Be a Better Negotiator and Get Your Best Deal
So you’ve done some research, have chosen the car you’d like to buy, and are ready to go into the dealership. Or are you? The following tips will ensure that you’re fully prepared to negotiate your best car deal and put you in control when it comes time to negotiate the price.
Before Going into the Dealership
Know the Car’s Value: Whether you’re buying a new or used car, there are several resources online – i.e., Edmunds.com (new) & KBB.com (used) – that can give you a reliable estimate of what the car is worth. If you can find out what the dealer paid, which is more difficult, even better. Dealers typically make a 3-5% profit so that would be a good and fair place to start negotiating.
Get Your Credit Score: You can get your score for free right now by clicking here, or from sites like creditkarma.com and AnnualCreditReport.com and it’s a crucial first step toward finding out what you can afford and obtaining financing.
Research Your Financing Options: You can bypass the hard close in the finance office by getting your own financing (i.e., from a credit union). If you decide to go with the dealer financing, be firm with what you can afford and don’t be lured into a more expensive vehicle with an extended contract.
Consider Timing: If you can, go near the end of the week, month or year if possible. The dealership may be more inclined to give you a deal if they haven’t met their quota for that time period.
While You’re at the Dealership
Don’t Show Your Hand First: A sales person might ask how much is in your budget or what monthly payments you’re comfortable with. Don’t give them a number. Instead ask how much the car is worth with the options you want and go from there.
Define Your Limits: Part of a sales person’s strategy is to keep you at the dealership for as long as possible so that you’ll be willing to make deal just to end the process. Don’t let a sales person wear you down and get you into a vehicle you’re not comfortable with. If you’re just there for a test drive, be up front about it and don’t be afraid to walk away if you get pressured. You’ll likely hear something like “if you don’t buy now, I won’t be able to offer you the same price tomorrow.” This isn’t the only deal around and you’ll likely find something similar or better at another dealership.
The Finance Office & Add-ons: If you’ve chosen to go with dealer financing, you’ll be sitting in front of the Finance Manager at some point to finalize your contract. If you’ve followed the previous tips, you should be going in there with the options you want on the car. You’ll likely be offered unnecessary add-ons (extended warranties, floor mats, rust proofing, etc.) that will add another $100+ to your monthly payment. Stand firm with the selections you’ve made with the sales person. Finance managers are good at what they do and know how to manipulate buyers.
Be polite: Contrary to popular belief, not all car sales people are out to swindle you. It’s best to be professional and politely decline any offers or suggestions that don’t fit your needs vs. being antagonistic and on the defensive. You don’t want to jeopardize the deal and, if you’re shopping around, you don’t want to burn any bridges should you come back to that dealership.
While this is not an exhaustive list, it will give you a solid foundation and more confidence when you go into a dealership to buy your next car. The more knowledge you have, the more control you’ll have when negotiating. Good luck!