- It’s almost always possible to negotiate the price of a new vehicle.
- Do your homework before you go to a dealer.
- Know which extras you do (and don’t) want in advance.
- Get quotes from more than one dealer.
After being suppressed for a long time due to the pandemic, new car sales are expected to increase in 2022. For most people, a car is the biggest purchase they’ll make in their lives, other than buying a house. If you’re shopping for a new car and are worried about getting a good deal, try these negotiating tips. Head to the dealer armed with knowledge of the make, model, features, and trim you want. Have a clear budget in mind. Follow this advice and you should be able to stay in control of the negotiations and get the best possible deal.
The Internet Makes Shopping Around Easier
Buying a car today is easier than it was even just 20 years ago. Pulling up a list of nearby car dealerships is as simple as searching on Google. Or use deal aggregator sites like AutoTrader, which make it easy to search by the type of car you want. This means you don’t have to limit yourself to the couple of local dealerships you already know.
Do plenty of homework before you visit any dealers. That way, you’ll have an idea of what’s out there – and how much your desired model should cost. It’s much easier to walk away from an overpriced vehicle if you know you have other options in your local area.
Know What You Want Before Going to a Dealer
Most cars come in several trims, with a dizzying array of options. You should have an idea of what you want before you head to the dealer. You’ll still have to navigate a sales pitch, even if you go into the dealership knowing exactly what you’re looking for. However, it will be harder for the dealer to upsell you or direct you to an entirely different vehicle if you’re already familiar with your options.
Pay attention to the features offered by other dealers, however. Not all sellers can negotiate on price. However, they may be able to throw in some extras to match another company’s offering.
Pay Cash (If Possible)
Financing is a profit center for many dealers. Salespeople are trained to steer buyers toward the finance option whenever possible. So you’re unlikely to get a substantial discount on the sticker price for paying cash. However, if you can afford to do so, it’s still worth considering.
For starters, you’ll avoid any of the interest charges that come with a multi-year car loan. You’ll also gain the total equity of your vehicle right away. If you don’t have the money in the bank to cover the purchase up front, compare the cost of a loan from your bank to that of a dealership finance package. For those with a good credit rating, a traditional bank loan often works out cheaper in the long run.
If You’re Financing, Pay Attention to the Total Figure
One trick that dealership salespeople use is to focus on the monthly payment, rather than the total cost of the finance package. It can be tempting to opt for a longer term with a lower monthly fee. However, such loans often work out to be expensive in the long term.
Many car loans have early repayment fees too, making them expensive even if you decide to settle them before the term is up. Remember that cars depreciate quickly, losing as much as 40% of their value in the first three years of ownership. Do you really want to be paying off a loan for something that’s worth half of what you paid for it?
Have a Target Price in Mind
Put yourself in a strong negotiating position by having a target price in mind before you visit the dealer. Tell the salesperson that you’re ready to buy if they can meet that price. Be willing to walk away and see other dealers if they can’t do so.
If your target price is reasonable, which it should be if you’ve done your homework, you should find that the dealers are willing to work with you to close the sale. The salesperson will most likely try to get you to go above your target price by offering extras, so be ready to politely (but firmly) turn down their offers.
Save Trade-In Talk Until the Price Is Set
One of the first questions the dealer will ask is what kind of car you currently have. Don’t let them distract you by making your current car or trade-in plans a topic of discussion. Tell them you haven’t decided what you’re doing with the old car yet. Save any discussion of trade-in prices until you’ve fixed the price of the new car you’re buying.
This not only makes the negotiating process simpler and less confusing, but it also helps you keep your options open. Selling your old car privately will probably net you a higher sale price anyway.
Online Quotes Can Be a Useful Starting Point
If you’re not sure what the car you’re looking to buy should cost, getting a few online quotes will be helpful. Be sure to check that any online quote you receive covers everything you want, including the right trim, any extras, and delivery.
One useful resource is Kelly Blue Book. This site offers lists of invoice prices for new (and used) cars. The invoice price will be lower than the manufacturer’s suggested retail price. Knowing those two figures will give you an idea of how much negotiating room you have and help you figure out whether the price you’re being quoted by the dealer is fair.
Salespeople Are Not Your Friends
Always remember that a salesperson’s job is to get you to pay as much money as possible for your new vehicle. They may even have ulterior motives, like pushing a certain model or insisting on a specific financing plan.
Successful salespeople are good at building rapport. They are also incredibly persuasive. Don’t let a salesperson talk you into buying something that wasn’t on your original wish list. That slightly nicer trim or those heated seats might seem tempting. However, if the salesperson needs to “tweak the finance package” so you can afford them, you could end up spending thousands of dollars more over the loan term.
Don’t Rush To Give Out a Number
When you’re negotiating any major purchase, it’s best to avoid being the first person to give a figure. Let the salesperson tell you how much the car costs first. This gives you an upper limit because, once the salesperson has said that figure, they can’t raise the price.
Armed with that information, you can give the salesperson the amount you’d prefer to pay, which should be a figure lower than your actual budget. From here, you and the salesperson can negotiate back and forth until, hopefully, you reach an agreement on what the car (and any extras) are really worth.
Shop With a Clear Head
Don’t let yourself get emotionally invested in any vehicle. Remember, you always have the option of going elsewhere whenever you’re buying a new car. If you’re buying a car for your family, be aware that the salesperson might try to figure out whether you or your spouse are emotionally motivated and use that to their advantage.
It helps to agree on a game plan in advance. If possible, don’t shop when you’re in a rush, tired, or have other things on your mind. Treat each visit to a dealer merely as a plan to gather more information, rather than to actually make a purchase.
Take a Friend
If you don’t know what you’re doing (or you’re just not confident in your ability to negotiate), try taking a friend with you that knows about cars. Let that friend do most of the talking.
This is a common strategy when it comes to buying used cars, but it can be just as helpful with new car purchases. Once you’ve been through the negotiation process once or twice, you should feel confident enough to make future purchases on your own. Even if you do know about cars, having a friend come along to support you can still be helpful.
Be Willing To Walk Away
Perhaps the most important thing is to be willing to walk away from a bad deal. Salespeople want to make as much money as possible, but they know they won’t make any money if you leave the showroom empty-handed. If the price you want is fair and the salesperson knows you won’t budge, there’s a good chance they’ll be willing to meet that price.
Even if they aren’t, walking away will save you some time. Don’t bother continuing to negotiate with someone who won’t budge. You’re totally free to go to another dealer, who will hopefully be more willing to meet your price. The beauty of buying a new car is that you have lots of options available to you.