While buying a new or used car can be exciting, few buyers enjoy the process of negotiating the
price of a vehicle. With some preparation and persistence, though, you can get the car you want without getting stressed out or blowing your budget. This guide will give you the information you need to confidently navigate the car-buying experience and learn how to negotiate car prices.
The car-buying experience is one of the last bastions of the price negotiation between buyer and seller. It’s also one of the most unbalanced negotiations because professional car salespeople perform hundreds of transactions per year, while most car buyers only get a vehicle every four or five years. Fortunately, consumers have better access to vehicle data than ever before and easier ways to work with multiple dealerships.
The majority of dealerships have abandoned the old-timey sales tactics that have given the industry a bad rap. Still, as a buyer, you need to know the strategies to counter dealer tricks when you see them.
Tips To Negotiate The Best Car Price
1. Find Your Perfect Car:For a successful car purchase, one must do research on the vehicle that is desired and have
financing already approved prior to visiting a dealership. To buy a new car, start by finding the one that fits your needs and budget. Our rankings and reviews are based on the consensus opinions of the country’s top automotive journalists, combined with quantitative data on safety, reliability, and other factors. When you start visiting dealerships, focus on the vehicle you want–not the used or new car they want to sell you.
2. Be Knowledgeable:To get the best deal on a new car, you should know as much as possible about the model you’re considering. The buying insights at the bottom of many of our reviews show current demand for the vehicle, helping you identify models that are in high or low demand. If demand is low, you should be able to strike a better deal.
Many car dealerships are not loved by their customers. Sites such as Yelp.com and specialized auto dealer rating sites provide customer reviews of car dealerships, but every business has some bad reviews. You’re looking for trends that show you which dealerships are better to do business with than others.
3. Preapproval for your Car Loan:Dealerships typically want to bundle all of the components of a car deal into one big transaction. This can be a confusing way to buy a car because you’ll be negotiating to finance, the value of any trade-in, and the price of the new car at the same time. You can take the financing component out of that package by getting a preapproved car loan from an outside lender before you head to the dealership.
A preapproved car loan can save you a lot of time and confusion, as well as help you get a great financing deal from a dealership. Instead of offering an auto loan that makes the dealership the most money, they’ll be forced to beat the offer you already have.
Though most buyers arrange financing through their car dealerships, there are several places
outside of dealerships where you can get a financing offer. They include large national banks,
community banks, and credit unions. Credit unions typically offer the best rates, though larger banks have a broader range of services. Banks occasionally offer interest rate specials and some credit unions rival the size of big banks.
4. Discover The Best Deals:If you’re looking for a way to save money without having to deal with negotiating, take advantage of special financing or cash-back incentives. These deals are frequently offered when automakers don’t sell cars at the rate they’d like or they approach the end of their product cycle.
Interest and cash-back programs are two popular options for car buyers. Interest-free financing is typically offered on new cars, whereas cash-back offers can be used for certified used cars. The best interest rate deals are zero percent offers, which make the financing free. You can typically find both kinds of offers on new cars, but only financing deals on certified used cars.
You will find the best deals each month on our new car and used car pages. Even if you are getting a deal, you’ll still want to try and negotiate for a better car price. Some salespeople will tell you that you can’t negotiate if you are getting an incentive from an automaker, but that is not true in most cases.
5. Go To The Dealership:Now that you have a better understanding of the vehicle and its pricing, it’s time to visit dealerships. You’ll want to budget enough time to test drive the car you are considering and work with multiple dealers to get the best price. Arriving at a dealership or meeting with a private-party seller unprepared is one of the main reasons people overpay for both new and used cars. If you want to save money, buying a car should not be a spur-of-the-moment decision.
6. Go at the time right:Some people believe that you can save money by going to a dealership right before closing time. This is more fiction than fact, but there are some times is better to shop for a car than others.
Car dealerships have monthly, quarterly, and annual sales goals for both salespeople and the
dealership as a whole. If your dealership hasn’t reached its goal yet, you might find a fantastic deal. Some manufacturers structure their sales incentives this way: if your dealership sells a certain number of vehicles during a certain period of time, it gets a bonus on all of the cars it sells. If you’re the lucky buyer of the last vehicle they need to reach their target number, you’re in a great position to get a deal.
Dealerships tend to be busier on the weekend than during the week, according to TrueCar data. This may not be a good time to make major purchases because dealers may not want to spend a whole lot of time with you if it doesn’t look like you’re going to be an easy sale. You have a better chance of a good deal on a weekday, according to this data.
7. Multiple Dealers:Before the Internet, car shoppers had to drive miles and miles and waste a lot of time and gas in order to check out multiple dealerships. Nowadays, you can get in contact with several car
dealerships’ internet sales managers and do much of your car shopping from your living room. In rare cases, you can negotiate a price and buy the vehicle online, and have it delivered right to your house.
Shopping at several dealerships can be beneficial. By getting price quotes from multiple dealers and letting each one know that there are other dealers in the game, you gain a competitive edge. For example, different dealerships earn different discounts and bonuses that change the effective cost of cars on their lots; find a dealer who paid a lower price than others in your area for the car you want to buy, and you’ve found a dealer with more room to haggle.
Dealers often trade cars among themselves to get the right model, trim, and color for their customers. In many cases, the offers you receive from multiple dealerships are on the exact same car. If you go with the dealer’s offer, they’ll make a dealer trade to get it onto their lot.
8. Business TransactionAlthough it can be easy to develop emotional attachments to your dream car, it’s important to
remember that buying a used or new car is simply a business transaction. The less emotion involved, the better. You want to remain polite and cordial, yet firm, when you’re dealing with salespeople and managers who work at car dealerships.
You have one main goal: to get the best deal possible on the vehicle. You must understand that
dealerships rely on you to be an ethical and legal customer, to make sure they’re getting the highest price with the most profit. While both parties are trying to help you, salespeople are experienced negotiators who will try to move you incrementally to a deal that they want you to accept and to a vehicle they want you to buy.
Remember that they have training in negotiating; it’s up to you to make sure that the price you want is realistic for your budget and makes sense for your situation. Also, remember that salespeople know what they’re doing; don’t be afraid of them or give them any opportunities for pressure tactics.
Some customers go to the dealership with the intent of bullying salespeople into giving them a good deal. This is a strategy that can backfire, as salespeople are usually more likely to give a break to someone who is pleasant and professional than someone who is being a jerk.
9. Don’t Get Distracted:When the time comes to negotiate a deal, dealers will often try to get you focused on the price of the car, not its total cost. They might use a form known as a Four Square to make their offer seem more appealing.
You, however, should remain focused on finding the right price for the car—not the monthly payment or financing, not your trade-in value or anything else. When they try to talk about the trade-in value, tell them you need to talk first about pricing. When they try to talk about financing, tell them you already have financing arranged.
The number of dealerships that have adopted the no-haggle pricing model is growing. These dealerships sell their vehicles with fixed prices on all of them, so they don’t need to negotiate the price with you—their job is simply to make sure you pay the lowest amount possible for your new car. Although this approach may save you some money, it can also be confusing and intimidating, especially if you are unfamiliar with this type of negotiation process.
10. Payment is not the Focus:A common sales tactic is to get the buyer to focus on monthly payments, but this method of
car-buying is very poor. You should concentrate on the entire cost of the vehicle, including its
financing. That means negotiating a fair price for the vehicle and then getting the lowest-cost
financing deal you can find.
By focusing on the payment, the salesperson and their finance manager can play around with the rest of the numbers. For example, it’s easy to get a low payment when you extend the loan out to seven or eight years. Many dealers and lenders will not tell you about the financial impact of long-term car loans because each stands to make money off getting you into longer-term financing deals. In general, you want the shortest loan possible with a payment that you can afford. You don’t want the length of your loan to exceed the vehicle’s powertrain warranty if possible, as you’ll be exposed to expensive repair costs while still having car payments.
11. Price Negotiation:Negotiating a car’s price is like playing a game of chess. The person who makes the first move loses, while the person who holds her cards close to her chest, doesn’t volunteer much information, and is patient often comes out ahead in the end.
Some dealerships operate quickly, efficiently, and with a high level of customer service. As a result, they are able to provide you with a price quote that’s upfront with little negotiation. However, before you go to the dealership, it is important for you to know some of the methods used by dealerships so you can be prepared when dealing with them.
Ask the salesperson for a price quote. This limits how much they can ask for, because once the price is out, they can’t simply raise it. On the other hand, once you state a car price that you’re willing to pay, you can’t negotiate any lower.
To negotiate a fair price, remember that dealers are entitled to a profit. If there are any incentives available, be sure to subtract them from the sticker price, and then set your target price (the most you want to pay for the car) somewhat below that.
When you’re talking to a salesperson face-to-face, don’t feel like you need to keep talking. Make an offer, justify it with the pricing data that you found before you started visiting dealers, and then stop talking. It’s natural to want to fill in the gaps in the conversation, but often you’ll weaken your negotiating stance when you do so. Instead, let the salesperson fill in those gaps of conversation. If you feel you need to be doing something other than sitting there, politely break out your smartphone and start checking your email or taking a walk around the showroom.
When you encounter a salesperson who is holding out on you, be polite and tell him or her that you have limited time, so if their repeated delays continue, you’ll have no choice but to leave. And be prepared to do just that. They may chase you across the parking lot to make sure that doesn’t happen. If you genuinely have the time to stay, bring a book and park yourself in the showroom to show that you don’t care how long it takes to get the right price.
When it comes time to sign the various documents presented by the salesperson, you may be asked to do so. These are just designed to make you feel like you have no choice but to go along with whatever they have in mind. The only real paperwork that matters is what you’ll sign in the finance office a bit later.
A few salespeople will sometimes try to guilt you into making a deal that you don’t want, by talking about all the work they’ve done to get you a good deal. Remember that it is their job to do just that, and they’ll be fine even if you walk away.
Throughout the negotiation, keep a calculator or a calculator app on your smartphone out where it can be seen. When any calculations need to be done, do them yourself so that you both understand the numbers and avoid the chance that the sales rep can cloud the outcome of the calculations. Just demonstrating that you know how to do math lets them know that you’re serious about getting a fair deal.