5 Tips on How to Negotiate Car Price
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Filling out paperwork and negotiating prices are top frustrations for car buyers, but bargaining doesn’t have to be a hassle if you do some homework ahead of time. Doing a little legwork before you walk into a dealership or meet the seller can pay off in a big way. A lower price means borrowing less, which will impact your wallet for years to come. We’ll give you five tips for how to negotiate car prices and walk you through a car-buying scenario.
How to negotiate car price
Negotiating a fair price on your next vehicle comes down to these five tips.
- Research the market value of the car
- Keep car, buying options open
- Get preapproved
- Focus on price, not payment
- Be willing to walk away
Research the market value of the car
The first way to know if a car’s sticker price is a good deal is to see how it compares to its value. While it might take a minute to figure out how to use an online valuation tool for the first time, it’s something you could do even when you’re standing in a dealership parking lot.
Different guides may give different prices for the same vehicle, which is why we suggest using more than one. Kelley Blue Book (KBB), NADAguides and Edmunds are industry-recognized resources for accurate consumer pricing. Here’s a quick glance at what you could expect from all three.
KBB gives a “fair market” range, NADAguides has pricing breakdowns and Edmunds provides a price comparison. The images above are results for different trims on a 2018 Honda CR-V.
Compare your guidebook research to deals offered in your area. You could do this through online car-buying sites and apps or old-fashioned print advertisements in your local newspaper as well.
Keep car, buying options open
If you set your heart on one vehicle at one dealership, that’s a salesperson’s dream. But if you keep your mind open to other models or different sellers, you hold the negotiating power.
Rather than focus on a specific car, consider why you need a vehicle and which vehicles could match that need. Maybe you really want a Honda CR-V, for example, but there are only a couple available near you. Consider other small crossovers, such as a Mazda CX-3, or a Subaru Crosstrek. You could also check out our best vehicle picks.
Vehicle picks should (hopefully) stay within the car-buying budget you set before leaving home, but another way to make sure you stay on track is to get an auto loan preapproval before going to a dealership or meeting with a private seller. Your bank, credit union or online lender can usually tell you how much you could borrow and at what rate without knowing the specific make or model.
If the dealer can beat that rate when it’s time to talk financing, great; you’ll know you’re getting a good deal. Otherwise, you’re at the mercy of the offer they present, an offer that’s best for them, not you.
Focus on price, not payment
Negotiating car price usually comes after you test drive the vehicle and provide positive feedback. “What monthly payment do you want?” sounds like a reasonable way for a salesperson to start the conversation. This is actually a trick question.
Counter with “What’s your best price?” Salespeople are perfectly willing to lengthen your auto loan in order to meet your payment goal. But a long auto loan means you’ll pay more in interest. Sticking to your price point keeps the conversation on track. Before signing, make sure you understand the “out-the-door price,” the price for the car plus fees.
Be willing to walk away
If the dealership isn’t willing to lower its price despite competitor deals and/or a lower guidebook value, walk away. Of course, this won’t be so easy if you need a car immediately. But if you can take your time, shop again another day, maybe at a different dealer.
A negotiation scenario
Once you’re sitting down with a salesperson you’re comfortable with and who already knows you want to talk about total price, not monthly payment, it’s time to put what you’ve learned into action.
Step 1: Show the guidebook value
If the vehicle’s price is above its guidebook value, show the salesperson a screenshot or the guidebook page on your phone. Ask why they would expect someone to pay more than the car is worth and tell them to at least meet the guidebook value or beat that price.
Step 2: Show the competitor’s price
If a similar vehicle model from another seller is cheaper, show the salesperson the advertisement or the vehicle listing. Ask them to give you a reason to make you stay and buy from them rather than the competitor.
Step 3: Walk away
This is your trump card. Mentioning that you’d like a day to think or threatening to go to another dealer could work wonders. But it also means you have to be willing to go through with it. Considering the average price of a car, you shouldn’t have to pay more than it’s worth, even if that means you don’t get a car right now.
How to negotiate with a car salesman
When you’re aware of the tactics that salespeople use, it’s easier to counter them. Here are ways you could counter three popular dealership sales tactics to negotiate car price.
counter the waiting game: Take a Break
Sometimes dealers will purposefully draw out the car-buying process. The average time spent with the dealer or seller is about two and a half hours, according to Cox Automotive. Prepare for a wait, but if you feel stymied, tell your salesperson you’re going to grab coffee or get a meal and will be back. This way you’re not sitting around, playing their game and you’re using your time to get away, relax and reflect during what can be a stressful process.
counter the pen pointing: Use your Own
When a salesperson rapidly points out figures with a shiny pen, be careful. Much like magicians use wands, dealers use pens to direct your attention where they want it, usually away from the total car price. Get out your own writing implement or ask to borrow theirs and point out the numbers you want to discuss.
counter the “too low”: Stay Firm
If the salesperson cries foul and says you’re asking for too low a price, tell the salesperson you know that what the dealership paid for the car is lower than your asking price. Whether the dealership bought the car as a trade-in from another customer, wholesale from an auction or new from the automaker, the car’s value in those transactions is much lower than the car’s retail value, usually by a few thousand dollars. For new cars, automakers provide a built-in profit margin called a “holdback” that dealers could dig into to lower the price for you if they want.
Dealership chains like CarMax promise no-haggle prices while car-buying services like those at discount clubs say they’ve already done the negotiating on behalf of members. Our advice: Don’t take their word for it. Compare prices with your own research and make sure that you’re not trading one cost for another. It’s possible that no-haggle sellers keep car prices low only to charge more for extended warranties or other services. The total out-the-door price is the only way to compare apples to apples.
FAQs about negotiating car price
How do I negotiate a used car price?
You can negotiate used car prices the same way as described above: look up the car’s market value, have other options and show that you’re willing to walk away. If you find deficiencies during your used car inspection, you could negotiate the cost of repairs off the car’s price.
How can I get the best deal on a new car?
To get the best deal on a new car, look up manufacturer incentives. Automakers often offer strong deals with rebates and 0% APR financing. If you’re willing to be flexible on car models or can afford to wait, you might be able to time your purchase to your advantage.
How do I negotiate with a car dealer when paying cash?
If you’re buying a car with cash from a dealer, don’t say so until after you’ve negotiated the car price. Dealerships often look at car deals holistically and see all parts of the transaction as a way to potentially turn a profit. If you tell the dealer you’re a cash buyer, they might be less willing to go down on the price because they’ll know that they won’t be able to make money from helping you arrange financing.