Negotiate Car Price

Buying a new or used car can be intimidating, and you might be wondering how you can negotiate with the salesperson and still end up with the lowest possible price. Learn about the best ways of negotiating the price for that shiny new or new-to-you car in the lot, and if you can't save money after learning expert tricks, you should take the bus!

Steps

Researching Before You Visit the Dealer

1. Decide which car you want. By knowing which car you want, you give yourself the opportunity to research which options it comes with and how much the car is really worth. You can visit dealers and take test drives, but don't start any negotiating yet.
2. Find out the car's "true market value." There are tools you can use to research this for free online. For new cars, check out Edmund's TMV pricing. For used cars, take a look at the Kelley Blue Book price. You can also use online tools such as US News Rankings and Reviews for cars and trucks to get a general idea of pricing from various dealerships in your area.
   • Market value is determined by a number of factors, but essentially, the value is calculated based on the current automobile market as well as the price that dealers around the country are selling a particular car for.
   • As a safe bet, make your "target price" roughly equal to the car's true value. Your target price is not an opening bid; on the contrary, it should be your closing bid, and the price you will not go above.
   • If you feel a little more daring, you could make your target price $500 to $1000 less than true market value for new cars or 10% to 15% less for used cars. Getting a dealer to settle for this price can be extremely difficult, but it can be done.
3. Get quotes from multiple dealerships. Before stepping foot in any given showroom to start negotiating, place a call to the dealerships in your area and inquire about their asking price for the car you're interested in. Do not mention anything about a trade-in, monthly payments, or financing. The only thing you need to know from each dealer is the out-the-door price.
4. Set up your own financing. Car dealers make a good amount of profit on financing deals, which means that you might lose out if you rely on financing from the dealer. Apply for your own financing through a bank, credit union, or another lender before you head to the lot.
   • One exception to this rule, however, would be if you want to take advantage of a special promotional interest rate offered by the dealership. Compare it to what you can get at your bank or credit union.
5. Rest and eat before you go in. The process of buying a car can take up a lot of energy and a lot of time, so if you want to put up a decent fight, you need to make sure that you can keep up with the salesperson throughout the entire negotiating process.
   • As a general rule, you should also stop by when you have plenty of time and do not feel rushed. To the same end, you should avoid car shopping when you are in desperate need of a new or new-to-you car.

Negotiating At the Dealership

1. Shop during slow times. Do not go when the dealership is offering a lot of sales and promotions or when there is a lot of customer traffic. Go to a dealership during a weekday when possible, as weeknights and weekends tend to be the busiest. Choose a day with terrible weather toward the end of the month and you'll have a better chance to make a great deal.
   • You might think that the rush of people would work in your favor since it means less time the salesperson can spend on you, but the rush of people also means that more sales are being made, so salespeople are less desperate to sell the cars on the lot and quicker to let you go without making a sale.
2. Determine whether you should state which car you want. There are two schools of thought concerning the way you lead the salesperson to the car you have in mind. The first states that you should let the salesperson know exactly what you want the moment you step into the dealership. The second states that you should never let the salesperson know that you came in with a particular car in mind.
   • On the one hand, knowing what you want and the price you want it for lets the salesperson know that you are thoroughly prepared and will not be easy to persuade.
   • Alternatively, it can also be a good idea not to zero in on any particular car and insist that you love it and need to take it home. Doing so suggests that you are desperate for one specific car, and that is a weak place to start negotiations.
3. Ask to see the invoice. The invoice will let you know how much the dealership paid for the car, so you know how low the dealership can afford to go while still making some sort of profit. This gives you a good idea about what your initial offer can be.
   • Keep in mind, however, the dealer may be getting volume discounts and refunds after the invoice was issued.
   • The invoice will also tell you important information about the car.
   • Note that many dealers do not supply this information to customers, referring instead to the "sticker" price.
4. Avoid being the first to name a price. If you make the first offer, you might end up making an offer that is higher than the salesperson's lowest offer and ultimately pay more as a result. A salesperson will be trained to ask certain questions like, "What monthly payment would fit into your budget?" or "What are you willing to pay?"
   • You should answer these questions with your own questions. Explain that you've done a lot of research and have shopped around, but would like to hear from the salesperson first since he is the expert. Conclude by asking for his best price.
   • The focus should be on the price of the car, not the financing that results in a monthly payment.
   • As you move through the negotiating process, make small increments that gradually build to your target price. Take your time. Even if the salesperson is in a rush to make the sale, you can make him follow your pace. Determine what your ideal payment would be based on your target price and tell the salesperson that is all you can afford. Don't get into monthly payment until you've agreed on a final price.
   • The salesperson will go running back and forth to the sales manager for approval. As they come down substantially in price, you inch up your offer very "painfully."
5. Be bold and ignore the "sticker" price. A sticker price (Manufacturer Suggested Retail Price or MSRP) might seem like the lowest price you can expect from a dealer, but that really isn't the case. The manufacturer's sticker price is a price calculated by the manufacturer that grants the dealer plenty of profit and wiggle room. In actuality, the dealer can still go below that price and still make money.
   • Your starting offer should be low. If you worry about offending the salesperson or not being taken seriously, then you might end up making an offer that is too high to start with, and as a result, you could end up paying more than you need to.
   • Suggest a percentage of the sticker price (88%-90%) as a beginning point if the invoice is not available.
6. Decide on your options beforehand. When looking at options and add-ons, only add options you know you need and actually plan on using. There is no need for you to end up paying for a bunch of extra stuff you don't really want. Include this cost in the total amount you "can afford to pay."
   • Extended warranties and service contracts may sound nice when the salesman pitches them to you, but in actuality, most new cars already have good warranties. Also, extended warranties have lots of loopholes, so it may not cover a lot of repairs.
   • Be on the look-out for extras that cost more than they're really worth, like fabric protection and rust-proofing.
   • If there are options you do want, make sure to state which options those are in your first offer.
7. Do not get too attached. The downside of figuring out which car you have your heart set on is that, oftentimes, you might find yourself developing an emotional attachment to a specific set of wheels. When it comes to car negotiations, affection is weakness.
   • You can do a test drive to get a feel for how the car operates, but you should avoid doing anything that could make your attachment to the car stronger, like driving it home or keeping it out for more than a quick spin.
8. Maintain a friendly attitude. You need to be firm to avoid being on the losing end of the deal, but at the same time, you should never get nasty with the salesperson. You want to keep as much of your money as possible, and the dealership wants to make as much profit as possible. Neither party is in the wrong, though. It's just how business works.
   • Also keep in mind that friendly people are more pleasant to deal with, and others may have a natural tendency toward wanting you to stay happy and satisfied if you treat them with the same sort of attitude. You might be tempted to think that being mean or vicious could intimidate the salesperson, or would otherwise encourage her to do whatever necessary to get you to make a deal, but this is not often the case. Usually, being difficult will only make the salesperson feel better about watching you walk out the door empty-handed.
9. Lock in your total price. This includes the value of your trade-in and, if applicable, financing. While determining the final price of the car, you should only focus on the actual final purchase price. Talking about anything else may end up prompting the salesperson to take the extra cash they give you for a trade-in and add that amount to the price of the new car.
   • Do not talk about financing options, monthly payments or any rebates and incentives until that final price has been locked in.
   • Even if you already have a monthly payment value you can afford, letting the salesperson know this in advance could cause him to stretch financing out for another year instead of dropping the final price of the car.
   • Mentioning a trade-in early on can complicate things and give the salesperson more opportunity to trick you into accepting what only seems like a good deal due to the deal being offered on your trade-in. This applies when he offers to “pay off the rest of your current car” as well.
   • If a rebate or other incentive is calculated before you lock in a final price, you have no way of knowing if that rebate is legitimately less or not.
10. Walk away when necessary. If the salesperson presents a final offer, and that offer is still above your target price, stand your ground and let the salesperson know that you refuse to go any higher. If she still doesn't budge, politely say farewell.
    • Note, however, that this does not necessarily mean that the deal is done. Make sure that the salesperson has your phone number and knows your target price before you leave. If this price is at all possible, the salesperson will probably contact you.
    • Never rush when you're buying a car or you could end up with a bad deal. Don't be afraid to take your time and shop around.

Following Up

1. Know when a follow-up is appropriate. If you have not found a dealer willing to match your target price, you can make a follow-up call to the dealership that came closest to your target price after a couple of weeks pass. Stick to your target price, even when you make a follow-up call. Do not settle.
   • You should also avoid giving the salesperson the impression that you are desperate or willing to settle for less. Do not let him know that no other dealers have matched your price, either.
   • When you place a follow-up call, ask to speak to the salesperson or manager you spoke to before. He will already have some relationship with you, so you will not need to start negotiations from the ground up.
   • Remind the salesperson on the other end of the line that you are only interested if he can meet the figure you proposed. Ask if anything has changed, and if not, politely end the phone call.
2. Pick a Saturday or Sunday night. More specifically, place a follow-up call an hour before the dealership closes for the weekend. Oftentimes, a salesperson might be willing to work with you simply for the sake of getting in one final deal before the weekend is over. This is especially true if the salesperson or dealership had a bad week.
   • Call on the last day of the month. The last day of the month is an even better time to make your follow-up call because salespeople might be eager to push out one last deal.
   • If a salesperson did not meet a quota, for instance, she would be eager to gain one more sale toward that quota on the last day of the month, when those sale amounts are often due to supervisors.
   • Note, however, that if the month had been very successful for the dealer or the salesperson, this tactic may not work.
3. Follow up during bad weather. Bad weather tends to drive people away, so a dealership is less likely to make as many sales during periods of heavy rain, wind, or snow. As such, a salesperson might be more desperate to make a sale when the opportunity comes around.
   • This option works if you have only had a full day of bad weather, but it can be even more effective when you have had several days to a week or more of nasty conditions.

Quick Summary

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See also

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• Compare Used Cars
• Find Out How Much a Car Is Worth
• Apply for a Used Car Loan
• Buy a Fuel Efficient SUV
• Buy a Used Car Online
• Negotiate Buying a Used Car

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