Eight Tips for Negotiating Your Car Purchase
Patience is a virtue when it comes to buying a car.
Knowing how, what, and when to buy can mean more negotiating power and a better deal to be had.
- Research car prices before negotiating.
Knowing how much you should be paying for a vehicle is the first step in negotiating a good price.Visit Kelley Blue Book or Edmunds.com to find used car values and invoice pricing for new vehicles. You can also ask a dealership to see the invoice on a new vehicle. Dealers usually get a 3% "holdback" off the Manufacturer's Suggested Retail Price (MSRP) for each new car sold. The 3% is usually paid by check to the dealer from the manufacturer after the vehicle is sold. If you want to know if prices are going to go up or down within the next 30 days, use the Edmunds.com True Market Value® Predicted Price Trends. This free online service forecasts pricing for most models to let you know if you should wait a month or two before you buy.
- Negotiate online or over the phone.
Go to the lot to see vehicles firsthand and to test drive the vehicle, but take the emotion and urgency out of the sale through remote negotiations. You can often get a dealer's best price by calling a dealership and asking for a price quote or getting a quote over the Internet. The Kelley Blue Book website allows you to get multiple price quotes from various dealers on new vehicles. Let the dealers get into a bidding war to get your business.
- Shop during the holidays.
There are better times to shop than others. Holiday periods are slow for dealers, so you may get a deal. But keep in mind, they also cut inventory because it's slow, so you might not have as much of a selection.
- Shop early in the week and at the end of the month.
Car salesmen have lots of customers on the weekends, but may be hungrier for a sale if you're the only one calling or visiting the lot. Try shopping on a Monday or Tuesday when you have a salesman's full attention. Also, a dealer might be a few cars short of a month-end quota which will give them a big bonus. They might forego a big profit on your transaction to get that bonus before the end of the month.
- Buy last year's model.
Dealers often try to get rid of last year's inventory through incentives, such as significant price reductions, cash rebates and special financing. Even greater savings are to be had if the manufacturer is introducing a completely redesigned car under the same name. Out with the old, in with the new and you've got yourself a hefty discount.
- Negotiate your car purchase and trade-in value separately.
Get a price for the vehicle you want to purchase apart from your trade-in. You should know what the value is for each, rather than lumping it into one transaction. You always have the option to sell your vehicle through a private party if the dealer isn't willing to give you a fair price. (Find trade-in and private party vehicle values at Kelley Blue Book or Edmunds.com.)
- Turn the tables.
A dealer will often give a price and tell you the deal is only good for that day to pressure you into a sale. After doing your own research beforehand, you can play the same game and give them your own price, telling them your offer expires tonight. Dealers also play good cop, bad cop with a sales manager they need to confer with before they can accept your offer. The sales manager in the back room plays the "bad guy" role, while the salesperson appears to be on your side. This is a common sales tactic found at most dealerships. You can use this tactic after they present a price. Tell them you need to check with your spouse, best friend, mother, father, or accountant—you get the idea. That person can play the role of a tough negotiator so you don't have to.
- Stay focused and don't get emotional.
The easiest way to take away your bargaining power is to get too attached to a vehicle. Always be prepared to walk away from a deal, no matter how much time is invested. This is especially important if you feel pressured to buy. Take a break and start over when you feel comfortable and in control.
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