• Things to Know When Negotiating a Car Price

    Negotiating car price is one of the most commonly feared aspects of purchasing or leasing a vehicle. However, if you are well prepared it does not have to be an overly stressful process.

    Negotiating used car prices and new car prices are very different processes. When you are looking at a new car, the floor is the invoice price, or what the dealership paid for the vehicle. You can usually determine the invoice of any make and model online, and you can also ask a car salesman to provide you with the invoice of a particular vehicle. Unless it is a rare make or model (or a vehicle where demand exceeds supply), dealerships are often willing to sell new cars at or near invoice because the car manufacturer will give them cash bonuses for sales volume.

    Used car prices are a bit trickier to negotiate. Because dealerships do not receive bonuses for selling used inventory, they have to rely strictly on the sale to generate profit. Kelley Blue Book, Edmunds and similar pricing resources can be helpful guides but they are not particularly useful in negotiating for a specific vehicle. The reason for this is that dealerships generally obtain their used inventory from trade-ins or from used car auctions. They could have two cars on their lot with sticker prices of $8999, but they may have paid $5000 to obtain one and $7500 to obtain the other. They may be perfectly willing to sell the first car for $6500, but refuse to dip below $8000 on the other. The easiest way to work around this is to simply ask what they paid for the vehicle. Many dealerships are hesitant to reveal this information, but they do have it on hand and they will reveal it if pressed.

    Negotiating car leases can be a bit more complicated because the lease rate depends on factors such as projected resale value, as the dealership will generally retake possession of the vehicle at the end of the lease and sell it. However, the process is similar and the knowledge required to get a good deal is largely the same.