Car Buying Articles

Negotiating Car Prices

Easy Tips for Getting a Better Price on Your Next Car


  • Negotiating for a Car

    Negotiating for a Car

    Negotiating for a new or used car is easier than most people think, if you follow a few simple tips. | June 11, 2013

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Many people say they aren't good at negotiating to buy a car. This is partly because people see negotiating as confrontational and they dread conflict. But with a change of perspective and a few simple negotiating tips, you can save hundreds of dollars — maybe even thousands — when you buy your next car.

How much can you save? If you negotiate even a little, you can save $1,000 on most new cars. If you negotiate actively, you might save $2,000 with about an hour's worth of discussion at a dealership.

This article covers negotiating car prices when you are physically present in a dealership. Many people might prefer shopping through the Internet department. The prices are often so good that it requires little or no negotiating.

Where To Begin?
Many people are confused about how to start a negotiation, which usually takes place when you and the salesperson sit down in a sales office at the dealership.

In many cases, the car salesperson will start this way: "What monthly payment would comfortably fit into your budget?"

It's important that you sidestep this question because it's hard to track the price of the car when the salesperson presents it as a monthly payment. Instead, tell the salesperson you will talk about financing later and only want to discuss the purchase price of the car.

In response, or maybe as his opening move, the salesperson will say something like, "Make me an offer." Or even, "What are you willing to pay?"

Be careful of how you respond. There is an old saying that goes something like this: When negotiating, the person who speaks first loses. This simply means that if you are the first one to name a price, the other party might have been ready to name an even lower price — but you'll never know that.

Now, let's see how this plays out in our scenario. After the salesperson says, "Make me an offer," you could respond with: "We've done a lot of research on what this car sells for and we've shopped around a bit. But we would really like to hear from you first. After all, it's your car and you're the expert. So what's your best price?"

A response like this accomplishes several things. First, it lets the salesperson know that you're an informed buyer. Secondly, he probably assumes you have offers from other dealerships, since you've said that you've shopped around. He knows he has to beat these offers. So there is a good chance that he is going to jump to the low end of the dealership's pricing structure.

However, if you do decide to speak first in the negotiation, you had better be prepared with an offer that is as low as possible, but still in the ballpark. To do this, make sure you know the numbers behind the deal.

Zeroing in on the Right Price
Knowing the right price for a car is a simple matter of looking up the car on the Edmunds.com True Market Value (TMV®) pricing page). Knowing a vehicle's TMV is powerful, and it will make you a good negotiator.

TMV is based on actual sales prices of car deals across the country and it is the price at which a dealer will likely sell you the car. It represents a fair deal for you and a fair profit for the dealer. But can you get the car for less than TMV? Possibly. Should you try? It depends on you and your desire to negotiate. You can always test the water by throwing out a lower price.

Many car buyers seem reluctant to make a low offer. Often people say they are afraid the salesperson will laugh at them, or become angry or act insulted. And yet if you think about it, the salesperson is really doing the same thing with you, but in reverse.

In "Confessions of a Car Salesman," Edmunds shares the secrets of negotiating tactics at car dealerships. As part of the sales training process, a new salesman was repeatedly told to quote customers very high prices, then come down slowly: "Hit 'em high and then scrape them off the ceiling and make a deal." In other words, if the salesperson starts very high, there is a lot of room to drop the price and still make plenty of profit. You're taking the opposite, low-moving-up approach.

Use TMV pricing to create your negotiating strategy. Ahead of time, think of what your opening offer will be, how you will counteroffer and what your highest price will be. Then, when you're in the heat of the moment, you will negotiate like a pro.

Here are a few additional tips to help you get a good deal on your next car:

  • Don't buy a car in a hurry (unless you have no choice). And don't go into the dealership unprepared. The salesperson may draw you into negotiations before you are ready.
  • Check all the numbers, such as TMV®.
  • Read online reviews of the dealership before you begin negotiating. Start with a dealership that has good customer reviews.
  • Eat before you go to the dealership. With the test-drive, the negotiating and the financing process, you might be there for four hours or more, and you want to be able to think clearly. You can speed things up by being prepared for all the car-buying paperwork and also shopping midweek rather than on the weekend.
  • Don't enter negotiations with a salesperson who intimidates you. Negotiating should be a relatively comfortable, win-win relationship. Ask for the sales manager and request a different salesperson. Or "test-drive" your salesperson before you even get to the dealership.
  • Take risks. Treat negotiating as a game, and know that the car salespeople are doing the same.
  • Get multiple quotes and ask the salesperson to beat your best price.
  • Always remember to walk out if you don't reach a deal you like.

And finally, know your style of negotiating and use your unique qualities to your advantage. After all, you won't get what you want unless you ask for it. Negotiating is just another way of asking for what you really want.

Comments

  • mcflyguy mcflyguy Posts:

    Very informative and enjoyable article..

  • sjvhondas sjvhondas Posts:

    For the Record, PROFESSIONAL Sales Consultants don't think of negotiating as a game. It is our livelihood and the chief means of support for our families. I take my deals very seriously and understand someone else's livelihood is at stake if they enter into a financial contract they are not able to uphold. Ethics are not absent in the field of sales. Please keep this in mind as you conduct business, that salesman and women are people too and can and do empathize with the consumers. Happy Shopping.

  • grant81 grant81 Posts:

    I spent about 20 minutes reading this and boy am I glad I did. I actually got a lot from it. Some of the points really made sense like eating before arriving at the dealership because I might be there for a while. I never would have thought of that so thank you. It seems like there's a lot of attention on whether or not Six Sigma training for car manufacturers is really necessary or not. i found another article on your site that mentioned this so I was able to get answers to two of my questions from your site. Thanks again for the great information.

  • moemoe455 moemoe455 Posts:

    I am only going to say this. What makes people think that they can go in and demand the invoice price? Look at it this way, if you are in business and sell anything. You have your normal bills, lights etc. Someone comes in and wants to buy things for the price that you paid for it and nothing else. More than likely these people don't take into account that the business owner also has to make a profit to pay the employees that he has, that have families too. Pay the lights to stay in business etc. Be real people, at the end of the day MSRP is a fair price for the vehicle. I can understand not wanting to pay for what’s over that on the "Bump Sticker" or the things that F&I tries to sell you, you can always say NO! I see people get on here and tell Sales people that "You picked this job, etc." Well Sales people are the life line of the economy, without them factory’s would close, and then where would you be? More times than not the customers make the experience 100 X worse than it has to be. They walk into a car dealership with a chip on their shoulder and automatically give the Sales person hell. Customers make things harder than they have to be, you will get a good deal if you ask for something that is not out the box. Just saying, slam me if you want but think about it.

  • bdechent bdechent Posts:

    The comment above me has a valid point. There is no other place where people shop and automatically walk in with a chip on their shoulder. I fully understand the nature of the job I have chosen, however if you have a bad experience at one dealership, there is no reason to take it out on another. People do not understand that the industry is NOT what it used to be. Car buyers recieve "Surveys" rating their experience at a dealership. With all the information thats out there (google reviews, yahoo reviews, Dealerrater.com) it is important for a dealership to maintain a positive reputation by providing a genuine "experience" rather than just getting a sale. Price is always important because we are all on a budget these days. But how do you want to be treated after a purchase? Do you want someone to follow up with you to make sure all is well with your car? Do you want someone who is concerned with how much you like the vehicle afterwards? Would you rather have a service advisor call and introduce himself/herself rather than walk in for service and not know anyone? Do you want someone to show you the ins, outs, features, and functions of your car? You bet you want all of the above. How would you feel if someone said; "Heres yours keys, theres your car, see you later!", after you just spent $18k-$50k with their business. Nowadays its about the "experience". You want someone who you know will treat your family, friends, co-workers with respect. In order to do that the business needs to stay open to employ and pay salespeople, service advisors, mechanics..etc. So lets say you pay $500 over invoice price..($6-$10 extra per mo)..Is is worth it knowing that the dealership you purchased from is going to ensure that they take care of you before, during, and long after the purchase? Try this, ask a sales person what the dealership will do for you AFTER you purchase a car. Also, if you walk into a dealership and act like a complete jerk, dont expect anyone to bend over backwards to try and earn your business. A dealership reserves the right to say "Good luck on your search. have a nice day!" Please dont think that we won't.

  • aad11 aad11 Posts:

    Moemoe: what the heck is a bump sticker? As for "invoice" price, you know, I know, and the kid next door knows that this is *not* the net the dealer paid for the car. Where else is a buyer charged a "destination fee" or bull like "dealer prep" or "doc prep fee". I've had car salesmen lie to me about equipment, I've had one repeatedly hit on my wife. I've seen them consistently act like commission sharks -- a sales critter who isn't the first to swoop in on me will never in the future so much as give me the time of day. I don't much car about how the sales critter will treat me in the future because we won't have any contact. It's not like I'll even make the mistake of using dealer service depts ever again: shoddy work, inflated hourly rate, undue waiting, refusal to fix their work when it causes gas to spray over the engine. Padding bills with " diagnosis" after I tell them exactly what needs to be done. Customers understand that dealers need to make a living, but inflated MSRP tells us right off the bat that the dealer is trying to gouge. If you want our respect, lose the commission crap and treat us the way you would like to be treated. Don't blow cigar smoke in my face, don't give me histrionics when I want a certain color or decline %*!€^ leather seats or "paint sealant". David McDavid KMA.

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