Buying a car can be stressful. It’s a very large purchase and you can easily overpay by thousands. The following 10 tips can help you negotiate more effectively when buying a car:
1 – Do your research. Knowledge is very important when negotiating. Do research online, test drive cars of friends if possible, or at a dealership (but be firm when you are at the dealership early on in the process that you are not quite ready to buy -don’t be intimidated into a premature decision). When you have finally settled on the kind of car you want, you should be familiar with the various trim levels, what kind of features you want and other basic information about the car.
2 – Know what others are paying. This is related to #1 above and you should definitely have this information prior to walking into the dealership. There are amazing tools online today to help the buyer that did not exist in the past. I recommend Edmunds.com which, after plugging in some basic information about the car you are looking for and your zip code, gives you the price that others are actually paying for that car in your area. It can often be thousands less than MSRP. Aim for what others are paying or even a bit lower when negotiating.
3 – Don’t play the negotiation game. If you have done the research and know what others are paying – you should be able to come up with a reasonable price for the car. You can walk into the dealership, explain that you are serious about purchasing a car, but you are also serious about not going above a certain number. If they can’t match it or come close enough for your liking – you walk out.
4 – Leave emotions at the door. You might be excited or scared about the prospect of buying a car. As hard as it is, try to not show those emotions and calm yourself down when entering a car dealership. Remember – don’t try to negotiate too much as your emotions may come through and you may lose to the trained negotiator on the other side.
5 – Get some help. If you feel that you can’t keep your emotions in check, bring someone along to help you if possible. There is strength in numbers. Additionally, you can use programs (Costco members can use their Auto Program) which will “pre-negotiate” for you a lower price before walking into the dealership. Costco’s member pricing is usually pretty competitive – but just remember to check it against what others are paying (tip #2 above) to make sure.
6 – Be ready not to buy. This means being ready to walk out the door if the dealership cannot come close to what you are looking for. Don’t get hung up in the moment and give in.
7 – Shop at the end of the month, quarter or year. Car salesmen and even the dealerships they work for often have sales quotas they need to meet in order to earn bonuses. You can use this to your advantage when purchasing a new car buy approaching dealerships toward the end of the month, or better yet end of a quarter. At this point, they may be more apt to selling the car at a lower price, just to make their quota for the month or quarter.
8 – Don’t give any reasons behind your decisions. This one is similar to tip #3 above. The salesperson may engage you in a way to get to the reasons behind your decisions. Do not give any reasons. If you do, it becomes a tool for them to work on you. If you offer no reasons, they have nothing to use against you. For example here is how a conversation can go in one of two ways:
Conversation #1 – with reasoning given
Buyer: I’d like to buy a 2018 Honda Civic LX for $18,000.
Salesperson: Sure, but can I ask why you are interested in the LX? Have you considered the EX which has a larger engine, alloy wheels and many more interior features.
Buyer: Well, I guess I want to save some money so I figured by going for the LX I can save a few thousand.
Salesperson: Oh, I am totally with you about saving money. That’s why I wanted to mention that we have phenomenal deals on the EX. Come, let me show you.
Conversation #2 – without reasoning given
Buyer: I’d like to buy a 2018 Honda Civic LX for $18,000.
Salesperson: Sure, but can I ask why you are interested in the LX? Have you considered the EX which has a larger engine, alloy wheels and many more interior features.
Buyer: I’ve done the research, and I have decided that I want an LX.
Salesperson: But there is so much value in an EX. They are great cars and we have phenomenal deals on them.
Buyer: I still want an LX.
Salesperson: OK, that’s fine – here are our LXs.
If you give reasons, then you give the salesperson power to try to convince you why those reasons are not good. If you don’t give reasons, then they have nothing to work with. You may think you are coming off as rude by not engaging in the small talk and giving reasons for your decisions, but you are not. It’s OK to be direct in this situation as you are talking about a transaction. Be respectful, but no need to be extra friendly.
9 – Do not let them talk to you about a monthly payment during the negotiation process. Don’t let them steer you to negotiate over the monthly payment. It’s much easier for you to know if you are getting a bad, fair or good deal when you negotiate over the full purchase price and not a monthly payment. Come in with a price in your mind and ask them to match it. That’s it. If you want to finance the car, you should discuss that after you’ve agreed on a price.
10 – Talk trade-in value after you have agreed on a price of the car. If you have a car to trade-in, first agree on the price you want for the new car, and only after that start to negotiate the value of the trade-in. You should also come to the table with knowledge of the market value of your trade-in.
Bonus tip:
Have somewhere to be after the dealership visit. Plan an appointment or meeting for about an hour after walking into the dealership. That way you can say you have limited time and it puts pressure to close the deal. It will also limit the amount of time they will hold you there while they are “checking with the manager.” You can always leave and say that you have a prior commitment you need to get to and give them your number to follow up with you when they can match your price. If you’re price is reasonable – there is a good chance they will call you back a few days later to close the deal.
