1. Get outside financing first: Car dealers don’t make money just by selling cars. They make money selling financing. That complicates your negotiation. So get pre-approved for a loan at a bank or credit union before you ever talk to dealerships.
2. Choose either in-person or online: You know what it’s like to visit the dealership. But there is another way. Most car dealers have “internet departments” that interact with customers via phone and email. They’re often quicker to reveal their best price, which can make for a lower-pressure experience.
3. Know what to pay: One way to set a fair opening offer and maximum offer is to use Edmunds.com‘s “True Market Value” pricing tool. It’s free, available for new and used cars, and is based on actual prices people in your area are paying for the same car. For example, with a used car, Edmunds gives you four levels of TMV pricing:
-Certified Used, the most expensive
-then Dealer Retail-
-followed by Private party
-and, TradeIn, the least expensive.
Find the level that matches the vehicle you’re looking at. Is it Certified? Dealer Retail? If you’re negotiating for a very popular vehicle, make your opening offer one pricing level below that, for a less popular car, two levels below.
For your final offer, since TMV prices are averages of what other people are paying, and you want to be better than average, try to pay less than the price listed for the vehicle’s category. I will link you to the True Market Value pricing tool from EasyMoneyShow.com/23.
4. Talk price, not payment: Many car salespeople like to talk about the monthly payment instead of the vehicle price. That’s a mistake because auto loans can be strung out over many years to manipulate the size of the monthly payment. You could end up owing more on the car than it’s worth because vehicles depreciate so fast.
5. Get the salesman to go first: There’s an old adage about negotiating that “whoever speaks first, loses.” Why? Because once you name a dollar figure, you can’t go any lower than that.
6. Name your price and shut up: When it IS time for you to name a number, state your reasons, spit out the number -then SHUT UP. You WANT that pregnant pause, that awkward quiet, because often the salesperson will fill it with concessions!
7. Express your pain: When the salesperson makes a counteroffer, visibly wince as if the amount is painful to you. Hey, if you save money thanks to your negotiating, that makes you a paid actor!
8. Counter with a smaller increment: To demonstrate your mental toughness to the the sales staff, make the increments of your counteroffers smaller than theirs. If they come down a thousand dollars, you will only go up by, say, $500.
9. Leave or hang up: Never purchase a car without leaving the dealership at least once! Politely let your salesperson know the numbers aren’t where you need them to be, and you’re leaving -or hanging up- to shop around elsewhere. Chances are you’ll soon get a call —and some concessions.
10. Shop multiple dealerships: Always shop more than one dealership and – without naming names – make sure they know about each other. “Execute the squeeze” by saying that you can get a better deal down the street —and ask them to beat it.
11. Ask for upgrades: If you’re very close but can’t quite get the price where you want it, instead of trying to get the car for less money, you can try to get the money to buy more car. Ask for extras like an extended warranty, better tires or a fancy stereo, if you really do want them.
12. Mention your trade-in at the end: Negotiate the entire deal, then reveal that you have a car available to trade. If you mention it at the beginning, it’s one more number they can use to make the transaction confusing. You can get a good idea of your old vehicle’s value using the same Edmunds TMV pricing you worked with before.
So, does it work? I once did a project for the Katie Couric show where we sent 2 customers into a dealership on the same day to negotiate for the same car. One was armed with my tips. The other was not. The newly educated car consumer negotiated a price that was $7,000 less!