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!
I suggest treating the price of the car you’re buying and your trade-in car value as two seperate transactions. Many salespeople will try to merge the two.
Determine the value of both vehicles via something like KBB.com and know those figures when arriving to the dealership. Every dollar counts!
Peter Anderson says
You’ve got a good point. Once again, dealers will try to confuse issues by bringing in a trade when discussing pricing/etc. Treat them separately if you can – and if you’re able, just try to sell your car to a private party instead of trading as you’ll probably get more for your car!
Mike Rumple says
Yes, absolutely, the purchase or lease should be negotiated separately from a trade-in. And you should also shop the trade-in with multiple dealers like you should do for the purchase.
The only real way to make sure you’re getting a good deal is buy making dealers compete. Unfortunately, today’s market in 2021 is nuts and a lot of dealerships are able to sell vehicles above MSRP. These are unprecedented times of course.
There are a lot of good research sites out there, but if they are providing leads to dealerships, they are more than likely getting paid for those leads and dealerships are their real customers. If it’s free to you, then someone else is paying. And, who really cares what your neighbor paid? I tell me clients this all the time. You want a good deal, not what your neighbor paid, trust me. You’ve got to make the dealerships compete, which means reaching out to multiple dealers and getting proposals on vehicles with the same MSRPs. Then you can begin negotiating.
Two words — “mini” “van”. Or maybe that should be one word. Here are a few reasons to get a van:
1. Lifting a kid into an SUV is much more difficult than in a van.
2. Easier for a toddler to climb into a van than an SUV. Picture mom with an armload of groceries having to drop them, put kid in the car, then pick up bags and put in the car. With an automatic door opener on the van you just say “hey kid, hop in the van!” As with any toddler, there’s only a 50/50 shot he’ll listen, but still better in a van.
3. No more door dings (because of sliding doors) initiated by an impatient 2 year old who suddenly learns how to unbuckle a car seat AND open the door.
4. Forget the lack of “cool” factor. You are a PARENT. Utility is king.
5. Kid’s #2, 3, 4 — most vans have easier access to the third row than SUV’s.
We’ve been driving a Honda Odyssey for 5 years and plan on driving it for 5 more. Best car decision we’ve ever made. I do look like a nerd when I drive it though . . . .
Peter Anderson says
Yeah, I said we should get a mini-van but the significant other has a loathing for mini-vans. Not sure why. :)
Buy a minivan. We have two kids (6 and 9) and we just love how much room we have. We bought a used 2000 Odyssey for about $6K and paid cash -no payments and love it! Thanks to Ramsey, no payments ever again. The van runs great and planning to keep it for about 5 years at least.
After I get to what I think is the lowest price a dealership can give me I always call other dealerships in my area (other honda dealerships) to find out if they can beat the price. You have to be careful though because if you give them too much info they will start calling their partner dealerships to keep from competing with each other.
“It isn’t in the deal if it isn’t in writing” – this’s right on the money! So often car salesman throw out attractive verbal offers/counter-offers to bait you to move to the next step, but then the proposals quickly evaporate once you move to contracts.
In fact the whole negotiaton process seems to be a series of mini-steps designed to get you to move on to the next one until they’ve got you in the deal that looks nothing like the original package. It works because they overload you with numbers until you’re so confused that you’ll agree to anything.
There’s an art to that that most of us can’t master, but we need to be sure we’re aware of it and ready to counter it so we don’t end up paying thousands more than the deal we came in for.
When buying a car, I always walk out of at least one delaership. Just so I know the very lowest that someone is willing to go. Its good to use this as a benchmark.
I’m not rude or anything, I just always leave at least one place.
First, I would go around the whole market and check which cars I like. I would choose some 3 best ones. In each case I would ask for a price and then walk away. When I come back I would offer my price. I would try to make it as low as possible. From this point real negotiating starts. The seller asks for the highest price, the buyer asks for the lowest. They should meet somewhere in the middle.
I would also try to think of some positive and negative things about the car and present the positive ones for showing that I want to buy the car and the negative ones for showing why I want to have the lowest possible price. Depending on the reaction I might try to walk away one more time allowing the person to rethink my offer and by checking other two choices of mine. I would repeat the same procedure with the other two. I would also try to see which of the sellers is the most desperate to sell.
I think negotiations is an art in itself. There could be many more points to discuss. You have covered quite a lot of them. Thanks.
Great points. I like the point about shopping at the end of the month. I never thought of that before, but it makes perfect sense!
Up till now, I have never bought a car from a dealer. I buy all of mine from the public auto auctions. I get amazing deals. The only thing with those is that you can never be too careful about what you are buying.
Also, give yourself time and make sure you eat BEFORE you go car shopping. That way you won’t feel hurried or hungry.
This comes at a perfect time since we will be buying a new vehicle in the next few months. We are currently expecting child #3 and there is no way that 3 car seats will fit into my little G6.
When we bought my husband’s truck the dealers annoyed the crap out of me with the whole monthly payment. They kept asking me what I wanted my monthly payment to be under instead of what I wanted to pay in total for the truck. They didn’t understand that I was more concerned about paying off the loan than what my monthly payment was going to be. We actually walked away from one dealership and they called two days later with a lower price but we had already bought a truck somewhere else!
Looks like it will mostly likely be a mini-van for us with 3 kids and possibly 4 down the road. My husband can’t get over the fact that he may have to drive a mini-van but he will just have to.
Car Negotiation Coach says
Hey Peter, Thanks for the mention! My strongest tip is to get competing offers from multiple dealers and pit them against each other. I’d suggest not making an offer at all, but instead asking each dealer to beat the best price from their competitors. When you throw out an offer, you’ll never get a deal below that price. But through competitive bidding, the price keeps going down.
Also, I’m a huge fan of the Honda CRV. We have one ourselves and love it. Honda’s are notoriously reliable, reasonably priced with high residual values, and the CRV is not too big and not too small.
BTW- If you haven’t bought yet and would like some help (or to be a case-study) let me know!
These are really good tips. However after working in the car business for 20 years I have seen dealerships evolve. Now they are more concerned about making money from after market products or financing. Because the internet allows people find the dealer invoice they will play the game of negotiating but are really making more money from the back-end leases and finance contracts. you can read about car dealer’s back-end profits here. http://www.hoopdi.com/guide/index.php/Car-Dealer-Secrets/The-Back-End.html
Thanks for the article Peter. To me using sites like Edmunds.com and http://www.truecar.com are the best way to figure out what you should be really expect to pay for a car.
Caryl Anne says
Great tips! I’ve always said it’s best to shop at the end of the month and sometimes at the end of a quarter because salesman are trying to meet their goals. They are more willing to work with you then compared to the beginning of the month, etc. Thanks for sharing these valuable tips!