Cars are costly these days, but consumers do have some say over how much they pay—if they negotiate. Plenty of people hate to haggle, but doing so can deliver thousands of dollars in savings. “Buyers almost assuredly have more negotiating power than they realize,” says Karl Brauer, executive analyst at automotive research firm iSeeCars.
We asked Brauer to share his car-price negotiation tips…
Do Your Homework Before You Shop
Before visiting any dealerships, identify several vehicles that seem likely to suit your needs. If you’re shopping for a new car, tab at least two to three makes and models. If you’re buying used, target at least three to five used vehicles currently listed for sale online, spread among multiple dealer lots.
Focusing too much on any one car or dealership is a potentially costly mistake. “You need to be looking at multiple cars, not thinking I need this one,” says Brauer. “Never fall in love with a single car—dealers can spot the I have to have it in buyers, and they know how to take advantage.”
Research the real value of each of the vehicles you’re considering. Many auto websites, including Brauer’s iSeeCars.com, include a valuation tool that can estimate a fair price for a particular vehicle. The best of these valuation tools generate estimates using real-world sales data, says Brauer. “It’s based on an aggregate of hundreds of recent sales in that area.” This fair price figure might be significantly below the dealership’s asking price, though this varies.
If you plan to trade in your current vehicle, use these online tools to research its value, too, and/or get an offer from a company that buys used cars, such as Carvana (Carvana.com).
If you intend to finance the purchase, get preapproved for a car loan through a bank or credit union. That way you won’t be stuck with the dealership’s loan terms.
Contact your insurance provider to learn what the various vehicles you’re considering would cost to insure.
Set Your Budget and Stick to It
Salespeople often try to upsell car buyers into higher-end models and trims. You’re less likely to fall for these dealership negotiation tactics if you set yourself a budget and refuse to go above it.
Calculate your budget based both on the total amount you consider reasonable to spend on a car…and, if financing, on the size of the car payment that you can comfortably fit into your monthly budget.
Warning: A dealership might try to convince you that you can squeeze an expensive car into your monthly budget by taking out a longer-than-normal car loan. Never agree to a car loan that’s longer than five years—the longer the loan, the more the vehicle is likely to end up costing you. “Buyers who take out six- or seven-year loans often end up upside down,” says Brauer. “They owe more on the car than it’s worth.”
Shop Around and Compare Offers
When you visit dealerships, your goal should be to convince salespeople that you’re going to buy a car soon…and then leave the lot without buying. Salespeople assume they’re in control when a shopper is on their lot, but the balance of power shifts if that shopper walks away without handing over his/her money. “If it’s clear that you’re a serious car buyer on the verge of giving tens of thousands of dollars to a dealership,” says Brauer, “it will drive the dealership nuts if it is not the dealership that gets that money.”
After looking over the car that interests you on a dealer’s lot, tell the salesperson “I am definitely buying a car within the next two days, but I’m going to look at several other cars before I make my final choice,” advises Brauer. Then get the salesperson’s card, provide your contact information…and leave. If you decide this really is the car you, it’s best to haggle over the final price later via phone or e-mail.
Caution: The salesperson will probably try to stop you from walking away, perhaps by claiming that other buyers are coming to look at the car soon and you’ll miss out if you don’t buy immediately…or that he can offer you a lower price now than he’ll be able to later. Such claims are rarely true, says Brauer. “Reply, ‘Well, if that happens, I guess I’ll have to buy elsewhere.’”
Alternative: Some car shoppers refuse to set foot on a dealership lot until after they’ve negotiated a price they like—they make initial contact with dealerships and negotiate prices entirely online or over the phone. That is a viable strategy, but Brauer believes visiting lots in person and walking away is better. “It makes it more likely the dealership will see you as a buyer,” he says. “When they invest time in you and watch you walk away, they’re more motivated to make the sale.”
Choose the Right Time to Buy
Visit dealerships on weekdays, not weekends. Dealerships are less crowded on weekdays, so salespeople can invest more time in the shoppers who do appear and have extra motivation to sell to them. On a weekday, you might be the best chance that salesperson has to make a sale all day.
Weekdays near the end of a month—or, better yet, near the end of a quarter or year—are an especially good choice because salespeople and dealerships might be anxious to sell cars to meet sales targets. Winter is another candidate for the title of “best time to buy a car,” says Brauer. Cold weather and holiday-season-stretched budgets tend to keep car shoppers off lots this time of year.
Make the First Offer…and Make It Count
That old negotiation tactic of never making the first offer is not how to get the best deal on a car. Instead, make the first offer, and make sure that offer makes you look like a serious, well-informed buyer.
To accomplish this: Use the online vehicle-valuation tools described above to select a dollar amount at or very near the low end of the value estimates you uncovered but no lower. Resist the urge to make a low-ball offer well below what valuation tools say is reasonable. A lowball offer won’t convince a dealership to lower its price…it will just convince it that you’re not a serious buyer and not worth its time.
Focus on the Total Price, Not Just Monthly Payments
When you discuss prices with dealerships, negotiate based on your “out-the-door price.” Car dealers might try to shift the discussion to instead focus on monthly payment amount. Don’t fall for this trick—dealerships want to talk in terms of monthly payments because that makes it easier for them to hide the total amount you will pay for the vehicle.
Remind the dealership that this “out-the-door” price should include literally every dollar that you’ll have to pay to drive away in the vehicle. It should include not only the purchase price but also fees, taxes and registration costs. For a new car, the destination fee should be included as well. Reminder: Vehicle-valuation estimates produced by automotive websites generally do not include state taxes and registration fees.
When you reach an agreement, politely inform the dealership that you have no intention of paying even a single dollar more than this agreed-upon “out the door” price. “Be blunt,” advises Brauer. “Say ‘That’s everything, I don’t want to hear about any other charges.’”
Discuss auto-loan terms and the value of your trade-in only after you’ve come to an agreement on the out-the-door price. If you don’t like the loan terms you’re offered, mention that you’re pre-approved for financing through another lender. Sometimes saying this inspires a dealership to offer better terms after all.
If you don’t think you’re being offered enough for your trade-in, don’t trade it in. “You can always sell your used car yourself,” says Brauer. “But if the trade-in offer is only a few hundred dollars below what you want, you might decide doing that isn’t worth your time and effort.”
Use Inspection and Vehicle History as Leverage
Used-car negotiation strategies are slightly different than new-car strategies. When buying used, always get the CARFAX (Carfax.com) or AutoCheck (AutoCheck.com) report for any used car you’re strongly considering. Cross cars off your list if these reports reveal major accidents or other serious problems in their past.
Once you’ve settled on a particular vehicle and before finalizing the deal, take it to your mechanic for a “pre-purchase inspection.” This inspection might cost a few hundred dollars, but that’s money well-spent. If your mechanic finds minor issues, you might be able to use those issues to negotiate a lower price. If he/she finds major issues, you can walk away from the deal and avoid buying a lemon. “Getting an inspection might seem like a hassle,” says Brauer, “but it’s a lot less of a hassle than buying a used car that has hidden damage.”
Stay Calm, Polite and Ready to Walk Away
Some dealerships try to tack on charges at the last minute or throw other hurdles or hassles in a buyers’ path. Their goal is to wear buyers down until they’re willing to pay more than they should just to be done with the car-buying process. Remain calm and polite in the face of these tactics. If you are near your breaking point, tell the dealership that you’re walking away if it doesn’t stop playing games—and follow through if necessary.
Finalize the Deal and Review All Terms
Before signing the contract or handing over a check, review the contract closely to confirm that every detail is as agreed. Pay particular attention to the total price, which should match the out-the-door price you negotiated earlier. “Make sure they haven’t added charges onto the deal,” warns Brauer. “They sometimes tack on things like scotch guarding, paint protection or nitrogen in the tires. Just say no.”
