Negotiating the Best Deal When Buying a Car

How Do I Buy a Car?

Cars are a necessity, not an investment! So you’ve got to get the best deal you can and not knowing how to negotiate the car price can cost you hundreds if not thousands of dollars. Car dealers often play on your psychology to influence the sale. So remember - Every aspect of the sales encounter is an opportunity for the dealer to make money off you. You need to be prepared when they try to use their techniques on you. Review the tips below, then try a practice negotiation at a dealership before going for the real one, or take a good negotiator along with you to help you in the bargaining process.

Be Flexible

Flexibility can help save you money. For example, if midnight-blue cars are in high demand, you'll probably be able to make a better deal if you choose a different color. Be prepared to compromise, but only on those items on your nice-to-have list.

Have Patience

Automobile negotiations take time – usually 2 – 3 hours. The salesperson will try to wear you down. Most likely you'll go through several rounds of offers and counter-offers before you reach a deal. So don’t be in a hurry and relax. It’s a good idea to be well rested and fed before you start the negotiation process. And be nice. Being arrogant or pushy will not help in your negotiations. This is not the time to let your emotions get the best of you.

Ask Lots of Questions

Show the salesperson that you are serious about getting a good deal and that you want to understand exactly what is included in the dealership's offer. Ask them to explain completely each figure presented to you. They should be happy to answer your questions.

Negotiate One Thing at a Time

There are three things to negotiate when purchasing a vehicle

• the vehicle price
• the value of your trade in
• financing

Salespeople like to combine all three by asking what you can afford to pay per month. This allows them more leeway to move figures around so it looks like they are giving you a more favorable figure in one area while inflating the figures in another area. Never talk payments with the dealer. If a dealer only talks about monthly payments with you, it usually means they are avoiding telling you the real price of the vehicle. If you did your homework, you will already know what price fits your monthly budget.

Don’t Be Foolish on Financing

Why spend hours researching, test-driving, and negotiating the vehicle price, only to turn around and give back to the dealer all that you just saved? Even if you negotiated a great purchase price and a great trade in for your used car, if you are not negotiating a very good finance package, the whole deal may turn out to be horrible.

Dealerships are more willing to give you a steeper discount if you seek a car loan from them. When you finance through the dealership, you should know that Finance and Insurance (F&I) department is often a bigger profit center than the sales department. If you get a pre-qualified loan somewhere else (credit union, bank, etc.) before going to the dealership some dealerships may match your rate. When they do, they will make some money on your loan and should pass along other savings to you.

If you plan to use financing other that from the dealership, it may behoove you to not disclose that to them until you have negotiated the price of the car and your trade in. That way, they cannot try to offset the deal they gave you already with the cost of financing.

Get It in Writing

For your own protection, make sure you get all the details of your deal in writing. Have the salesperson write down every figure and terms, and any options that are included in the deal. And get the salesperson (or better yet, the sales manager) to sign it.

Watch Out for Dealer Tricks and Manipulation

Car dealers are in the business of making money. Unfortunately, they have earned the reputation of ripping people off. Whether or not this is deserved is debatable. But there are some things you should watch out for. Be suspect of anything that doesn't jive or seem right. Here are some actual, real-life examples:

A dealer brought out the Manufacturer's Invoice to show a customer. Funny thing was, it was printed on the dealership's letterhead.

When negotiating with a married woman who was there by herself, the salesman asked, "Do you need your husband's permission to do this?" His goal was to get her to react with, "Oh course not! I can make this decision myself." (It worked.)

Even though a car manufacturer was advertising rebates for buyers on new cars, when it came time to negotiate the price, the dealership kept the rebate. Their explanation was that that was how they were able to keep the price of the car so low. Huh?

If the dealer talks you into taking the car home overnight to try it out, they know they've made the sale. Don't let yourself be manipulated into doing that.

Don't buy their sob stories like, "Gee, if we sell it to you at that price, we won't be able to pay the salesperson." Trust us, they would never sell a car at a price so low they wouldn't be able to pay the salesperson and make a profit, too.