Starting the car buying process can be exciting, but when it comes to discussing the price, many buyers feel unprepared and intimidated. Negotiating the price of a new car is a crucial step to ensure you’re getting a fair deal and not overpaying. Understanding how to approach this negotiation can save you a significant amount of money. This guide will equip you with effective strategies to confidently negotiate your car price and drive away feeling like you got the best possible deal.
Start with Your Target Price: The Transaction Price
Before you even step into a dealership, arm yourself with information. Your negotiation should begin with a well-researched low offer, grounded in data, not just a random number. The best starting point is the average transaction price for the specific car model and trim you are interested in. Focus on this actual transaction price rather than the invoice price. The invoice price, which is what the dealer paid, is less relevant in today’s market and doesn’t reflect real-world supply and demand dynamics. Websites like Consumer Reports provide valuable data on transaction prices for different car models. Aim for the lower end of the transaction price range as your initial offer. Matching the average transaction price means you’ve already secured a fair deal.
Prepare for the Back-and-Forth Process
Once you present your initial offer, be prepared for a negotiation dance. The salesperson will likely take your offer to the sales manager, and you should expect counteroffers that are significantly higher than your target price. This back-and-forth can take time, so be patient and don’t be pressured into accepting the first counteroffer. Each step in this process might involve waiting, but remember, this is part of the negotiation strategy.
Leverage Competitive Bids and Buying Services
A powerful tactic in your negotiation arsenal is to mention that you have competitive bids from other dealerships. You don’t need to disclose the exact figures, but simply letting them know you are comparing offers can be effective. Convey that you are looking for the lowest possible markup over your bottom price.
Another strong approach is to ask if the salesperson is willing to beat a price you’ve obtained from a legitimate buying service. If you have a quote from such a service, present it to the salesperson. Showing them a printout can add credibility to your claim and put pressure on them to offer a better deal.
Stay Calm, Firm, and Incrementally Increase
Throughout the negotiation, maintain a calm and respectful demeanor. Avoid getting into arguments. Instead of focusing on hammering down the dealer’s counteroffer, stick to your strategy of working upwards from your lower figure. Increase your offer in small increments. If you’ve started with the average transaction price as your target, the negotiation process is likely to be smoother and quicker. However, if you begin with a significantly lower number, be prepared for a longer negotiation period.
Keep Trade-in and Financing Discussions Separate Initially
To maintain control of the negotiation, keep different aspects of the deal separate. If the salesperson brings up a trade-in, politely defer that discussion until you have finalized the new car price. Locking down the price of the new car first prevents complications and ensures you’re not losing value in the trade-in due to a poorly negotiated new car price.
Similarly, when discussing financing, inform the salesperson that you are pre-approved for a loan and are prepared to pay cash. However, also express your willingness to consider financing through the dealership if they can offer a competitive rate. Make it clear that your priority is agreeing on the purchase price of the car first.
Be Ready to Walk Away
Finally, reassure the salesperson that you are serious about buying the car if you can reach a mutually agreeable price. Let them know that if you can agree on fair terms, they can expect a quick sale. However, also be prepared to walk away if the negotiation is not going in your favor. Sometimes, being willing to walk away is the strongest negotiating position you can have.
You might find yourself dealing with a more senior sales associate or manager during the negotiation. If this happens, simply reiterate your ground rules and expectations. Regardless of who you are negotiating with, clearly explaining your position and what you are looking for will help you navigate common sales tactics and stay focused on getting the best possible car price.
