Negotiating a New Car’s

It happens to the best of us. After you drive out of the showroom in your new car, you wonder whether you could have done a better negotiation. You wonder whether you got the best deal or whether you could have asked them to lower the price. That happens because we never prepare for negotiating car prices.

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Why People Don’t Negotiate New Car Prices

Focusing only on the product: People often focus on finding the right car and not getting it at the right price. If you were to ask someone who’s about to buy a new car, most of what they tell you would be about the model and its features. Little attention is paid to the price or the tactics you could use to get the best deal.

Believing they aren’t salespeople: Some would-be buyers believe that they don’t have the skills for negotiating car prices because they aren’t into sales. This is wrong because anyone can learn the tips for better car price negotiations and without being aware, you may already negotiate as part of your job or while shopping for other products or services.

They’re overwhelmed: Perhaps the biggest reason why people shy away from negotiating car prices is that they feel overwhelmed by the process. Walking into the showroom, seeing all the shiny new models, watching other customers opt for pricier cars, and spouse or a family member liking a car can all be mildly unsettling.

How To Negotiate A New Car's Price

Negotiating car prices is an art that you would need to understand at some point because it’s a purchase you will make at some point. From the mails we receive at Car Digest, we know how most people end up regretting the price they paid especially when they hear from family, friends, or colleagues who would have got a better deal.

You can avoid that by following these steps while negotiating car prices.

Research The Market Value For The Car You Want

The first—and most important—step is to understand the market value of the car. Entering a negotiation with the necessary information will empower you. Knowing the market value will also let the salesperson know that you’ve done your homework.

To understand market value, you would have to know about the MSRP (manufacturer suggested retail price) and the invoice price. MSRP is the price determined by the manufacturer. You can easily find this by visiting their website or checking their newspaper ads or social media handles.

The invoice price is what the dealer would have paid for the car. Understanding these prices will give you the bandwidth to negotiate. You should also be aware of the overall demand for the car. For a newly launched car, there could be more demand for a particular model which will push up its price.

Importantly, keep in mind that there will be little wriggle room for the latest models. If you can find a similar car with the same features from the previous year, you’re more likely to get a good deal.

Pick Your Time Of Year To Buy—Wisely

The conventional wisdom is that you should wait until the end of the year to buy a car. There’s some truth to it as most manufacturers would want to increase their annual sales. They would also support dealers with incentives which would give you some room to negotiate.

But the end of the year is not the only time to buy a car. You should also be aware of seasonal fluctuations in prices. If your region experiences harsh winters, sales would be lower. This would work in your favour. Similarly, expecting a sales jump in summer, dealers may end up with an overstock of cars they can’t move.

There will also be cars that haven’t seen any major upgrades in years. Due to increasing competition, their potential may not be easily visible or even the dealership may not be interested in pushing those cars. If you can research and approach at the right time, you might get an excellent deal on one of those cars.

Talk Price, Not Payment

This is an age-old trick that car salespersons use. Instead of talking about the price of the car, they will talk about it in terms of the monthly loan payments you would have to make. And guess what, gullible buyers fall for it!

That’s because the dealers will be able to make them focus exclusively on the reduced monthly payments. They will not harp on the loan duration. So, buyers, thinking about their monthly budgets, would agree to buy a higher-priced car with low monthly payments and longer loan periods.

Don’t fall for it. When you negotiate, focus on the total price of the car. Steer the discussion away from what you would have to pay every month. If they ask about the monthly payment range you would be comfortable with, bring the discussion back to the price.

Don’t Be In A Hurry

You should never rush the purchase. This is why it’s a good idea to do your preparation and start the process early. Even if you want the car at the earliest, you should never let the salesperson know about it.

As far as they’re concerned, you should have the time to find out the best price from multiple dealers and wouldn’t mind waiting. The dealer should think that you have done your homework and is in no rush to buy the car.

Get Pre-approved For An Auto Loan

You can always get your loan approved at the dealership. It won’t be difficult but it would ensure that you spend more time there and the ease of getting the loan would encourage you to settle soon in your negotiations.

What you should do is apply to your bank and get pre-approved for a loan range. You can do it online and it won’t be a complicated process. You can take that documentation when you visit the dealership. If the dealer can offer a better deal on your loan, do take it.

Get Prices From Multiple Dealers

You should shop multiple dealers if you want to get the best deal when negotiating car prices. While doing your research, have a list of several dealerships and let them know that you’re interested. Importantly, let them know that you’ll be visiting others.

If you fail to reach anywhere on your negotiations with a dealer, you can always visit another dealership. When they know that you have that option, they would compete with each other for a lower price, more accessories, or a better car loan.

Don't Be Afraid To Walk Away

The car salesperson wants you to make the decision then and there. But if you’re not comfortable with the price, always be ready to walk away. This puts pressure on the dealer.

Now, don’t expect the dealer to call you back with a better offer. But walking away will ensure that you don’t make an impulsive decision you’ll regret later. Even if you like everything about the car but there’s some uncertainty in your mind, let them know you’ll need some time to think about it.

In Short

Maybe you know people who’re better at negotiating car prices. Maybe you have taken them along for negotiations with car salespersons to get the best deal. But the truth is that anyone can get good at negotiating car prices and save thousands of dollars. All it takes is a bit of preparation.

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