What you need to know before walking onto your next car lot or showroom.
For many buyers, negotiating with a car salesperson is a terribly fraught and often unpleasant process. However, by arming yourself with knowledge and preparing in advance, you can turn the tables and walk into the dealership with confidence. Negotiating the best price is not just a possibility, but a reality that can save you thousands of dollars.
Begin with Research
The cornerstone of any successful negotiation is comprehensive research. Before even setting foot in a dealership, equip yourself with detailed information about the car you're interested in.
Online resources like Kelley Blue Book and Edmunds are invaluable for understanding the fair market value of vehicles. Knowing the average selling price in your area provides a solid benchmark for negotiation. It demonstrates to the salesperson that you are an informed buyer. With this information, you can set a target price for your negotiation. It's usually best to start lower than your target price, as the salesperson will likely counteroffer, and you'll end up somewhere in the middle.
Remember, the dealership needs to make a profit, but there's often room for negotiation, especially on slower-selling models or at the end of the month when salespeople are trying to meet quotas.
Embrace Online Negotiation
Many dealers now have an "internet department" that's introduced the possibility of online negotiating much of the car buying process. This method offers several advantages, including the ability to communicate with multiple dealerships simultaneously, the reduction of high-pressure sales tactics, and the convenience of having offers in writing for easy comparison. When negotiating online, be clear and upfront about what you're looking for and ask for the best offer from each dealer. This approach saves time and puts you in a position to make an informed decision.
Leverage Dealer Incentives and Inventory Knowledge
Understanding the dealership's motivations can give you an edge in negotiations. Dealers often receive manufacturer incentives for selling specific models, which can vary by month or quarter. Additionally, cars on the lot for an extended period may have additional discounts applied to move the inventory. This information, sometimes available on dealer websites or through online research, can be used to your advantage, suggesting that there's room for negotiation on price.
Focus on the Total Price, Not Just Monthly Payments
A common dealership tactic is to focus negotiations around monthly payment amounts rather than the total purchase price of the vehicle. This approach can distract from added fees, extended warranties, or other costs being rolled into the financing. While a low monthly payment may sound appealing, it can often mask a higher overall price or a longer loan term.
By insisting on negotiating the total price first, you ensure a transparent understanding of the car's cost and avoid overpaying through extended financing terms. Negotiate based on the car's total cost and work out financing separately.
Explore Financing in Advance
In addition to researching prices, getting preapproved for financing before you go to the dealership is also a good idea. This way, you'll know exactly how much you can afford to spend and won't be at the mercy of the dealership's financing options. You can also use your preapproval as a negotiating tool, telling the salesperson that you're already approved for a specific rate and asking if they can beat it.
Managing the In-Person Experience
Even if you start the negotiation process online, you may decide to finalize the purchase in person. This negotiation stage can be the most intimidating but also the most rewarding. Maintain a calm and respectful demeanor throughout the interaction. Don't be afraid to pause and think before responding to offers or counteroffers. Remember, the power to walk away is one of your strongest negotiating tools. If the dealer isn't willing to meet your terms, be prepared to leave. Often, the willingness to walk away can lead to a call back with a better offer.
The Art of Closing the Deal
Reviewing the sales contract carefully is essential once you've negotiated a price that aligns with your research and budget. Ensure that all the discussed terms accurately reflect the contract, including the price, warranty information, and additional fees. Mistakes or misunderstandings can still occur at this stage, so reviewing the contract can prevent future disputes and ensure that you're fully satisfied with your purchase.
What if Negotiation Doesn't Work?
If the salesperson isn't willing to negotiate on price, try negotiating other aspects of the deal, such as including free accessories, offering a longer warranty, or reducing the documentation fees. Every little bit helps, and these extras can add up to significant savings.
Remember, the decision to buy a car is a significant one, and it's important not to rush into it. If a salesperson is pressuring you to make an immediate decision, it's often a sign that they're not offering you the best deal. A reputable dealership will respect your need for time to consider your options and make an informed choice.
The Takeaway
Negotiating the price of a car can be intimidating, but it doesn't have to be. By doing your research, setting a clear target price, and being willing to walk away if necessary, you can ensure that you get the best possible deal. Remember, the more prepared you are, the more confident you'll feel, and the better the outcome will likely be.