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Let’s go back in time to Thanksgiving of 2020. Trust me, you’ll quickly connect the dots. For the very first time during the pandemic, we decided to let our guard down and spent the festivities at our friend’s house. Not only that, this time we decided to be in charge of the Turkey, which based on feedback turned out better than expected.

We arrived at our friend’s house around 2:00 pm and were ready to leave at midnight. It was an amazing evening centered around gratitude, friendship, and excellent food and drinks. As we exited their house, we loaded both our kids in our SUV and quickly found out there was something off.

When I open the door for the driver seat, I heard a loud noise and noticed the door was bent. My first thought was somebody had used a crowbar to get into our car. Inside everything looked normal but outside, the story was a different one. Upon second look, the driver side had a deep dent that extended from the front to the rear tire.

You guessed it, a hit and run.

Our friend’s camera was not working that evening (of course). Some of his neighbors had ring cameras but given how late it was, he said he would follow up.

Based on the location of the damage it was not surprising the SUV started without any issues. All features were functional so we got in, drove slow, and made it home safely. Looking back this was an unnecessary risk.

Our insurance towed our vehicle the following Monday. I later stopped by the shop with my fingers crossed hoping for a full repair. After all, we had just paid off our SUV 3 months ago.

The shop needed a week or so to dismantle the vehicle to assess the damage and determine repair costs. Thankfully, I had been working from home since March so even though we did not have rental car insurance, we were ok driving our sedan.

We got a call from the shop with a repair estimate at ~$13,522.37. My immediate thought was “f#ck a total loss”.

Why? because I knew a GMC Acadia with 100,000+ miles was worth ~$12,000.

As my crystal ball predicted, Geico declared the vehicle a total loss so we received a check for $15,436.50 in a matter of days.

Our deductible was $1000 so not bad all things considered. That said, it sucks the person who hit us did not have the decency to stop and leave a note. Still, I was shocked by the extend of the damage based on my visual observations.

What Actually Happened

A month later, my friend calls me and says hey dude I got news for you. I got a video of the hit and run. He participated in an HOA meeting, and somebody had captured the event. Check it out and just wait for it. Sneaky bastard.

Like I said before, we were shocked by the high estimate of the repairs but after watching this video it all made sense to us.

Weather conditions were crappy that evening, but the reckless driving and shameful behavior by the driver is pretty shitty. If anything, stop, leave your car insurance information and be on your way. That is what normal and decent people do.

Need for Another Vehicle

All things considered, we got the best outcome out of a really crappy situation. The reason I say that is because first, we were not inside the vehicle, especially having small children, and second, we got more money from our insurance than the vehicle was worth per KBB.

We received the check sometime in December. With a Christmas trip closing on us we knew that any considerations to getting a replacement vehicle would need to wait until 2021. Meanwhile, we were still saving our legacy car payment which we intended to use at least as a downpayment fund.

In early January we discussed the need for a vehicle. My wife had valid concerns about the weather in Colorado and the fact that our sedan was a front-wheel-drive (FWD). I agree with her concerns, but since I was still working from home, making short trips to take the kids to school and running nearby errands I pushed back on a vehicle purchase.

In mid-February, we decided to make a trip to the mountains to Edwards, CO. My wife was arguing about the need to purchase an SUV soon but my argument was: if we want to get to the mountains let’s just rent one. We used the ultimate rewards travel portal and used Chase points to book both the hotel and an SUV. Travel hacking to the rescue!.

Kicking Off The Vehicle Search

On black Friday of 2020, we booked our Spring Break trip to Cancun in March of 2021. Early that month, we decided it was probably the right time to hone in on the makes and models to narrow our search.

But before you give me crap about getting a vehicle we had no intention to use in spring break let me tell you the real why.

One of our goals in 2021 is to continue to invest in rental properties. Our turnkey provider knows so our portfolio advisor is on the lookout for screening properties that meet our investment criteria.

As you know acquiring a rental property with conventional financing can take months and we do not want to be surprised by the need for a car in the middle of a deal. Getting a second vehicle was inevitable, in other words, it was not a matter of IF but WHEN. Since a deal for a rental was on the horizon we decided to just get it done.

One of my favorite apps to search for used vehicles – not to be interpreted as me being a fan of cars, which I’m not – is Truecar. The feature I like the most, aside from its advanced filtering, is the fact that you can get a qualitative assessment of the price, ie. “good”, “great”, “high” and a dealer discount in almost all cases. Coupled with KBB, this offers a great workflow to understand pricing, ranges, and chances of getting a favorable deal.

Initially, we built a search for certified pre-owned (CPO) vehicles for various brands based on reliability, mileage, and price point. As a result, we landed on 4 makes and models: Toyota 4Runner, Honda Pilot, Subaru Abscent, and the Volkswagen Atlas. In addition, we wanted a V6 engine, a 3rd-row seat, and captain chairs.

As time went on, we discovered the CPO filter coupled with our desire to get a vehicle under 30,000 miles was limiting exposure to a sizable inventory. As a matter of fact, we ended up with less than a handful of choices, namely 2 4Runners and 1 Atlas.

Due Diligence and Search Criteria

We reached out to 3 dealerships to schedule test drives for two (2) 2018 4Runners and a 2018 Atlas. The 1st 4Runner was not a CPO but looked great in pictures. It also, had a couple of months left on its warranty so that seemed encouraging.

When we test drove it, we found issues with the seats and some deterioration inside the cabin. In addition, we were shocked by the 3rd-row seat, it was a joke. No way an adult would ever fit there. It seems Toyota made that 3rd-row seat ONLY for kids and even so it had to be uncomfortable for them.

The 2nd 4Runner was a CPO. It was in better conditions than the first one but did not have a 3rd row seat. At that point, we considered ditching the 3rd-row seat. Last but not least the Atlas.

We currently own a 2012 VW Passat. I bought it cash in 2013 as a CPO and I love it. Aside from the standard every 10K mile maintenance, that vehicle has asked for nothing – I probably jinxed myself for just saying that I know.

When my wife test drove the Atlas we both fell in love with it.

Look, we love Toyota but the 4Runner needs some serious updating. That SUV got stuck in the past and needs a call from the future. I would love to get comments from readers who own a 4Runner 🙂 .

The 2018 Atlas was in great condition. It was a CPO with years of remaining life under its original warranty and had captain chairs!. Last, it was a lease so the owner simply returned it when the lease expired having driven it ~8K miles a year.

We showed up at the dealership around 7:00 pm, test drove it, and said we liked it but needed to continue our due diligence testing other vehicles. We didn’t ask about the price nor we felt any pressure from our sales rep. He understood and simply handed over his card.

For the first time, I felt absolutely no pressure on making a purchase. Not sure if it was our rep, the dealership, or the fact that we showed no interest in making a purchase that day.

Never Split The Difference

Ok, so we lied. There were no additional test drives.

We wanted the Atlas but it was time to run numbers and start negotiations.

My goal was to apply lessons learned from a book I had recently read called “Never Split The Difference” by Chris Voss and to do the entire negotiation via email following the advice from Ramit Sethis’ I Will Teach You To Be Rich.

Before describing the process and the techniques we used, let me share my favorite quote from “Never Split The Difference” and key takeaways.

“No deal is better than a bad deal” – Chris Voss

1. Build trust to gather information.
2. Watch your tone throughout negotiations.
3. Put emotions to use.
4. Don’t rush, don’t compromise, and don’t accept demands.

Below is the sequence of events:

• Email #1: address lingering questions base on due diligence on vehicle ipacket.

Hi name of rep, this is JJ, I hope my email finds you well.
My apologies in advance for all the questions. Hopefully, these are easy for you to address. 
(1) It appears this vehicle was a lease and the previous owner simply drove it and finally returned the vehicle. Can you confirm that was the case? (2) Can you clarify how the new vehicle limited warranty and CPO work together? My understanding is that CPO offers 12,000 miles or 1-year bumper to bumper after a $50 deductible. In addition, there is the 72K/6Y coverage and the 100K/7Y corrosion coverage. Am I missing anything? (3) Since we drove the vehicle in the evening, we were not able to check the exterior. Can you comment on any noticeable scratches or dents to be aware of? If we stop by today or tomorrow could you have it detailed on the outside so that we could look at it just to check?

• Email #2: request a transaction sheet detailing best selling price and all associated fees.

Hi name of rep, thank you very much for answering my questions. I very much appreciate your clarifications on all the items noted in my previous email. Now, let me ask you a few things about the purchase price and any associated fees. (1) Can you provide me with a transaction sheet detailing all ticket items that lead to the total price, e.g. taxes and doc fees?  (2) I would finance the purchase so based on #1 can you please include available options in terms of interest rates and term durations? (3) If I were to put 0 money down, would I just need to pay taxes on the transaction? (4) What is the absolute best purchase price VW is willing to offer if I were to proceed? I think being upfront will be good to manage expectations and make sure we avoid back-n-forth. Please know that I have a number that would work for us so I’d appreciate it if you can provide me with your best absolute price to see if this would work for us? we are interested in the vehicle and hopefully, we can make it a win-win for both parties. If you want, call me to chat about these items or feel free to reply via email.

• Email #3: provided range in credit score and our location for estimate of taxes.
• Email #4: we were asked about our desired price point but requested their best offer first and shared desire to make it a win-win for both partied (#empathy). Also mentioned that if price was non-negotiable that we should stop negotiations (#createtheillusionofcontrol and #donotrush)

Hi name of rep, let’s do this. Please send me the transaction sheet with current numbers to see all ticket items so that I can look at it. I would really like to partner with VW and make it a win-win so it is my hope you can work with me. If the price is absolutely non-negotiable then we should stop our engagement as unfortunately, we will not be in a position to move forward. Again, just trying to be respectful of your/my time and make sure we are on the same page.

• Email #5: we were quoted $34,758 but we indicated we had an offer from Truecar at $34,658. This was a good segway for sharing our low offer at $33,417 (#shareacalculatednumber). The way we calculated this number was pretty simple. We used Kelly Blue Book and estimated the average price based on the range for the Atlas with the same specs. The range was [$32,322 : $35,513]. This number was $33,917. We offered $500 less of our desired number. Why?. why not!

Thank you for providing me with the transaction sheet. The only question I have is the amount financed. It shows $38,399.55 but when you sum $34,758 plus all the taxes and fees it leads to $38,134.38 or a difference of an extra $265.17. Why is that? Did I miss something? In any case, you asked me what our number was and I will share it with you. The current price of the vehicle is $34,758.00. We have an offer from TrueCar at $34,658 but that price does not work for us. We are happy to stop by the dealership today and proceed with the purchase of the vehicle for a price equal to $33,417 (they probably scratched their head wondering where this number came from. Maybe not but who cares). This is the number that would work for us so it is our hope VW would consider it so we can move forward. If it does not work for VW then we totally understand. As I said, my intention is simply to be upfront and make sure we minimize back-n-forth in order to (a) proceed with the purchase or (b) pause our engagement.
Thanks in advance for your support.

• Email #6: we received an updated offer at $34,100. We thanked our rep and shared shared our appreciation for trying to work with us (#empathy). I mentioned that as a family we were willing to come up to $33,917 (#desirednumber) and would be ready to proceed with the transaction. We were also quoted 3.99% financiang with VW but I stated our desire to have 2.99% for a 72-mo term by bringing our lender.

Hi name of rep, thank you very much for sending the proposal. I understand that you are trying to work with us to make it a win-win so we appreciate that. After having some discussions with my wife, we would like to offer $33,917. It is our hope this offer is acceptable to VW so that we can proceed. If so, we should be able to stop by the dealership tomorrow or Friday (weather permitting). Last but not least, I’m not sure if the proposal you sent shows “typical” interest rates and terms for someone with an 800+ credit score. If that is the case, please let me know so that I can bring a pre-approval letter from an external lender who can offer a more competitive rate. To give you some context, given my credit score I’d be looking at 2.99% for a 72mo term.

This was their response:

Hi JJ, you’re very welcome for the proposal, and thank you for acknowledging that I am doing what I can to help you get into the right car for you! My manager says that we can get to your price, $33,917 plus taxes and fees!
As far as the rate goes, 3.99% is VW’s standard CPO rate for an 800+ credit score. However, we do use several different lenders that could have better rates. We would have to send over your info to them to confirm the rates. Please fill this out and we can send it over to the credit unions with the best rates to get you the best for your score.

As it turned out our lender was already in their database so they confirmed the rate at 2.99% for 72-mo.

• Email #7: confirm the date to go pick up the vehicle and sign paperwork.

I showed up at the dealership with numbers on hand, checked the vehicle one more time, signed all the required paperwork, gave a downpayment using my Chase Ultimate Freedom to rack some points, and after 1.5 hours I was back home.

Final Thoughts

One might wonder if I squeezed every dollar I could have from the dealership but the reality is that was not our goal. Instead, I methodically calculated a number that worked for us and we got it. That was our definition of success.

You may be wondering, would we have walked away from the dealer’s $34,100 offer? after all, it was just $183 above our number. Probably not, but would the dealership be willing to risk letting a potential sale walk out the door over 183? probably not. This, in my opinion, is the best example of the illusion of control and not accepting demands.

Ok, so let’s wrap things up.

• We were excited about not having car payments but shit happens. Thankfully, the pandemic and working from home pushed the decision out for a few months.
• We chose to get a car in preparation for financing our next rental property.
• Test-driving our vehicles of choice was critical. Not sure we are ready to buy a car sight unseen. Funny enough, we do the opposite when purchasing rental real estate.
• I know many in the FI community buy cars off of Craiglist or FB Marketplace. We like CPOs so were ok with the decision.
• Look, a car is a utility so our goal was to get a CPO, offset the steepest part of the depreciation curve and get the price we wanted. We did that and we are happy with the results.
• When buying a vehicle ALWAYS focus on the purchase price and NEVER on the monthly payment.
• Carmax is an option we considered and we do like the customer experience they offer. That said, they do not offer CPOs nor they negotiate on price. I like to negotiate so I’m sorry Carmax, we’re not a good match.
• I should probably change the title of this article. In reality, this post was not about whether or not you should buy a car online, at a dealership, Craiglist, Offerup, or from a friend, it’s about using negotiation tactics that work for purchasing a vehicle and in all facets of life.

Until next time … JJ