How to Negotiate Car Prices

I have over 15 years of experience buying and selling cars for Edmunds' test fleet, plus my own personal vehicles, and I'm going to let you in on a secret. You don't have to be an expert on negotiation to get a good deal on a car. The truth about negotiating car prices is that it's less about a heated back-and-forth discussion on the price of one car and more about setting yourself up with options and the numbers to back them up. In this article, we'll discuss what that looks like and how it applies to new cars, used cars and leased cars.

The best way to negotiate a car's price is to obtain multiple offers from dealerships and use the lowest offer to either improve on the discount or match the sale price at a location closer to home. Dealer websites may only list the manufacturer's suggested retail price (MSRP), so we recommend contacting the dealer directly to confirm whether there are any markups or unwanted dealer-added accessories. 

Note that regardless of your negotiation skill level, your actual discount will vary based on the vehicle's popularity, the quantity the dealership has in stock, and the salesperson's willingness to negotiate.

Table of contents:

• Car negotiation basics: Determining the market value
• How to negotiate a new car price
• How to negotiate a used car price
• Can you negotiate a car lease?
• Extra tips on how to negotiate a car price
• FAQs

Car negotiation basics: Determining the market value

You'll need to determine the vehicle's market value before you begin negotiating. This figure will serve as the baseline for your strategy and give you a reference point as you start getting price quotes from the dealership. Edmunds calls this the Edmunds Suggested Price, formerly known as True Market Value (TMV). The Edmunds Suggested Price is what we recommend you pay, excluding taxes and 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 you like, either on Edmunds' car reviews page or the new car and used car inventory pages. For new cars, there should be a "pricing" box near the top of the page. It shows the Edmunds Suggested Price and varies it by the selected trim level. For used cars, that same box will instead show the average price of all the vehicles of that make and model in Edmunds' listings. This range can be widespread, which is why we recommend looking at a specific piece of inventory.

Edmunds features a price details section on each vehicle listed for sale in both new and used inventory that shows if the price qualifies as "great," "good" or "fair" — or is instead a high price. It also includes a figure indicating how much above or below market the vehicle is. This is your basis for determining whether you're getting a good price or were quoted on the higher end of the spectrum.

Keep in mind that Edmunds' suggested pricing is an average. Your goal is to get a price at or below it. But if it is a little higher, that's OK too.

How to negotiate a new car price

Step 1: Get price quotes

First, we recommend calling, emailing or texting at least three nearby dealers to get a range of price quotes. You can also submit your information on Edmunds or the dealer's website. If you're calling, ask for the internet sales manager and, during that discussion, verify that the vehicle is in stock and that it has all the options you want.

Once you have a few quotes in hand, you can proceed with the following strategies based on your level of comfort. For starters, Edmunds has a price checker tool for new vehicles, which allows you to enter the details of a quote you've obtained and get a rating to let you know if it is a fair, good or great deal.

Step 2: Choose your negotiation strategy

Strategy A: No negotiation; the path of least resistance

Not everyone feels comfortable with negotiating, and that's OK. If this is you and you still want a fair price, the strategy is to simply take the lowest offer and move forward with it. Here, you're not really "negotiating" per se, but it allows you to feel confident that you were offered a good deal. This is especially true when a dealership has offered you its "best price" from the start, in which case there's no point in wasting time and energy haggling for more.

Strategy B: Negotiating with offers (Edmunds Recommended)

In this scenario, you are letting the multiple offers you've been given do the negotiating for you. Here's how it works. Let's say dealership X offered you a better price, but dealership Y is closer to home. A simple negotiation tactic is to call dealer Y and ask whether it can match or improve the price you were quoted by dealer X. If dealership Y declines to drop the price, you still have the offer from dealership X to fall back on. The dealership may not like the fact that you're "shopping their quote around," but that's within your right as a buyer, and ultimately, it'll respect the fact that you've done your homework rather than pulling numbers out of thin air.  

Be prepared to show proof of the offer if the dealer doesn't believe you. It's also important to make sure you're making apples-to-apples comparisons between the offers. In other words, don't try to get away with showing the dealer an offer on a less expensive trim level when you're really looking for the top trim.

If you're inclined to push further for an even better deal, you'll need to do some old-fashioned negotiating, so keep reading. 

Strategy C: Classic negotiation

You'll need to approach the negotiations carefully as the salespeople are trained professionals. That doesn't mean they're not willing to work with you, but it will be more effective to justify the discount with data rather than simply because you want a bigger discount.

When talking with a salesperson, a typical conversational opener from the salesperson might be, "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 that you just want to discuss the purchase price of the car for now. The salesperson will usually check with the manager and then come back with a price. You may not like that price, however, and this is where the negotiation begins.

Asking for a lower price: After the salesperson presents the initial offer, you could respond with: "I've done a lot of research on the market value of this vehicle and 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 of things. First, it lets the salesperson know that you're an informed buyer. You are justifying the price drop rather than asking for a discount without context. Second, the salesperson knows there are other offers to beat, so there is a good chance they will jump to the lower end of the dealership's pricing structure. This approach works for both new cars and used cars.

How to negotiate a used car price

Step 1: Find the used car market value

When negotiating the price of a used car, an apples-to-apples comparison is unlikely; instead, your goal is to make an offer as low as possible while still being in the ballpark. If you found the vehicle on Edmunds' inventory pages, refer to the price section to see the range of what might be a fair, good or even great deal.

If you found the vehicle elsewhere, head to our appraisal tool and be ready to answer a number of questions about its trim, options and condition level. Then, click on the Edmunds Appraisal Report to get a rough idea of what the dealership might have paid for the vehicle. Compare the "trade-in" price to its estimated "dealer retail" value on Edmunds. Your goal is to land between those numbers. 

You can also look for comparable used vehicles near you to see what others are listing them for. It's important to note that the miles and options are similar — otherwise, you won't be making an even comparison. Once you've done all this research, you'll have a better idea of what a fair price would be.

Step 2: Reach out and make an offer

Contact the dealership or seller and ask them what their "asking price" is. You likely know the listed price, but sometimes the salesperson may quote you a lower figure; in that case, you've already gained some ground.

If you're the first to make the offer, give yourself room for the dealership to make a counteroffer. In other words, if a vehicle is on sale for $30,000 and your research shows it as a "fair deal," make an offer near the top of the "great deal" spectrum, which, for the sake of argument, would be about $27,500. Make an offer of about $27,000. You should know in advance what your opening offer will be, how you will counter the dealer's offer, and the highest price you're willing to pay. Then, when you're in the heat of the moment, you won't get flustered. You will negotiate like a pro. The salesperson might counter with $28,500, which is more than you asked but still less than the original asking price.

Step 3: Don't be afraid to vouch for a better price

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

Can you negotiate a car lease?

It is possible to negotiate a car lease, but it is important to know which numbers to focus on. For example, the salesperson will be happy to lower your monthly payment, but it may require a larger down payment, which we don't always recommend on a lease.

In general, however, the strategy for negotiating a car lease is mostly the same as shopping for a new car. Once you've determined how much you want to put down and a target monthly payment, get multiple quotes from dealerships near you. Lease components such as the cap cost, money factor and residual value can vary from one dealership to the next, which will result in different figures, even though you may be putting the same money down. 

There are times when a manufacturer offers a promotional lease deal with certain terms and money due at signing, in which case you may not be able to negotiate the lease price further. 

Check out 10 Steps to Leasing a New Car for more detailed information.

Extra tips on how to negotiate a car price

Here are a few more 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 for a long day at the dealership. Between 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 think clearly. You can speed things up by being prepared for all the car buying paperwork. Shopping midweek rather than on the weekend will also cut down on the time you spend at the dealership.
• Other items are negotiable. While it is easy to focus on negotiating the MSRP (also called sticker price), don't forget you can also negotiate your interest rate, trade-in, and other products available for sale, such as undercoating or an extended warranty. 
• Get preapproved from a bank or credit union before visiting the car dealership so that you can compare interest rates.
• 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. You can also "test-drive" your salesperson before you even get to the dealership.
• Always remember you can walk away if you don't reach a deal you like.
• Dealer add-ons can sometimes be negotiated. These are items that were not originally included with the vehicle but that the dealership installed before putting it up for sale. You're not obligated to buy them, but understand that the dealership may not always be willing to remove them from the asking price.
• Don't forget about incentives and rebates. Be sure to ask about any new vehicle rebates that may be available. Even if the car has a cash incentive, you can still negotiate for a better price.

FAQs

Q: How to negotiate a car price when paying cash?
A: Buying a car 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 they can make a little profit by 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 a "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 pricing style at CarMax or at a number of dealerships that might use 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 pricing approach might 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 vehicle's market value, get several offers from dealers, and go with the place that treats you well and offers 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.