Car buying can be nerve-wracking. You’re typically making one of the three biggest purchasing decisions that you’ll make in your life (the other two: college choice and home buying). Your car is one of the most visible manifestations of your personality. It also needs to get you and your family to work, school, and everywhere in between.
Car buying is the most intimidating if you’re not prepared. The first thing that you as a buyer need to do is try to get as much emotion out of the buying process as possible. It’s not easy, but remember: It’s a business transaction, nothing more and nothing less.
Unfortunately, car buying is also one of the last bastions of freewheeling price negotiation. Nearly every facet of the transaction can be adjusted as you strive to get the best new car deal and the dealer tries to get the most for their product. Don’t hate the salesperson, manager, or finance manager for this; they’re simply doing their job.
The two biggest factors in the process are knowledge and confusion. Your best friend is knowledge and the dealer’s best friend is confusion. When you start to weigh in factors like rebates, financing incentives, your car’s trade-in value, and various fees, the process can get rather complex and confusing – especially if you’re relying on the salesperson to guide you through the process.
Fortunately, you're already on the right path; the fact that you’ve landed on this page means that you’re arming yourself with knowledge.
Follow these tips to cut through the noise and negotiate the best price on a car.
Get Quotes From Multiple Dealerships
It’s never been easier to get quotes from multiple dealerships, and you don’t even have to drive across town. The best way to get online quotes is to use our Best Price Program to get a prenegotiated price with guaranteed savings. You can also go online and use the quote tools on dealer and manufacturer websites.
The best part about these quote programs is that they give you exactly what you’re interested in: the price of the car you want without confusing factors like the value of your trade-in or what you’ll do for financing.
If you do decide to reach out to dealers on your own, don’t mention your trade-in, monthly payments, or financing options. At this stage, you’re only interested in the vehicle’s sales price. Be sure that any quote includes all of the taxes and fees involved in the transaction.
Know What You Want to Pay
You’re several steps ahead when it comes time to negotiate if you already have a price from a dealership in hand, a pre-approved financing offer, and knowledge about the value of your trade-in. Be sure to check our new car pricing tool to ensure that the quotes are in the ballpark of what you should expect to pay. If they’re too high, keep looking, even expanding your search to dealerships a couple hours from your home. If they’re suspiciously low, that should raise a red flag.
With that info in hand, you’ll have a target price for your negotiations. If the dealer says they'll give you $1,000 off, you’ll know if that’s a good deal or if they should go lower.
It’s critical at this juncture to be totally honest with yourself about what you are able to pay. Remember that your monthly payment is only one component of car ownership. There are fuel, insurance, parking, and maintenance costs to consider.
Don’t Become Emotional
As we noted earlier, buying a new car can be an emotional process. It’s even more emotional after you’ve just test driven your dream car. However, you need to try to keep those feelings at bay. Use good judgment and avoid anything that would heighten your emotional attachment to the car, such as taking it home for the night. They might offer, but don’t bite.
You want to get the best deal you can, and dealers try to maximize profits on every car they sell. It’s naturally an adversarial process, with a bit of tension involved. It’s in your best interest to remain friendly and courteous. A hostile negotiation is uncomfortable for everyone involved, and the staff will be more likely to work with you if you seem calm and friendly.
Remember, this is a business deal, and the salespeople have extensive training on how to manage the transaction in their favor. You’re much more likely to get a positive outcome if they like you, instead of wanting to stick it to you because you’re acting like a jerk.
Be Ready to Walk Out
This is your biggest advantage, and their greatest fear.
If you don’t like the deal that’s on the table, or if high-pressure sales tactics are making you feel uncomfortable, you can always walk away. There are other cars, other dealers, and other deals out there.
If the process totally gives you the sweats, there are alternatives to going through a dealer. Auto brokers can be recommended by your lender or auto club, and (for a fee) they will negotiate on your behalf, even delivering the car to your driveway.
Shop During Off Hours
Going to the dealership during a weekday means you’ll compete with fewer customers, which may make it easier to get a good deal. You’ll also have shorter waits to take test drives, confer with managers, and get into the finance office if you decide to buy. Weekends and nights are the busiest times at the dealership.
Negotiating the Purchase Price
The less you talk the better. While they will try to mine for information, you should keep it simple and businesslike. Don’t talk about anything except the final purchase price of the car at this point. If you’re taking a test drive, many dealers will ask for your social security number before you get in the car. You should politely decline if possible. They want to use it to run a credit check on you while you're test driving, so they can put a financing package together that is profitable for them. Fortunately, with your financing research, you’re already one step ahead of them.
Dealers will want to talk about your monthly payments, trade-in value and financing options – everything other than the true price of the car. Each of those things can obscure the price of the car and make it look like you’re getting a better deal than you are.
Don't Only Focus on Monthly Payments
You may (and probably should) have a maximum monthly payment that you can afford in mind, but it’s not in your best interest to shop by monthly payment. When you shop by monthly payment, rather than the total cost of the vehicle, you’re more susceptible to financing mechanisms that can have you paying thousands more over the life of the loan.
For example, to lower the payment, a dealer might stretch a car’s loan term an extra year instead of dropping the price. That means that you not only pay more for the car, but you also pay interest for an extra year -- a double win for the dealer and their finance company, but a huge loss for your pocketbook. Know roughly what your monthly payments will be on your target price, and negotiate on price alone.
There are financial calculator apps for smartphones. Install one, or use the one on our website, so that you can check the dealership’s math.
Negotiate Your Car’s Trade-in Value Separately
Bringing up your trade-in too early can complicate the process, and add to the confusion that the dealer relishes. It allows a salesperson to draw your attention away from the sales price by moving numbers around. For example, a slightly higher sales price may not look so bad if you think he or she is offering you a good deal on your trade-in.
You should already know what your car is worth, and staying with that number through the negotiation process will deliver a truer price on your new car.
Negotiate Rebates and Incentives Separately
Part of your research process should include a search for deals on the model or brand of car you’re looking for. But bringing that knowledge up too early in the process can lead to paying more than you should.
Do your best to lock in a price, before the incentives are applied or deducted. If the car you’re considering has a cash back offer available, have them subtract the difference after you’ve negotiated a price, not before. Negotiating an awesome price, then getting cash off or zero percent financing, is a special kind of wonderful.
Know Which Fees Are Negotiable
There are a few things that you can’t negotiate. You’re going to have to pay title and licensing fees, sales tax, and a destination fee, which is set by the manufacturer. There’s a growing tendency, however, for the dealer to include a number of other fees, such as documentation, marketing, or dealer fees, which are open to negotiation, though the dealer won’t want to. They’re the dealer’s fixed overhead costs, and their inclusion in your deal shouldn’t be considered a certainty.
When you’re in the finance office signing the final paperwork, the finance manager is likely to offer you any number of add-ons, from an extended warranty to paint protection or key insurance. Many of these items can be purchased from outside companies, including your lender, insurance agent, or independent shops. If you’re interested, be sure to do your research up front, so you have an idea of what you should be paying.
To wrap it up, knowledge is your friend, confusion isn’t, and you always have the option to walk away if you’re uncomfortable. The car buying process can be daunting, but sticking to this plan should help simplify it, helping you get the best price possible on your next new car.
