tells them which accessories to put on the car. According to YAA, you shouldn’t fall for this unnecessary accessorizing. Instead, tell the salesperson straight away that you don’t want any accessories installed on the vehicle when it arrives. If you want to know a bit of the dealership lingo, then you can tell them: “When you do the R.O. for the P.D.I, don’t add any accessories,” says Shefska. “(The dealer) has to honor the customer’s request. They’re the ones actually paying for it.”
3. Floor-plan assistance
Contrary to popular belief, dealerships don’t pay the manufacturers in cash for the cars that they order. According to YAA, they finance them instead, which means that the dealer pays interest on the cars that they have. To offset this interest accrual, the manufacturer will give the deal some money for every car, which is also known as “floor-plan assistance.”
Since you’re ordering a car from the factory, it won’t have time to sit on the dealer’s lot, thus it won’t accrue any interest. In that case, the dealer gets to pocket the floor-plan assistance money, which you might be able to use as some leverage for negotiating the price of the car down.
However, YAA notes that given the current 2021 market conditions, most dealers might not give you any discounts for calling out their floor-plan assistance profit, but it’s worth a shot.
Tips for ordering a new car from the factory
Now that you know how to save some money when ordering a car, here are few other tips from YAA:
- Remember to put a deposit on the car: Most dealers will ask for a $500 to $1,000 deposit to secure the car order. If they don’t ask for a deposit, then ask them about it or else your car might not be yours when it arrives.
- Make sure to sign a buyer’s order: Just like the deposit, a buyer’s order will secure the deal as it will have the all the details about the car your ordered and the pricing that you discussed. Make sure that you sign one of these, if not, then the deal could fall through or be delayed.
Also, if the dealership doesn’t want to negotiate, then you can always try ordering from another dealer and see if they will budge. After all, it’s your car that you’re ordering and you’re paying for it, so you should get the best deal possible.