5 Tips for Negotiating a Car Price
Negotiating a car price can feel scary, as you face down a dealer who may know a lot more about autos than you do. But really you just need some preparation and the right approach.
Here’s how to negotiate a car price and win.
- Before negotiating, be sure you know the new car’s suggested price, your trade-in value and any incentive deals, as well as what the taxes and fees will be.
- Focus on negotiating the out-the-door price, not the monthly payment.
- If you don’t feel good about the deal or you feel pressured, then walk away.
5 tips for negotiating a car price
Bargaining for the lowest price on a car can save you a lot of money and ensure your payments will fit your budget. To get a good purchase price when buying a car, consider the tips below.
1. Research the numbers
Before you enter the car dealership, make sure you know the manufacturer’s suggested retail price (MSRP) for the car you want. This is the starting point for the negotiation process, and it’s what the dealer hopes to sell the car for.
You can find the MSRP on websites like Kelley Blue Book (KBB), NADAguides and Edmunds.
But that’s not all — you should also research:
- The trade-in value of your current vehicle. Knowing this helps you get a fair value if you trade in your old car, offsetting the cost of your new vehicle.
- Any incentives you might qualify for. Manufacturer incentives and car rebates can lower the overall cost, so see if there are any available.
- Estimated local sales tax: Tax on a new car can be significant, so try to get an idea of how much this will add to the price.
- Any dealer fees. Dealer fees, such as documentation or processing fees, can add anywhere from 8% to 10% to the car’s final price.
2. Get preapproved financing
Getting preapproved financing — where a bank or other lender OKs you for a specific auto loan amount before shopping for a car — can give you a clear budget and strengthen your bargaining position.
You won’t be at the mercy of the dealer’s lender or in-house financing, and you won’t get talked into spending more than you planned, since you’ve already set a maximum loan amount.
3. Shop around for car loans
Shopping around for car loans ensures you get the best interest rate and terms. Start with your bank or credit union, but also check online lenders and in-house financing options with dealerships.
If you want to avoid using the dealer’s financing, shopping around for car loans can save you money. Check out loan marketplaces, including our own list of best auto loans, paying attention to the reviews, ratings and of course, interest rates.
While you can refinance your car loan in the future at a lower rate, comparing offers helps you secure the best deal from the start. You can also try our car affordability calculator to see how different cars and loans will affect your budget.
4. Focus on the out-the-door price
When buying a car, the “out-the-door price” is the total amount you’ll pay for the car, including all fees, taxes and additional costs. Negotiating this price, rather than just the MSRP, will make sure you know how much you’ll actually pay.
After all, the total cost of owning a car is more than just the sticker price.
5. Don’t be afraid to walk away
If an offer doesn’t meet your expectations, or if you feel pressured, just walk away. Sometimes, simply showing you’re willing to leave can inspire the dealer to offer a better price.
You need to feel comfortable with the purchase price because you’ll be the one making the monthly payments. You have every right to wait for a better deal or even put off buying the car in order to save for a larger down payment if you find the payments will be a strain.
Consider no-haggle dealers
No-haggle dealers offer a different approach to the car-buying process than traditional car dealers. You can visit used-car websites like CarMax or Carvana where the price you see is the price you pay, with no negotiation.
This is ideal if you don’t want to play the bargaining game against an experienced car salesperson, but you’ll likely pay a higher price with a no-haggle dealer.
How to negotiate with car salespeople
If you prefer to go the traditional route, here’s how to negotiate with car salespeople:
- Be patient: Salespeople may use various tactics to rush you into a decision. Take your time to evaluate the offer and make sure it’s right for you.
- Counter the monthly payment conversation: Dealers might focus on monthly payments to distract from the total cost. Always negotiate the total price of the car, not the payment amount.
- Counter the hard sell: Be prepared for high-pressure tactics. Stand firm and stick to what makes sense based on your research and budget.
- Confirm the final price: Before talking about your trade-in, make sure you get the final price of the car you want. This way, you’ll know the exact cost before the dealer evaluates your current car.
Frequently asked questions
Be aware that although you can often negotiate factors like trade-in value, APR and repayment terms, you can’t bargain when it comes to the taxes, title and registration fees.
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