How to Negotiate the Price of a Car

Negotiate the Best Price

Getty Images/Scott Olson

Regardless of what kind of car you’re shopping for, you probably have one goal in mind: getting the best price possible. 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. Here’s how to cut through all the noise and negotiate the best price on a car.

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. It used to be that you had to call around to various dealerships, but now you can get dealer quotes online. You can use our Best Price Program to get a pre-negotiated price with guaranteed savings.

The best part about these quote programs is that they give you exactly what you’re interested in: the price of the car you want without confusing factors like the value of your trade-in or what you’ll do for financing. If you do decide to reach out to dealers on your own, 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 these steps.

Know What You Want to Pay

If you’ve already gotten a price from a dealer, you’re one step ahead when it comes time to negotiate. We offer pricing tools that tell you if you’re getting a good price on a car. With that info in hand, you’ll have a target price for your negotiations. If the dealer says he’ll give you $1,000 off, you’ll know if that’s a good deal or if he should go lower.

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.

Part of not becoming emotional is keeping your cool. 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. Remember, this is a business transaction.

Be Ready to Walk Out

You always have the option to leave and walk away from a deal. 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. There are other cars, other dealers and other deals out there.

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, which may make it easier to get a good deal.

Negotiate the Purchase Price

Keep it simple. Don’t talk about anything except the final purchase price of the car. Dealers will want to talk about your monthly payments, trade-in value and financing options. Each of those things can obscure the price of the car and make it look like you’re getting a better deal than you are.

Monthly Payments

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. The dealer may play with financing to get you into a lower payment, but that could make you end up paying more for the car over the long term. For example, to lower the payment a dealer might stretch a car’s loan term an extra year instead of dropping the price. That means that you not only pay more for the car, but you also pay interest for an extra year, which costs you money on top of the higher price of the car. Know roughly what your monthly payments will be on your target price, and negotiate on price alone.

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.