6 Tips To Look Out For When Negotiating a Car Deal
Buying a new car means either paying the full price or negotiating with a salesperson until you agree. Unfortunately, many people avoid buying a new car until it is absolutely necessary because they don’t want to get stuck overpaying just because they don’t have negotiation skills. While negotiating properly takes some practice and there could be tons of different leads and avenues, there are ways to help you save money on your next vehicle through negotiation. Here are tips for negotiating a car deal.
- Plan Ahead
If you already know that you’ll need to buy a car in-person instead of online you will need to learn how to negotiate for a better price. You should start planning as soon as possible by understanding what makes up the dealer cost of a vehicle. These components are:
Dealer invoice: The dealer invoice is different from the manufacturer’s suggested retail price (MSRP); it’s essentially the cost the dealer pays to purchase the vehicle. Of course, dealers need you to pay more than this so they can make money, but it’s good to know what they paid so you can haggle better.
Advertised rebates: Many dealers offer cashback rebates as an incentive to make you want to buy the car. For example, if a car comes with a $2,000 advertised rebate, the dealership must give it to you when you purchase the vehicle. However, you need to know what rebates are before you walk into a negotiation since they can impact your opening offer.
Dealer incentives: Dealers typically get hidden incentives from the manufacturer that most people don’t know about because the dealers want you to pay more for the vehicle. You can only take advantage of an incentive when you know one exists. Rebates and incentives change often, so you’ll need to stay updated on the most recent information.
The holdback: The holdback is a hidden rebate paid by the manufacturer to the dealer for every car they sell. This number might not impact you too much, but it can help you think of a starting offer since you now know they get paid by the manufacturer as well as their customers.
Know the True Dealer Cost
Before you can walk into any negotiation, you need to know the true dealer cost, including all of the pricing components we just went over. You should add the dealer invoice, advertising charge, delivery, and hidden dealer incentive to find the true cost to the dealership.
The advertising charge will typically be unknown to you, but it’s typically around $300-500 dollars, so you’ll need to factor that in. Additionally, the holdback generally is about 3%, so you’ll need to subtract that from your total to get the actual dealer cost of a vehicle.
- Do Your Research
Even if you don’t want to do all the math to help you find out how much the vehicle truly costs the dealer, you can still walk into a negotiation with all the knowledge you need, thanks to the internet. First, search for the car you want online and ensure it’s best for your needs. For example, if you have a pet that enjoys car rides make sure you get a car with proper seats or space for your best pal. After, you will need to get quotes from many different dealerships and check your auto insurance to see if it will increase or decrease depending on the make and model of the vehicle. Once you have the quotes in hand, you can bring this with you to a dealership and ask them to beat the lowest price.
- Be Calm and Patient
Patience is a necessity in any negotiation. If you’re impatient or get frustrated, you’ll likely lose. You should also never fall completely in love with one vehicle because you might not be able to afford it even if negotiations go well. You should never show a salesperson how much you want a car because they’ll be able to sense your desperation and will likely win based on that. When you visit the dealership, don’t go in knowing you’re going to walk out with a brand new car. Instead, consider the fact that you may not purchase a vehicle that day and that you’ll likely need to come back for more negotiations.
- Remain Focused
Remember, you want to buy a car for a fair price, so remain focused on that goal. Salespeople will try to throw you off balance and use all of their tricks to convince you that they can’t sell you the vehicle for anything less than what’s stated on the vehicle. However, you must remember that any realistic price is possible, no matter what they say. Throughout negotiations, remind yourself how important it is to save money on your vehicle. Not only will lowering your price ensure a lower monthly payment, but it may even reduce your car insurance bills.
Salespeople sell hundreds of cars every month, and many of them are sold at their bottom line. They’re open to negotiations, but you must stay focused if you want to get the best possible price. If you want to catch a salesperson off guard you can mention the option of using crypto to buy your car. If you are an avid crypto user and have a strong portfolio, some dealerships accept cryptocurrency as a method of payment.
- Take Control
Salespeople know how to take control of their sales, so you’ll need to go with their flow to take control yourself. Let them control the deal, but don’t let them control you. Always be friendly while remaining firm because you control whether or not you purchase the vehicle.
- Be Prepared to Leave
Always be prepared to walk out if a dealer isn’t willing to give you a fair price on a vehicle. The only way to convince a master negotiator that you mean what you say is to walk out. However, you should always walk out softly. Instead of stomping out, which can be perceived as rude, you can tell the salesperson that you don’t believe the sale will work out and give them your business card so they can call you if they change their mind on the price.
Always keep the conversation going when you leave so that they feel comfortable calling you to continue negotiations.
Deciding When to Negotiate
Not every car is negotiable. Sometimes you never will get a better deal, and some dealerships even believe in no haggling and will set fair prices no matter what. However, now that you understand how cars are priced, you can start to decide whether it’s worth it to negotiate with a salesperson. Sometimes it just isn’t worth the stress.
Matt Casadona has a Bachelor of Science in Business Administration, with a concentration in Marketing and a minor in Psychology. Matt is passionate about marketing and business strategy and enjoys San Diego life, traveling, and music.