Car salesmen are notorious for their high-pressure tactics, but don’t let them steamroll you. The thought of facing aggressive sales pitches and complex jargon can be daunting, but it doesn’t have to be.
With a few insider tricks up your sleeve, you can walk into the dealership with confidence, armed with knowledge, and leave with a killer deal that makes you feel like a pro. Whether you’re buying new or used, the strategies outlined below will empower you to take control of the negotiation process and save big bucks. Here’s your ultimate guide to outsmarting car salesmen and ensuring you get the best value for your money.
To help you navigate the car buying process like a seasoned negotiator, we’ve compiled 8 essential tips that will give you the upper hand at the dealership. These strategies are designed to help you stay in control and secure the best possible deal on your next car purchase.
8 Tips to Master the Art of Car Price Negotiation
Follow these expert tips to ensure you’re getting the best deal possible. With these tactics, you’ll be well-prepared to handle any negotiation scenario and come out on top.
1. The Secret Weapon: Pre-Approved Financing
Financing your vehicle purchase at the car dealership sounds convenient. However, in reality, it will likely end up costing you thousands in extra interest over the life of the loan. Avoid this trap by getting pre-approved with your bank, credit union, or an online lender before you even set foot on the lot. This way, you’ll have the upper hand right from the start.
Buy Here, Pay Here: The Sneaky Dealer Trap
“Buy here, pay here” (BHPH) sounds like a great deal, but it’s designed to rip you off. Dealerships acting as middlemen between you and the lender often hike up interest rates significantly. Avoid this by securing your own financing. This way, you can ensure you’re getting a fair price on the car and avoid paying inflated rates.
Local Banks, Credit Unions, and Online Lenders: Your Best Bet
Start your financing search before you even head to the dealership. Talk to a lender at your local bank or credit union. You can also check rates with online lenders based on your credit profile if you want to get the best price on a car. These institutions are less likely to push you towards a loan amount that is too high for you. If your credit score is low, consider repairing your credit before taking out a major car loan to secure the best car deals available.
Alternative Lenders: A Lifeline for Bad Credit
If you have an immediate need for a car loan, look into reputable alternative lenders online. They’ll quote you an interest rate without doing a hard pull on your credit report. Plus, that interest rate is tied directly to your credit history, so you receive a very targeted offer. Not only can you select your repayment terms, but many lenders also offer low or even no origination fees. This makes the car buying process much more transparent.
2. Expose the Dealer’s Profit Margin: Demand the Manufacturer’s Invoice
Did you know you can ask to see the invoice price the dealer paid for the car? That’s right. This gives you a baseline to start your negotiations. Be wary of dealer-generated invoices filled with add-ons. Demand to see the manufacturer’s invoice for the true cost and compare it with the manufacturer suggested retail price (MSRP).
Watch Out for Fake Invoices
Some dealers might be prepared for you to ask for this information and show you a dealer-generated invoice rather than the original copy from the manufacturer. The sticker price on the dealer’s invoice includes optional add-ons which inflate the purchase price of the car.
The Real Deal: Manufacturer’s Invoice
A manufacturer’s invoice, on the other hand, will be addressed to the car dealership. It only includes the price of upgrades that are already on the vehicle, such as a leather interior or sunroof. Even after you have the true invoice price, it’s worth noting that the dealer may have paid even less than that amount because of hidden incentives from the manufacturer.
Shop Around: Compare Invoices for the Best Deal
You can also shop around at several dealerships to compare invoices. That way, you’ll gain a better understanding of how accurate each one is and set a baseline for your own negotiations and expectations.
3. Timing is Everything: Go When the Dealer is Desperate
Want to catch a dealer off-guard? Show up when business is slow. Bad weather, end of the month, or an hour before closing on a weekend are prime times. Dealers are more likely to slash prices to hit their sales targets.
Bad Weather: Your Secret Advantage
For example, bad weather typically deters other customers from going out on the road. After all, no one wants to do a test drive during a rainstorm. This gives you a wide opportunity to take advantage of a slow business day. You can negotiate with a car salesman who has little chance of making any other sale that day.
End of the Month: Dealer Desperation
Similarly, the end of the month is another time when they’ll be trying to boost their sales numbers. Head in on the 31st to entice them to take your offer—even better if the last day of the month lands on a rainy weekend.
Strategic Timing: Weekends and Evenings
The day and time you go to the dealership may also sweeten your chances. Try showing up on a Saturday or Sunday evening, one hour before closing. If the car dealer is short on its weekend goal, they will be more likely to go a little lower on the price rather than letting the sale slip away.
4. Say No to Useless Extras: Avoid Pricey Add-Ons
Dealers will try to upsell you on warranties, gap insurance, and other add-ons. Just say no. Do your homework beforehand and know what you need and what you don’t. This will save you from unnecessary costs that eat into your savings.
Research Extras in Advance
Research extras in advance to see if you need them. Always go in armed with as much information as possible so you can give the car salesman a reason for your responses and requests. Even though you want to be firm throughout the process, it’s also important to be polite. Any person is much more likely to want to help you if they like you, and there’s no reason to be rude.
Be Firm But Polite
Keep your tone pleasant and don’t let your nerves get the best of you. A good way to do this while negotiating a deal is to acknowledge their offer by briefly restating it in your own words. Then you can either decline it outright or propose a counter-offer.
5. Keep Your Trade-In Leverage: Don’t Hand Over Your Keys and Title
Dealers love to keep your keys and title during a trade-in to trap you on the lot. Don’t fall for it. Hold on to your keys and demand your title back immediately after inspection. This keeps you in control and ready to walk away if the deal isn’t right.
Avoid the Sneaky Dealer Tactics
Their goal during negotiations is to keep you on the lot. Some dealers are sneaky about this if you’re trying to trade in a vehicle to go towards the financing of your new purchase. They may ask for the key to your trade-in car so that they can inspect it, then not give it back right away. This prevents you from walking out during negotiations.
Stay in Control
Another tactic is to request to look at the title of your vehicle so they can confirm that you do indeed own it. While that may seem reasonable, make sure you don’t let them keep it because this also limits your ability to walk away from a deal. Ask for the title back right away after they inspect it. Consider giving a spare key for the vehicle inspection, rather than the one you use regularly.
6. Play It Cool with Your Financing: Keep It a Secret
Even if you’ve secured financing, keep it under wraps during negotiations. Dealers make more money off their in-house loans, so they’ll be less willing to drop the car’s price if they know you’ve got outside financing. Only reveal your pre-approval after you’ve locked in a final car price.
Negotiate the Out-the-Door Price
Once you’ve settled on a final number for the new car, and preferably get that price in writing, they will likely turn the conversation to financing. At that point, it’s appropriate to mention that you’ve already been pre-approved for a loan with favorable terms and conditions.
If you’d like, you can always hear out their financing offer. Just be sure to review all the fees and length of repayment in addition to the monthly payment to get a full comparison of your loan offers. More often than not, your private lender will offer you a better, more transparent deal than any dealership.
7. Be Ready to Walk Away: Your Ultimate Bargaining Chip
Your biggest power in negotiations is the ability to walk away. Don’t let nerves get the best of you. Set your maximum price, be firm, and if the dealer won’t meet it, walk. You might be surprised how quickly they chase you down with a better offer.
The Power of Walking Away
When you’re able to walk away from a bad deal, you might just find someone running after you in the parking lot, agreeing to your offer. This is because no car salesman wants to lose a sale. So, be firm on your final number while avoiding pricey extras so you can get a good deal that works for everyone.
8. Preparation is Key: Arm Yourself with Knowledge
Buying a car is a major event, so it’s no surprise that it takes a bit of elbow grease to ensure you’re getting the best bang for your buck. Understanding how a car dealership makes its money and increases its profit margins empowers you to level the playing field as soon as you enter the financing office.
From there, it’s as simple as knowing the price you’re willing to pay and knowing when to walk away from a bad deal. No car salesman wants to lose a sale. So, be firm on your final number while avoiding pricey extras so you can get a good deal that works for everyone.
Frequently Asked Questions
How do I negotiate car price when paying cash?
Car salespeople may be more inclined to negotiate the purchase price of your car if they are unaware of your payment method. Wait to disclose that you plan to pay in cash until after negotiating the price. This is because salespeople often make more money when customers finance their vehicles. On the other hand, if you’re buying a car from a private seller, offering to pay in cash can sometimes give you leverage in negotiations.
How much should your initial offer be when negotiating car price?
Start with an offer that is about 10-20% lower than the asking price. This gives you room to negotiate while showing your interest. Be prepared to justify your offer by pointing out any flaws or issues with the car. Always have a firm budget in mind and be ready to walk away if the seller is unwilling to meet your price.
How do I negotiate the price of a used car?
The process is similar to negotiating a new car purchase. Start with an initial offer lower than the asking price, justify your offer with any car flaws, and have a firm budget. Be prepared to walk away if the seller won’t budge.
How do I determine a fair price for a car?
To determine a fair price for a car, research the manufacturer suggested retail price (MSRP) and compare it with the prices listed on various car websites. Additionally, consider the vehicle’s condition, mileage, and any additional features or packages. Utilize online tools and resources to find the average selling price for similar models in your area, ensuring you have a comprehensive understanding of the market value.
Why should I focus on the out-the-door price rather than the monthly payment?
Focusing on the out-the-door price helps you avoid hidden costs and fees that can inflate the overall car price. Dealers might offer a low monthly payment by extending the loan term, which means paying more in interest. Negotiating the total purchase price ensures transparency and better control over your finances.
How can I avoid unnecessary add-ons and extras?
Do your homework beforehand to know what you need and don’t need. Politely decline any add-ons or extras the dealer tries to sell you, such as warranties or gap insurance, unless you’ve already decided they’re necessary.
Should I trade in my old car at the dealership?
Trading in your old car at the dealership can be convenient, but you might get a better deal by selling it privately. If you do decide to trade in, make sure to negotiate the trade-in value separately from the new car price.
What is the best time of year to buy a car?
The end of the year, end of the month, and holiday weekends often have the best deals as dealerships try to meet sales targets. Additionally, new model releases can lead to discounts on the outgoing models.
How can I verify the condition of a used car?
Always get a vehicle history report and consider having the car inspected by a trusted mechanic before finalizing the purchase. This ensures you’re aware of any potential issues that might not be immediately visible.
What should I do if I feel pressured during negotiations?
If you feel pressured, take a step back. Don’t be afraid to leave the dealership and take time to reconsider your options. High-pressure tactics are a red flag, and it’s important to feel comfortable and confident in your purchase decision.
