While getting behind the wheel a new or used car can be a lot of fun, few buyers find the process of buying a car an enjoyable experience. With some preparation and persistence, you can get the car you want without blowing your budget. Getting a great deal makes buying a great car even better, and this guide aims to give you the information you need to confidently navigate the car-buying experience and learn how to negotiate car prices.
Car buying is one the last bastions of freewheeling price negotiation that happens directly between a buyer and seller. However, it’s also one of the most unbalanced negotiations you’ll find. Professional car salespeople work with hundreds of transactions per year, while most car buyers only get a vehicle every four five years. Fortunately, consumers have better access to vehicle data than ever before.
This guide will walk through three sections negotiating a car price:
- Be Prepared – Do research ahead time to prepare yourself before you start visiting dealers.
- At the Dealership – Work with multiple dealers and know what you should do when talking to salespeople and their managers.
- Completing the Deal – Complete the transaction, while protecting the deal you just negotiated.
Getting a good price on a new or used car starts weeks before you ever go to a dealer or other car seller. Your goals are to have as much information as possible about the vehicle you want, and have a preapproved financing plan in place.
The first step is finding the car you want that fits your needs and budget. Our new car rankings and reviews and used car rankings and reviews are based on the consensus opinions of the country’s top automotive journalists, combined with quantitative data on safety and reliability. When you start visiting dealers, you’ll want to focus on the vehicle you want, not the one they want to sell you.
Arm Yourself With Information
You’ll want to know everything you can about the car that you are seeking, from its sticker price to the invoice price that the dealer may have paid for it. You can see what other buyers in your area paid for similar cars by looking at the True Car Market Analysis report linked in each of our new car reviews. While you’ll often hear talk that a car’s invoice price (or simply, “invoice”) is the price to aim for, the True Car information is a more accurate measure, as it’s often impossible to know what a dealer’s true invoice was.
The buying insights at the bottom of many of our reviews show the current demand for the vehicle, helping you identify models that are in high or low demand. If the demand is lower, you’ll like be able to strike a better deal.
Not every car dealership is loved by its customers. There are several sites, from Yelp.com to specialized auto dealer rating sites, which show reviews of car dealerships from customers. While every business has some bad reviews, you’re looking for trends that show you which dealers are better to do business with than others.
Financing Comes First
Dealers typically want to merge all of the components of a car deal into one big transaction. That’s potentially a confusing and costly way to buy a car, because you’ll be negotiating financing and the price at the same time. You can take the financing component out of that package by getting a preapproved car loan from an outside lender before you head to the dealer.
Having a preapproved car loan not only saves you a lot of confusion, it’s also the best way to get a great financing deal from a dealership, as they’ll have to work to beat the offer you already have. There are several places where you can get a financing offer, including large national banks, community banks, and credit unions. You’ll typically find the best rates at credit unions, and larger banks usually offer the broadest array of financial services. Still, banks occasionally offer interest rate specials, and a few credit unions rival the size of big banks.
At the Dealership
So you have information about the vehicle, its pricing, and the deals available. Now, it’s time to visit dealerships, both virtually (via their websites) and in person. You’ll want to budget enough time to test drive the car you are considering and work with multiple dealers to get the best price.
There’s an old axiom that you can save money by going to the dealership right before closing time, so they’ll make you a great deal so they can go home for the evening. While that’s not really true, sometimes are better to shop for a car than others.
Like other businesses, car dealerships have monthly, quarterly, and annual sales goals for both salespeople and the dealership as a whole. Find one that has yet to reach their goal, and you might find a fantastic deal. With the way some manufacturers structure their deals, they’ll get a bonus on all of the cars sold in a certain period if they make a goal. If you’re the lucky buyer of the last vehicle they need to get the bonus, you’re in a great position to get a deal.
The urgency to meet goals typically ramps up on the last weekend of the month, quarter, or year, but Saturday or Sunday may not be the best times to shop. Dealerships tend to be busier on the weekend, so they might not want to spend a whole lot of time with you if it doesn’t look like you’re going to be an easy sale. You have a better chance of a good deal on a weekday, according to data.
Shop at Multiple Car Dealers
In the past, shopping at multiple dealers meant driving miles and miles and wasting a lot of time. You’ll want to visit at least one dealership to take a test drive and check out the colors available on the vehicle. Beyond that, you can get in contact with several dealerships’ internet sales managers, and do much of your car shopping from your living room. In some cases, you can negotiate a price and buy the car online, and have it delivered right to your house.
There are many benefits to shopping at several outlets. Getting price quotes from multiple dealers, and letting each one know that there are other dealers in the game tells them that they have competition to beat. Second, despite the “invoice price” that you’ll often hear about, different dealers pay different prices for the vehicles that they sell. Find a dealer that who paid a lower invoice than others in the area for the car that you want to buy, and you’ve found a dealer with more room to haggle.
Dealers frequently trade cars among each other to get the right model, trim, and color for their customers. In many cases, the offers you get from multiple dealerships are on the same car. If you go for their offer, they’ll make a dealer trade to get it onto their lot.
Remember It Is a Business Transaction
Though it’s easy to develop an emotional attachment to your dream car, it’s important to remember that the buying process is a business transaction. The less emotion involved, the better. You want to remain polite and cordial, yet firm, when you’re dealing with the salesperson, the finance manager, or the internet manager.
Your main task is to get the best deal possible on the vehicle. The mission of the dealership (or private seller) is to get the highest price with the most profit they can. Both goals are OK, as long as all parties act in an ethical and legal manner.
Realize, however, that salespeople are skilled negotiators, trained to move you incrementally to the deal that they want you to accept and to the vehicle they want you to buy. You need to have a firm budget that you’ll stick to, the confidence to advocate for yourself, and the information to back up the price that you want to get.
Some customers go to the dealership with the intent of bullying the salespeople into giving them a good deal. That’s a strategy that’s doomed to fail, as people are much more likely to give a break to someone who is pleasant and professional than someone who is being a jerk.