How to Negotiate the Best Price on a New Car
Regardless of what kind of car you’re shopping for, you probably have one goal in mind: getting the best price possible on your next new car. However, when you start to weigh in factors like rebates, financing incentives, your car’s trade-in value and various fees, the process can start to seem a little complex – especially if you’re relying on someone who wants to make a sale to guide you through the process. However, you can negotiate the best price on a new car by sticking to this plan.
Get Quotes from Multiple Dealerships
Before you even set foot on a showroom floor, it makes sense to call around and get quotes from competing dealers. Don’t mention your trade-in, monthly payments or financing options. At this stage, you’re only interested in the vehicle’s out-the-door price. A car dealership’s goal is to get the most money possible for each car it sells. By making them compete with each other for your business, you’ll be one step ahead when you go to the dealership.
The Negotiation Process
The dealership wants to sell you a car, and you want to buy one. Seems simple, right? Well there’s no reason it can’t be, assuming you follow this code of conduct:
Don’t Become Emotional
Buying a new car can be an emotional process. It’s even more emotional after you’ve just test driven one that’s exactly what you want, but try to keep those feelings at bay. Use good judgment and avoid anything that would heighten your emotional attachment to the car, such as taking it home for the night.
The dealership is at odds with you in some respects, even though they want to sell you a car. You want to get the best deal you can, but car dealers try to maximize profits on every car they sell. This can create some tension, but it’s in your best interest to remain friendly and courteous. A hostile negotiation is uncomfortable for everyone involved, and the staff will be more likely to work with you if you seem calm and friendly.
Be Ready to Walk Out
Remember that you always have the option to leave, regardless of the situation. Whether you don’t like the deal that’s on the table, or if high-pressure sales tactics are making you uncomfortable, you can always walk away from the negotiation table. In fact, walking out may work in your favor if the dealership calls you back in an attempt to earn your business. There’s a chance they’ll be more willing to negotiate the second time around.
Shop During Off Hours
Car dealerships are typically busiest on nights and weekends, and a large pool of customers might make it harder for you to negotiate. Going to the dealership during a weekday means you’ll compete with fewer customers. You’ll be more likely to get a good deal since the staff will be focused specifically on selling to you.
Negotiate the Purchase Price
Keep it simple. Don’t talk about anything except the final purchase price of the car. This is especially important if you plan to use outside financing or pay cash, since dealerships make money by offering loans for the vehicles they sell. Think of the dealer as the middle man between lenders and you, since dealerships make money by securing financing through lenders. Avoid discussing the following three things until you have your new car’s price in writing:
You may have a maximum monthly payment in mind that you can afford, but it’s not in your best interest to shop by monthly payment, especially if the dealership can meet your requirements by stretching financing out over an extra year instead of dropping the car's price.
Your Car’s Trade-in Value
Bringing up your trade-in too early can complicate the process, and make it more difficult to lock in a good new-car price. Additionally, it allows a salesperson to draw your attention away from the sales price by moving numbers around. For example, a slightly higher sales price may not look so bad if you think he or she is offering you a good deal on your trade-in.
Rebates and Incentives
A big cash back rebate may have gotten you in the door, but discussing rebates and incentives before you’ve locked a price in could end up costing you more. If the car you’re considering has a cash back offer available, have them subtract the difference after you’ve negotiated a price, not before. That way, you’ll have a clearer picture of how much money the dealer is knocking off the price of your next new car.
Some Fees are Negotiable
In general, you’re going to have to pay title and licensing fees, sales tax and a destination fee, which is set by the manufacturer. However, that’s not the case with “dealer fees.” Many dealers add these charges in toward the end of the negotiation process in order to recoup some profit. If the dealership tries to add a dealer fee, such as “dealer prep” or a “marketing fee,” it’s up for negotiation.
The car buying process can be confusing, but sticking to this plan should help simplify the process, which will help you get the best price possible on your next new car.