Supercharge Your New Ride: Negotiating at Car Dealerships
When you’re negotiating a car purchase—whether it’s new or used—don’t be afraid to walk away from a bad deal and wait for the right price.
Next to buying a home, purchasing a car is one of the biggest financial decisions you’ll face in your life. And if you’re not a great negotiator, you could be drastically overpaying for that vehicle. Even if the car you end up with isn’t a lemon, you still don’t want to be paying more than you should!
Luckily we have the internet, which means there is a lot of information out there on how to best guard yourself against unfair prices. When it comes to buying a car—and negotiating with salespeople—here’s what you need to know.
Do your research.
There is endless research out there about your new dream car or your “just for now” car. If you find some options at a local dealership or online be sure to do your own research away from the lot to determine what’s best for you.
U.S. News has some great options for checking out different types of cars as well as comparison tools.
“Our new car rankings and used car rankings will show you the pros and cons of nearly every car, truck, SUV, and minivan on the market,” according to their latest car negotiation article. “You can use our comparison tool to see how they stack up against one another. You can see the best deals carmakers are offering on our new car deals, subsidized lease incentives, and used car deals pages.”
You can also check out CarFax if you’re looking at a used car. CarFax can give you an insider’s perspective on the vehicle’s history including collisions.
Jason Lancaster (a former car salesman and manager) via Forbes offers some great tried and true perspective as well that won’t steer you wrong even six years after publication: “If you’re buying a new car, Edmunds and TrueCar provide ‘true market’ estimates that are reasonably accurate. If you’re buying a used car, KBB is a great resource, as it will tell you both retail value and wholesale (aka trade-in) value.”
When you’re negotiating a price, you want the upperhand. If you know the “true” value of the car beforehand you’re better equipped to get the best deal possible.
Know your limit.
This seems obvious, but it bears repeating. Know what your budget is and stick to it. If something is simply out of your price range, walk away. There comes a point when the price simply won’t go any lower and you shouldn’t push yourself past what you can afford.
Lancaster’s advice for this is simple.
“Tell the salesperson and sales manager that you’ll sign the paperwork the minute they hit your target figure,” he said at Forbes. “Politely decline any counter-offers, give them your phone number, and leave. If the price you’ve proposed is within the realm of possibility, they’ll call you at some point.”
U.S. News also suggests leaving a number to reach you and walking away if the price point doesn’t hit what you need it to. It’s a way to stop yourself from spending too much and also may help you get that deal you were hoping for.
The Washington Post suggests offering counter offers in smaller increments than theirs. Instead of putting your offer up by $1,000 try $500.
“One key factor in this decision is how well you know what you want,” advises Harvard Law School. “If you’ve picked out a car down to the very last option, then by all means let the Internet do the haggling for you.”
Get your own outside financing.
This was the case across many different negotiating lists and articles. If you get your own financing outside of the dealership you’ll likely have an optimal financing option.
“Car dealers don’t make money just by selling cars,” warns Elisabeth Leamy at the Washington Post. “They make money selling financing. It’s another moving part that complicates your negotiation. That’s why it’s essential to get preapproved for a loan at a bank or credit union before you ever talk to a dealership. After you’ve negotiated a price for the vehicle, you can see whether the dealership’s financing is any better than your own.”
By going in with a financing package in hand you have something to compare the dealership’s option to. That isn’t to say your package will always be better than what the dealership has to offer, but it gives you more freedom and another negotiating tactic.
U.S. News goes so far as to say that “smart buyers” would never go near a dealership without considering outside financing first.
“Without a pre-approved offer, the dealership’s finance officer will have no incentive to try to find you a better deal on financing,” according to U.S. News. “Before you agree to any financing deal, make sure you know all of its terms—not only the interest rate, but also the length of the loan, if it has prepayment penalties, and any fees that are charged by the lender.”
Remember to be polite.
Car shopping is stressful. But there is no need for big egos or unkindness between yourself and the salesperson. They are, after all, just doing their job. U.S. News reiterates the fact that purchasing a car is a business transaction. As emotional as things can get, it’s not worth having emotions get the better of you.
“Politeness and professionalism should be the name of the game in all phases of the car buying process,” U.S. News advises.
Being polite to the salesperson or manager is so vital, in fact, that it’s Lancaster’s final piece of advice in his list of 8 negotiation tactics. With a history of selling cars, Lancaster’s advice is worth taking because it’s coming from personal experience.
“There are a lot of things that suck about working at a car dealership, not the least of which is being treated like crap by most of the people you deal with,” according to Lancaster. “While dealership employees learn how to ‘warm customers up’ —it usually only takes a minute or two to get a stranger to laugh and relax a little—it’s emotionally draining. Therefore, when someone starts dictating terms and making threats, most salespeople and sales managers will respond aggressively. It’s human nature. Instead of finding a way to make a deal, you’ll be told to wait an hour because someone is ‘on the phone with Japan.’”
To learn more about how you can save money, check out these other posts and articles from OppLoans:
- How to Save Money on Plane Tickets and Air Travel
- The Broke Person’s Guide to Spring Cleaning
- How to Budget and Save Money When You’re Making Minimum Wage
- 5 Great Tips to Save Money on Your Wifi Bill
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