How to Negotiate a Car Price
Car shopping is really a catch-22 experience. On one hand, shopping for a new car is fun experience, because you get to choose a bright and shiny new toy. What man doesn’t enjoy looking under the hood, reading up on specs, eyeing the shiny wheels and smelling a nice leather interior. Being able to test drive several different vehicles is always fun, too.
On the other hand, car shopping really sucks. As soon as you’re noticed on the car lot, you’re pressured by salesmen. Sales guys bombard you with questions and try to pressure you into test-driving something immediately, which is then followed by filling out a credit application. Car salesmen are trained to not let a potential customer off the lot without buying a car.
If you are “just looking,” on the other hand, you’ll be lucky to get any help. In that scenario, find something that does interest you, so you get your questions answered, at least.
Negotiating a Sales Price
Of course, the real torture comes when it’s time to negotiate a car price.
Haggling with a car salesman for a good deal on a car is no fun. Price haggling is the most stressful and trying part of the car buying experience, because you’re in the dark about how low they can go, while these guys have everyday experience with car price negotiations. Negotiating a car price takes a lot of the fun out of buying a new car, because you’re an amateur playing a pro’s game.
You can even the playing field somewhat, though, if you do your research, learn a few of the tricks of car bargaining and know how to negotiate a car price before you step on the lot.
That’s the key: prepare yourself before you step foot on the lot. Here’s some car negotiation tips to help you do just that.
Tips to Negotiating a Car Price
There are three words to keep in mind when buying a car: research, research and research. Don’t expect to go and buy a car and negotiate a good deal, if you don’t know what you’re trying to buy or what it sells for somewhere else.
First and foremost, you need to know what kind of car you are looking to buy. Be specific. Know the year, make and model, including the different upgrade packages that are available.
Know Your Auto Information
This information comes in handy for several reason.
One, you’ll look knowledgeable, so the sales staff are going to be less likely to try to take advantage of you.
Two, you know when you’re trying to be sold on an upgrade that you may or may not actually need.
Three, you can use deals other car dealers are offering for the same make and model to get a better deal when negotiating a price. Quoting the #1 competitor’s lower price is a great way to tell the sales guys that you have other options. They don’t want you going down the street, and there’s no reason you won’t, if they don’t come down on the price.
Researching Your Car Prices
Familiarize yourself with the invoice price. The price you see is the MSRP (manufactured suggested retail price), which is stickered to the windshield of a car for sale. This price is the maximum the dealer hopes to get out selling the vehicle. The MSRP can be as high as a 10% markup.
Never pay the Manufacturer Suggested Retail Price.
You won’t know the difference in the MSRP and the invoice price, if you don’t learn the invoice price. The “invoice price” is the price of what dealers pay for the car.
Find this information out by going to a website like Edmonds.com. Once armed with the invoice price, you can than start the negotiations at 1-2% above the invoice price. Negotiate up from there.
Knowing the invoice price will save you a substantial amount of money.
Have a Maximum Price You’ll Pay
How to Negotiate a Car Price
Go to the dealership with a maximum price in mind. If you don’t have a maximum price in mind, you’re setting yourself up to be pressured by a salesmen to spend more than you’re prepared to.
Don’t let the salesman pressure you into spending more than what you want. Tell them you can’t afford to spend any more and threaten to go somewhere else, if they can’t respect that.
Don’t Show Your Cards
Don’t tell the salesman how much you can afford to pay per month. If they know this, it affects you in several ways.
One, you’ll have a hard time negotiating a price, because the salesman will have the attitude that “oh, you said you can pay x amount of dollars per month.”
Two, just because you can afford a certain payment a month, doesn’t mean that you have to max yourself out.
Three, if you can afford so much per month and the salesman know it, they’ll try to sell you everything under the sun, to squeeze as much money out of you as possible.
You Have the Hammer – Walking Out is an Option
Do not be afraid to walk out. Use the fact that you’re not afraid to walk out as a leverage point. The dealership doesn’t want to see you walk of their lot empty-handed, much less see you walk of their lot and onto someone else’s.
Remember, salesmen are trained to keep you from walking off the lot. That can be to your advantage, if they get the idea there’s a real possibility you’re going somewhere else. They know you’re going to buy a car soon and, if you walk off their lot, you’re going to end up buying a car somewhere.
When you start to walk, see the dealership come down in their price on the car you want.
Take Control of the Negotiation
Be calm, be firm and be in control. If you ever feel like you’re out of your element or if you start to give some leeway while negotiating, the salesman sees that and they’ll walk all over you. Don’t let them use your emotions against you, in attempt to apply more pressure or try to get you to buy immediately at a higher price than what you want.
Staying calm and being firm in your offers leaves you in control of the negotiation process. Maintain the initiative and don’t be passive. I’m not saying you should be belligerent or rude – only firm and assured.
If at any time you feel you’re losing ground or have lost momentum while negotiating, leave. There’s nothing wrong with coming back and trying another day, when you’re armed with more information.
Be sure to get any deals in writing before you leave, however, so you can be sure that you don’t have to start the negotiations all over again from scratch.
Negotiating a Car Price
The most important thing to you need to realize is this: the biggest weapon you have in negotiating a car price is yourself. If you don’t arm yourself properly with knowledge about the car you want to buy, how much you’re willing to spend and how much the car is worth, you lose the battle of negotiations with the salesman before it ever starts. If you go in with blinders on, you pay much more than you should for your car.
If you use our tips above and educate yourself on how to negotiate a car price, you’ll drive away from the dealership in a great car that you got at a good price. It’s hard to say if you ever get the lowest price you could have on an automobile purchase, but you can know that you didn’t pay the maximum price, when you negotiate a car sale.
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