Negotiation Know-How: Getting a Better Price on Your New Car

New Car

The thought of negotiating with a skilled car salesman probably makes you more than a bit uncomfortable. He has the advantage of experience; he is trained to confuse you and wear you down. But, the main problem people face when shopping for a new car is not the formidable foe of the salesmen, but simple lack of knowledge about the cars at which they are looking and the overall sales process. And this lack of knowledge is what gives the dealer his true power. Simply arming yourself with a few helpful pieces of information can dramatically shift your position, and help you get a better deal on the vehicle. Here are just a few tips to help you do just that.

New Car

Shop for Financing on Your Own

For most of us, a new car is out of reach unless we can secure a loan. Before you head to a dealership, shop around for financing on your own to get an idea about the type of interest rates for which you are qualified. Then, when you go to the dealer, you will have a good idea of whether they are offering you an appropriate interest rate. Whether you get third-party financing or go with the dealer is ultimately up to you.

Know the Invoice Price of the Vehicle

Most of us who attempt negotiation start with the sticker price, and try to get it down. But, this is not the best way to go. For optimal results, you must find out the invoice price of the car, which is what the dealer paid the manufacturer. Any price above that number is profit—even if a car was sold at invoice price, the dealer would still make a profit from the ‘holdback’, which is a percentage of the retail price paid to the dealer quarterly for cars sold. There are websites that provide the invoice price and the amount of these rebates, such as

Don’t Focus on the Monthly Payments

You tally your take-home pay, and add up your expenses. This will give you an idea of what type of car payment with which you are comfortable. When looking for a new car, don’t focus on negotiating a monthly payment – this will not get you the best deal you can on the overall cost of the car. It is very easy for the dealer to manipulate the process and maximize his profits when you are talking numbers in terms of monthly payments. This is one reason it may be an advantage to secure funding from a third party, rather than through a dealer.

Don’t Talk Trade-Ins Until a Price Has Been Decided

If you have a vehicle to trade in, don’t bring that into the mix until you have reached an agreement on the price of the new car you are looking to buy. Talking trade-ins at the same time you are talking about the new car will put you at a disadvantage because the dealer will start throwing around terms you don’t know the meaning of, and succeed in confusing you to a point where you lose your negotiating steam.

And while on the subject of trade-ins, make sure you do your homework on the price–you should go into the negotiation having an idea of the high and low value of your car.Take it to a few used car dealers to see what they would give you for it.  Make it as appealing as possible–make sure all the junk is cleared out, and it has been given a thorough cleaning.

Be Ready to Walk Away

If you really feel you are not getting the best deal possible, be prepared to walk away, no matter how much you may want the car. This is not a license to be completely unreasonable in your offer, and just leave if they won’t budge. But, if you think they are not dealing with your fairly, or using shady tricks, this is a powerful tool to kickstart a real negotiation.

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