New Car Pricing

Great Tips for Negotiating a Car Price Like a Pro


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Negotiating car price isn’t something many people are too keen on doing. However, it is possible to save a substantial amount of money by taking the time to research what similar cars are selling for in your area and being willing to haggle. Car dealers must make a profit in order to stay in business; but, this doesn’t mean you can’t still get a great deal by negotiating the sticker price.

Have an Idea of the Dealership's Cost

Whether you are in the market for a new or used vehicle, it is important to have an idea of the dealership's ultimate cost before contacting the dealership. For new cars and trucks, you should research the invoice price of the vehicle via Autos.com. However, the invoice price is not always representative of the dealership's ultimate cost for a vehicle. Most manufacturers pay a dealership an amount called holdback for each vehicle that the dealer takes for inventory. The holdback amount is usually equal to a figure between 3-5 percent of the invoice price. Holdback is intended to be used to offset regular dealership expenses like facilities maintenance and sales commissions. Some dealerships will be willing to sell a car for invoice, as holdback allows the dealership to remain profitable on the sale.

If you are shopping for a used car, it can be more difficult to ascertain the dealership's cost for a vehicle. The best advice is to use a service like Kelley Blue Book to calculate the trade-in and retail values of a vehicle. Dealerships try to buy used cars for the inventory at a price near the trade-in value. They will often list cars for sale at prices near or above the Kelley Blue Book retail price. On a used vehicle, try to negotiate a price between the retail value and the trade-in value, with the price being nearer the trade-in amount.

Shop Around

Some dealers may offer incentives such as free scheduled maintenance for one year on new auto purchases. Others might offer special financing, or even special car pricing deals. It is a good idea to do as much research as possible, whether online or in person, in order to find out what is being offered and where. Visiting local dealers and seeing what inventory is available and what the sticker price is can be a good bargaining tool when it comes time to make an offer.

Trims

Most cars come in a variety of trims, each one having more options and a higher price. Dealers often times stock the most popular trims of a particular car. If a particular car has more options than you want, it is sometimes possible to get it for less.

Negotiate

Find out how long a car has been sitting on the dealer’s lot. The longer a car is there, the less money the dealer earns on it, thus making them more willing to accept less. If the salesperson seems unwilling to negotiate the price, ask to speak to the sales manager. Be prepared, bring along quotes from the Internet and other dealers. Do not be afraid to walk away if the dealer seems unwilling to make a deal. Auto dealers are competitive and most will do what they can within reason to make a sale. Offer less than what you are actually willing to pay and give the dealer an opportunity to meet you half way.

Trade In

It is often suggested that buyers negotiate the sale price of the new car prior to negotiating any trade in. The goal is to get the new car for the lowest possible price. Auto dealers often make more money selling used cars than they do selling new cars so a trade in can be a great bargaining tool. Taking the time to detail and clean your trade in will make more attractive to the dealer.

Never Be Afraid to Walk Away

When you are negotiating at a dealership, remember that the ball is in your court. You can leave at any time, and without a prospect remaining in the showroom, the dealership has no chance of selling a car. When a dealership makes their first offer, called the "first pencil," the price, down payment and monthly payment will all be ridiculously high. Cut to the case and make a reasonable offer per the research you completed online. It is best to give the dealership a time-line of 45 or 60 minutes to agree on a selling price. If you cannot make a fair deal within an hour's time, it is not likely that you will ever get through to the dealership. If all else fails, leave the dealership and await a return phone call. They may accept your offer, make a counteroffer or tell you that your offer is too low. In any case, at least you will know where you stand and whether or not to contact another dealership.

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