“I can’t wait to negotiate and bargain with the salesperson when I go to buy my new car.” says no one ever. But let's change that up. These tips might not have you gleefully rubbing your hands together as the salesperson heads in your direction; but they will help you be armed with information and more confidence.
What is your timeline?
If buying a new car is on your mind and you want it to happen before your lease expires in three months; start planning now. If your current car needs a new set of tires or some other repair and all you can do is picture yourself driving something else; start planning now. Before any negotiations can occur, there are a few things to plan for.
Test drive the cars with features that interest you. Make seat adjustments and sit in all the seats, test the air circulation, test the sound system, highway acceleration, etc.Make sure you tell the salesperson that you are not buying right now but test driving to help make your decision.
Test drive cars from several dealerships. This will provide multiple benefits. You will develop a feel for how that dealership treats its customers. Walking in and out of different sales floors helps build your comfort and confidence level. You will also get some practice at using your game face. Practice keeping your emotions neutral by not showing excitement over a particular model or feature(s).
Research prices, vehicle features, trim packages, and financing. Use several different sources for pricing. Print and save this information for future negotiations.
Look at dealership ratings and read customer reviews. How are their service departments rated?
Allow time to apply for an automobile loan from your lending institution. The dealership makes money when you finance your loan through one of their providers. But, if are you shopping with an already approved loan the dealership will be motivated to give you a better financing rate. In case they are unable to provide you with a better rate, your backup plan is already in place.
If you plan to use your current car as a trade in, clean it up. Then shop it around at a couple of used car lots to see what type of prices they are offering.
Certain days are better for car shopping than others. The end of the month, usually after the 25th often finds sales people under pressure to meet sales quotas. Bad weather does not facilitate car shopping. Find a motivated salesperson by showing up at the tail end of a stormy week. When do the new models arrive? Having new cars from two different model years sitting on the lot is an inventory situation the dealer wants to fix.
Plan out your steps and work backwards on the calendar. This will prevent you from feeling rushed and having to make a decision under duress. A calm individual is a better negotiator.
Know the true market value of the car. True market value is the amount that other customers in your same geographic area have paid. For apples to apples comparison it has to be the same model, same trim package, and the same options. Research this information on line and print it off. Use several different sources, Edmunds, TrueMarket, and Kelly Blue Book are good places to start.
When you are ready to negotiate at the dealership have these print outs with you. If you have been negotiating online and have a couple of offers print those and make sure the details of the offer are included. This will ensure that the salesperson knows you have done your research and are prepared.
Have a dedicated note pad and plan to take it the day you are buying. Write down your target price and the price of any features or trim packages that you want included in the sale. Have a pen and be ready to record any numbers that the salesperson or finance manager puts out there.
Make sure you have eaten. In all likelihood you will be at the dealership for several hours. Take a water bottle. The dealership will have water to offer but your own will help establish some control. Drink a bit less caffeine than your normal intake. The pressure of negotiating will release adrenaline and you do not want to be too jumpy. Also take this into consideration if the dealership offers coffee at their refreshment counter.
Think about what strategy you would like to use. What approach is comfortable for you?
One strategy is to go back and forth on price a couple of times so you have a feel for how close or far apart your numbers are from the salesperson. Then give him/her your purchase price number and tell them the offer stands for three days. Firmly state they should call if they can put it together. Say your thank you and head on out.
Working the numbers, assigning trade in value, etc. becomes the finance manager’s job. They will tackle number crunching when the weekend rush slows. Quota numbers or some other motivation might get your deal done.
A strategy recommended by Consumer Reports starts with the invoice number minus any incentives the dealer is receiving from the manufacturer. Add $100 to this number for the first offer. The salesperson will take this number to the finance department. The back and forth in this manner will result in a couple of these round trips. Be sure you are writing down any numbers they are offering. Numerical increases on your part should be small and decrease with each offer you make. Your next increase may be $250 but follow that up with a $100 increase.
They will be using dealership psychology during this time. Tactics include letting you wait longer and longer. Maybe they will mention what a great deal they are offering and what a shame if it were to go to someone else. They might tell you the offer is only good for that day. If you are feeling pushed don’t hesitate to reset, excuse yourself to go to the restroom. Remember, they sell cars all day long. You buy a car once every four to six years.
Another approach is to let them offer a price first. This may be done with different worksheets (dealership props) or offers of low monthly payments. At this time they may try to divert you by asking what number you want for your trade-in. Tell them you are not interested in talking payments (trade-in) at this time. Ask them for their best price to drive the car off the lot.
Next, ask if that is the best they can do? You might get a second offer from the salesperson without their making a trip to the finance office. Their first one or two sets of numbers are usually pre-arranged numbers provided to the salesperson by the finance manager.
This is a good time to let the salesperson know about your other offers. These may be offers you received in person while visiting other dealerships or they can be offers you received online. You should not hand the print outs over but pull them out and refer to them. Doing so establishes the other offers’ legitimacy, your seriousness, and tells the dealership you have options.
At this point the salesperson will probably make three to four trips to the finance office. Remember their goal is to wear you down. If there is an eye in the sky they have probably taken a look to see how you are faring.
What can be learned by observing? They are assessing your composure and noticing whether you are referring to your other offers. If you are shopping with a companion they might be reading your lips as the two of you talk. Does your body language show signs of someone about to leave without closing a sale? A word of caution here; do not lay open your notepad with your figures displayed. Security cameras can hone right down to see what you have written.
Additional negotiating approaches and tactics can be reviewed online. Practice your approach at home. What feels comfortable to you? It is a bit of role playing but, it's role playing that has the potential to affect your wallet to the tune of a couple hundred or even a couple thousand dollars.
Make Your Decision
Test drive the car that you have decided to buy. This is important to make sure that you still like it and that it is running correctly. If that one is not a good fit or the grey interior puts you off, test drive the next car.
In all likelihood the salesperson will be riding with you. They will probably be chatty and ask questions. “What is your target monthly payment?” “Are you excited about the navigation system?” “Isn’t this burgundy color the best?” They may even turn the stereo up pretty loud.
You the customer can turn down the sound system or even turn it off. State that you are listening to the engine and road noise. Be non-committal or neutral with you answers. Say things like, “the navigation system is convenient but not a priority,” “this color is okay,” or “I’m keeping my eye on the final price not the monthly payments."
Time to Talk Numbers
Upon returning to the sales lot if you are still interested in making the purchase you will sit at the salesperson’s desk or cubicle. This is where the negotiations begin. Refer to your notes. Record any numbers or offers from the finance department.
When you reach an agreed upon number circle it in your notes. Then move to talking about the trade in. Your salesperson will drive your car to the mechanic and wait to hear a number about its value. At this point there may be more haggling. You may be told that there is no way the previously agreed purchase price can stand in light of what you expect for your trade in.
Hold your line. You may have to give another $100 -200. But, remind them you have been there for a couple or even several hours and the entire time you have been negotiating in good faith. Start gathering your things and prepare to leave. Be ready to follow through on this action; all the way out the door and drive off the lot.
A Deal is Reached
When a price is agreed upon, the paperwork in next. You will move to the finance office. Other offers are headed your way. Extended warranties, rust proofing, window tinting, and other irresistible add-ons that will do just that; add-on to your final price. Most of these are not needed. Have in mind what you want and stick to it. You are tired at this point, stay on guard.
Read all of the paperwork. Make sure you understand any terms or clauses. Look for double charges and understand each charge that is listed. Any charges should be spelled out. Do not hesitate to ask clarifying questions.
Pat yourself on the back and enjoy your new, well deserved car.
If you want to learn more about negotiating, car loans, or anything in between, head to our page on the car buying process.