Car buying is one of the few areas of American life where you must negotiate. This can be intimidating, and it’s hard to walk away from a deal when you’ve fallen in love with a car. But, you should get a deal you’re happy with if you keep these three easy tips in mind:
1. Know the invoice price.
Before negotiating, know how much your car should cost. Don’t start with the sticker price and go down, start with the invoice price. And your research doesn’t end there. Also check to see if there are any rebates or incentives available on the model you’re buying. Often manufacturers will give dealers rebate money to move cars, essentially lowering the invoice price for the dealer.
2. Negotiate the total price, not monthly payments.
Always talk total price, not monthly payment, even if you’re getting a loan. While you know what monthly payments you can afford, you should not tell the dealer. By negotiating the total price of the car with the dealer, you ensure you get the best price for the car. But if you negotiate only the amount you would pay each month, the dealer may give you a good price on the car, but then sell you a loan that costs you more than it should, either through a higher interest rate or longer term. Be clear with the dealer about what you want to pay overall and once you reach an agreement, get in writing.
3. Shop around and be patient.
Some buyers shop by phone, giving several dealers the exact specifications of the car they want and asking for a price. Just make sure you have the dealer fax or email you the details in writing. Otherwise you may get to the dealership and they will have “forgotten” the good deal that got you in the door. And if they won’t honor the price they gave you, leave.
If you prefer to negotiate face to face, don’t be afraid to walk away if the dealer isn’t being as upfront as you like. Remember that you are in charge of the negotiation and that you have more negotiating power than the dealer. Don’t let them scare you by telling you only one of the model you want is left. Unless you’re buying hot-selling car, there are plenty left, and they can get cars from other dealers as well. If you walk away, chances are the dealer will call you tomorrow with a better deal.
4. Shop smart.
Shopping at the end of a month can speed up a deal. Dealerships and salespeople have sales goals to meet, so if you find one who is behind, you might be able to negotiate a better deal. Also keep your eyes peeled for holiday and end of the model year specials. Usually sales events of this kind offer good incentives to buyers, so you might be able to work out a lower price than at another time of the year.
Step 4: Financing your car.
Next Step: Saving on car insurance.
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