For most people, buying a used car will be the 1st or 2nd most expensive purchase that you'll make – depending on whether you own a home. Unfortunately far too many people just don't do their research, and don't try very hard to find the best deal because they just feel intimidated when going to a car dealership or talking with a car dealer. In my opinion that's a big mistake.
If you do your research, and make sure to have your financing (or cash) lined up and ready to make the purchase, you'll have more power when you go out to make a deal. Here are some sites to do that research:
My wife and I are currently shopping for something a bit bigger than my wife's Honda Civic now that we've got a baby at our house. We want something with a little bit more room for the baby and the baby's things – so we're looking for a small SUV or something similar. (Any suggestions? Let us know in the comments!)
Here are some tips that we'll be trying to remember when we go out to negotiate with dealers to buy our new (to us) car.
Tips For Negotiating With A Car Dealer
Here are some things that can help you when negotiating a price with your local car dealer.
- Set a hard price you won't go over: Before you even go to the dealership and start negotiating with the dealer, you'll need to sit down and figure out what your budget is for your new car. Do you research on the particular makes/models you're considering, set a firm price you won't even consider going over – and have that number in your head when you negotiate. And for heavens sakes, don't start negotiations at that price.
- Try shopping when salespeople need to make a deal – at the end of the month: Because most dealerships will have monthly sales goals for their salespeople, the end of the month is often the time that they're most willing to offer a deal and get you into a car. If they're 2 cars short of meeting their sales goal, do you think they're more likely to give you a better deal?
- Don't fall for the old “what can you afford for a monthly payment” trick: When you talk to the salesman about a certain car, they may try to distract you with low monthly payments, financing offers, and other incentives. Don't give them the control by allowing them to price your car by the monthly payment or by a good finance rate. Be in control of the situations and explain to them you'd only like to discuss total price first, and then talk about how you'll pay later on. You don't need to tell them if you're financing – or if you're paying cash – as we are.
- Don't be desperate, have walkaway power: When you start negotiations you can stress with the dealer that if the price is satisfactory – you could sign and drive today. However, you can tell them that you're certainly in no hurry. Always keep open your options and ability to walk away from the deal if you're not happy with it. If the dealer knows you are desperate or that HAVE TO HAVE this particular car, he will take advantage of that. (That means you'll be paying more!)
- Make an offer and shut up: Sometimes the easiest thing you can do to get a better deal is make your offer, and then just be quiet. Don't get uncomfortable if the dealer doesn't say something or make a their own offer right away. Just wait for them to make a counter offer. If you decide to counter their deal, never go over your firm price.
- Work up from dealer cost, not down from MSRP: Quite often the dealer will try to get you to negotiate the price down from the sticker price, trying to make you feel like you're getting a deal. The only thing is, nobody except for suckers pays MSRP. Instead, work your way up from the dealer's actual cost of the vehicle. Allow them a fair (and small) profit, and you'll both come out ahead. According to Carbuyingtips, on a 5% profit a dealer can still meet operating costs and come out ahead.
- If you're come to your firm price – stop: When your last offer has been put on the table, and you can't go any higher because you're reached your firm price, politely tell them that you've put your best deal on the table. Once your best deal is out there, they'll either have to accept it or turn it down. If they turn it down, be ready to walk out the door.
- Follow up with a call the next day: If they didn't accept your best offer, try calling the dealership the following day with a last chance offer. They may take the deal just to move inventory and meet their monthly goal if they're desperate enough.
- It isn't in the deal if it isn't in writing: Make sure everything you agreed to in your negotiations with the dealer are stipulated in the sales contract. If it isn't, it's like it never happened. Don't rely on the salesman's word – make sure to have it in writing.
Shopping for a car can be a stressful process. However, if you do your research, come prepared and understand how the sales process works, you'll end up paying a lot less money than the next guy.
Do you have your own tips for buying a new or used car? What things do you do when negotiating with a salesman? Tell us how you get the best possible deal in the comments!