Learn how to negotiate the best deal when buying a new car with smart tips on pricing, discounts, trade-ins, and financing
Introduction
Implication buying a new car is an exciting experience but can also be a daunting in one particularly when negotiating what you pay for it. Car dealerships can be some of the most intimidating places to deal with however if you are using just a few basic strategies you can walk away with the deal you wanted. Negotiation is an art form and if done properly you could end up saving thousands of dollars.
Do Your Research Before Hitting the Dealership
When it comes to negotiating knowledge is power. Do your homework on a make and model before you ever set foot in a new car dealership as well as on the cars manufacturers suggested retail price invoice price and fair market value. Use resources such as Edmund Kelley Blue Book and true car to get a sense of pricing. Knowing what everyone else has paid for that same car in your region will help you gain an advantage in negotiations. And see what incentives rebates and special financing are available.
Comparative Shopping Get More Quotes
Do not accept the first price you see from a dealership. Instead shop around for quotes from several dealerships. Many dealers are now offering online price quotes which make it easier to compare price. If a dealer knows you have other offers to compete with they will be more inclined to match or beat the lowest offer. Try shopping at the end of the month quarter of year when dealer may be more willing to offer a discounted sale to meet a sales quota.
Know the Dealers Invoice Price
The dealer invoice price is the price paid by the dealer to the manufacturer for the car. Knowing this price also gives you the ability to negotiate to a point closer to what the dealer actually paid as opposed to the sticker price. Remember manufacturers pay dealers hold backs and incentives so they often profit even when they sell at or below invoice price. 2-5% helps because then you can be negotiating above the invoice price instead of negotiating downwards from the MSRP.
Prepare for Financing Pre Approval
Arriving at a dealership armed with a pre approved loan from your bank or credit union give you some negotiating power. Most dealerships will provide financing, but their rates may not always be the most favorable. If they want your business they might even throw in a lower interest rate than your pre approved offer. Also do not negotiate on monthly costs. Dealers can stretch the loan term to reduce monthly payments but raise the total cost of the car.
Timing is Everything
There are certain times of year when you can score better deals. End of the month quarter or year dealers are working to meet sales goals. Holiday sales events Memorial Day, Labor Day, Black Friday and the year end sales features major discounts. When a new model comes out buying right before a model year refresh can get you a better deal on the outgoing model.
Be Willing to Walk Away
Perhaps the most powerful negotiating tactic of all is being prepared to walk away. If the dealer will not move on the price or is tacking on any unnecessary fees be ready to walk. Often they will call you back with a better deal.
Watch for Add Ons and Fees
Dealerships earn much of their profit on add ons such as extended warranties gap insurance paint protection and VIN etching. Reject unnecessary add ons that will only raise the bottom dollar more. Also watch out for surreptitious fees like dealer preparation fees or documentation fees and request the same to be waived or reduced.
Negotiate Trade In and Purchase Separately
If you have a trade in negotiate that separately instead of incorporating it into the new car price. To make it seem like you are getting a great deal dealerships will sometimes adjust number to compensate somewhere else. Get an appraisal from Car Max, Kelley Blue Book or local dealerships before you go to the dealer so you will have a baseline price.
Final Thoughts
You do not have to be intimidated to negotiate a car purchase. Research shop around for quotes understand the invoice price and be ready to leave without the car are all ways to negotiate the optimal deal. Be always patient always firm and confident. Follow these strategies and you will drive away in your new car with the comfort of knowing that you paid the best price possible.