For many, the thought of negotiating with a dealership car salesperson fills them with dread. This feeling is partly because people see negotiating as confrontational, and they would prefer not to haggle. But with a change of perspective and a few simple negotiation tips, you can potentially save thousands of dollars from the sticker price when you buy your next new or used car.
How to Negotiate Car Prices
Easy Tips for Getting a Better Price on Your Next Car
Where to Begin?
You'll need to determine the market value of a vehicle before you begin to negotiate. This figure will serve as the backbone of your strategy and will give you a reference point when you start getting price quotes from the dealership. Edmunds calls this the "True Market Value" (TMV) or "Edmunds suggested price." The Edmunds suggested price is what we recommend you pay, not including taxes or fees. It is based on our analysis of millions of data points including supply, demand, incentives, options, and recent nearby transactions.
Start by looking up the car on the Edmunds TMV pricing page. Pay attention to the trim level and options on the car to make sure you're making an accurate comparison. If you're shopping for a new car, look at the TMV price and see where it lies relative to the manufacturer's suggested retail price (MSRP) and the invoice. If you're shopping for a used car, look at the "dealer retail" TMV price. Keep in mind that TMV is an average. Your goal is to get a price below it. But if it is a little higher, that's OK, too.
Things are a bit easier if you're already looking at inventory. You'll see the Edmunds suggested price on new cars and on used cars. There will be a price rating from Fair to Great, with a figure indicating how much "below market" the vehicle is.
Next, we recommend calling, emailing or texting a few nearby dealers to get a range of prices. Ask for the internet sales manager, and in that discussion, make sure the car has all the options you want. You can also search Edmunds' inventory and look for any special offers that will give you a few upfront prices from dealers in your area.
A Typical Negotiation Scenario
When you are sitting with a salesperson, a typical conversational opener might be something like: "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 you just want to discuss the purchase price of the car for now. The salesperson will usually check with the manager then come back with a price. You may not like that price, however, and this is where the negotiation begins.
How Do You Ask for a Lower Price?
After the salesperson presents the price, you could respond with: "We've done a lot of research on the market value of this vehicle, and we have a good idea of what it sells for because we've shopped around a bit. If you can beat this price (here's where you present your best price quote printout from another dealership) we will have a deal."
A response like this accomplishes a couple things. First, it lets the salesperson know that you're an informed buyer. Your goal is to justify the drop in price, rather than present an offer without context. Second, the salesperson knows there are offers to beat. So there is a good chance the salesperson is going to jump to the low end of the dealership's pricing structure, which works for both new cars and used cars.
Tips on How to Negotiate the Price on a Used Car
If you are shopping for a used car, where apples-to-apples comparisons aren't possible, your goal is to make an offer that is as low as possible but still in the ballpark. Use the vehicle's TMV trade-in value as a guidepost for what the dealership might have paid for the vehicle.
If you're the first to make the offer, give yourself room for the dealership to make a counter-offer. You should know ahead of time what your opening offer will be, how you will counter the dealer's offer, and what your highest price will be. Then when you're in the heat of the moment, you won't get flustered. You will negotiate like a pro.
Many car buyers seem reluctant to make a low offer. Often people say they are afraid the car salesman or saleswoman 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 starting with a higher offer and working down. Knowing that you've done some research should give you a bit more confidence in recognizing a good price and knowing when to counter.
Here are a few additional tactics 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 car dealership unprepared. The salesperson may draw you into offer-counteroffer negotiations before you are ready.
- Check all the numbers and ask for the out-the-door price.
- Read online reviews of the dealership before you begin negotiating. Start with a dealership that has good customer reviews.
- Plan to spend a chunk of time at the dealership. With the test drive, a possible trade-in, the negotiating and the financing process, you might be there for four hours or more. Eat before you go: You want to be able to think clearly. You can speed things up by being prepared for all the car-buying paperwork. Shopping midweek rather than on the weekend will cut down on the time you spend at the dealership.
- While it is easy to focus on the negotiation of the MSRP (also called sticker price), don't forget you can also negotiate your interest rate, trade-in and the other products that are available for sale, such as undercoating or an extended warranty.
- If you're planning on financing, getting preapproved from a bank or credit union before visiting car dealers is a smart move.
- Don't enter negotiations with a car salesperson who intimidates you. Negotiating should be a relatively comfortable win-win process. If you get uneasy, ask for the sales manager and request a different salesperson. Or "test-drive" your salesperson before you even get to the dealership.
- Get quotes from several new-car dealerships. Ask them to beat your best price.
- Always remember to walk out if you don't reach a deal you like.
- Don't forget to discuss details such as warranty limits, loan and financing offers, or any add-ons the dealership may have included in your pricing. Be sure to ask about any new-vehicle rebates that may be available. These extra questions can help make sure you get a good deal.
And, finally, know your negotiating style and use your unique qualities to your advantage. You won't get what you want unless you ask for it. So don't be afraid to haggle. Because negotiating is just another way of asking for what you really want.
Q: How to Negotiate a Car Price When Paying Cash?
A: Paying with cash doesn't automatically mean the dealer will give you a killer deal. If anything, the dealer would prefer you finance the car so it could make a little profit from securing the loan. That said, it does simplify the process. You can ask for the "out-the-door price" instead of getting caught up in discussions of monthly payments and interest rates.
Q: What Does "No-Haggle Price" Mean?
A: A "no-haggle" price is another term for a fixed price. It means you cannot negotiate for any discounts. You'll find this style of pricing at CarMax or a number of dealerships who might have their own name for it like "Sonic Price" or "Best Price." If you don't like the back and forth of a typical car negotiation, this style of pricing may work best for you.
Q: Can You Negotiate a Tesla Price?
A: No. Tesla does not offer any discounts on its vehicles. Everyone pays MSRP.
Q: How Do I Get the Best Deal on a New Car?
A: Research the market value of the vehicle, get a number of offers from other dealers, and go with the place that treated you well and offered a competitive price. That said, price isn't the only factor that determines a good deal. Read "What Are the Elements of a Good New-Car Deal?" for more.