The prospect of buying a new or used car is exciting, but the process itself can be daunting. If you're planning on purchasing a vehicle from a local dealer, a bit of haggling is probably in order. After all, why should you pay full price when there's a high chance you could pay less?
That said, there's no guarantee that you're going to reach a compromise, so browsing online listings as well is always a wise move. Either way, learning how to negotiate a car price is a skill worth learning -- whether you're trying to cut a deal for yourself or someone else.
Do Your Homework
Before you even attempt entering into negotiations, it's crucial that you show up armed with plenty of information. Things to know include the average selling price of the vehicle in question and the key differences between makes, models and trim levels.
You need to be able to prove why you want to pay less, and naturally, that means you need to be prepared with facts and figures to back up your claims. Fortunately, the internet makes it easy to find valuable information that helps you approach the negotiation with confidence.
Have a Price In Mind
If you want to know how to negotiate a car's price, you need to know how to recognize a good deal. Your research should have already revealed what people are paying for the vehicle in question. Make sure you're finding pricing details for the specific make, model, trim and year that you want to buy, so it's an apples-to-apples comparison; a Ford Explorer with a base 3.5-liter V6 will cost thousands less than one with a turbo 3.5-liter V6.
Now, it's up to you to decide what kind of bargain would lead to a shaking of hands and a signing on the dotted line. As a general rule of thumb, you should shoot for $500 to $1,000 off the asking price, but that figure can vary widely depending on the base price of the vehicle. Either way, enter the lot with a realistic price goal as well as a firm idea of the most you'd be willing to pay.
Shop Multiple Dealerships
Beyond just ensuring that you find the best deal, shopping multiple dealerships gives you the opportunity to pit them against each other. If one dealership is offering a bargain, you can use that as leverage to convince another dealership to lower their price. Even if you don't get an offer, simply informing each dealership of your progress car hunting shows that you're not an easy target and that you're willing to move along if necessary. Remember: you're the one spending money, and that means you have power. But again, make sure you're asking dealers to compete on the same specific make, model, trim and year; a dealer may offer to beat a rival's price but with a lower-grade trim level than what you're asking for.
Be Firm with Your Target Number
Now, you can approach this step in two different ways. One way is to tell the salesperson what you're willing to pay right off the bat. Let them know politely but firmly that if they aren't willing to play ball, you're going to walk. The other option is to tell them that you have a figure in mind that you're unwilling to reveal. This forces them to make an offer that you can either accept or decline. As you leave the dealership, you may be surprised by how much lower they're willing to drop the price once they seem that you're serious.
Follow Up at a Later Date
If the dealer accepts your offer, that's great. You've done your job. If not, you may need to play the waiting game. A huge part of understanding how to negotiate a car price is accepting that patience is a virtue. The longer you wait, the more power you have (as long as your target number is reasonable).
Call the dealership on a weekend evening, an hour or two before they close, and ask to speak to the same salesperson you dealt with last time. At the end of the day, they may be more willing to work with you if they didn't sell anything. You can apply this same principle to the end of the month, often with good results. If the salesperson hasn't hit their goals for the month, finalizing the sale may be worthwhile, even if they're not getting the biggest commission check (they get compensated in other ways too).
Ignore the Monthly Payment
A salesperson may try to entice you by offering a lower monthly payment, even though you're paying more in the long run. When you're considering an offer, always multiply the monthly payment by the total amount of months you'll be paying. Don't forget to also factor in any fees, taxes, and interest associated with the loan. While part of learning how to negotiate price is certainly nailing down an ideal monthly payment, your primary goal should be keeping the overall price down. Try not to miss the forest for the trees.
Boost Your Credit Score
This is a long-term step, but it can be a huge help if you can spare some time. If you have solid credit, you're much more likely to get a better financing plan and a lower price form the dealership, but that's not all.
A high credit score also lets you get a pre-approved financing offer from a banking institution, credit union, or another lender of your choice. With that pre-approved offer in hand, you can negotiate a better financing plan with the dealership. Of course, sometimes boosting your credit is easier said than done, but even just paying down your existing bills can make a big difference.
Be Cold and Calculated (and Polite)
As you learn how to negotiate car price, you're going to have to figure out your own personal approach. In general, you're going to catch more flies with honey, so be friendly and polite. That said, if you let your emotions get the best of you, you may lose out on the deal. Remember that this is a business transaction first and foremost. Your hard-earned money is on the line, and often the negotiation comes down to who's most stubborn. Offer a warm smile and a handshake, but don't be afraid to be firm and say no at the same time.
Skip the Extras
After you've arrived at a price, the salesperson may try to tag on some extra features that you don't need. Of course, there's nothing wrong with springing for those amenities if you genuinely want them, but don't feel obligated to accept just because you won the negotiation. Make sure you go through the contract with a fine-tooth comb so you know exactly what you're paying for -- nothing more and nothing less.
Diversify Your Search
While learning how to negotiate a car price is a worthwhile endeavor, so is learning how to shop classified ads, online ads, and other private sales. Dealerships have a goal, and that's to make money. Plenty of private sellers are willing to offer a more significant bargain. Autolist makes the shopping process incredibly easy, letting you browse thousands of online new and used vehicle listings. The most important step is doing your due diligence to find the best deal. Use all of the tools that are available to you, and you should have no problem finding the perfect car at a price that fits comfortably within your budget.