Negotiation Techniques For Buying a Car
Regardless of whether you’re buying a new or used car, it pays to arm yourself with knowledge before you head to the dealership. This includes a thorough inspection from a mechanic who is not affiliated with the dealer.
Dealerships use a variety of strategies to maximize their profit, but knowing what you’re up against can help you negotiate a fair deal.
1. Do Your Research
If you’re in the market for a new car, it’s important to prepare. From getting preapproved for a loan to researching models and prices online, these steps can help you feel confident and ready to negotiate when the time comes. With cars in high demand and interest rates rising, it’s more important than ever to be an informed buyer and negotiate a fair price.
Every new vehicle has a window sticker with its manufacturer’s suggested retail price (MSRP). The dealer must charge more than the MSRP to make a profit, but if you know the dealership’s invoice cost and what other people are paying for the same car, you have some bargaining power.
Be sure to visit several dealers to compare offers and negotiate the best price. It’s also a good idea to bring food and drink, as shopping for cars can be a long, exhausting process. The more worn down you are, the easier it is for the salesperson to take advantage of you.
2. Keep Your Options Open
Car shopping can be stressful, exciting and exhausting. It’s a good idea to keep your emotions in check so that you can think clearly about the cars and offers on the table. Getting too emotional or becoming impatient gives the dealer power over you, which will hurt your ability to negotiate a fair price on your vehicle.
Whether you’re negotiating with a dealer in person or doing it online, be clear about your maximum price before you enter the showroom. Remember that the salesperson’s alternative to a deal with you is forgone profit. If they try to get you to sign a contract right away, use your power as the buyer to walk away and demand further concessions.
Also, make dealerships compete for your business by providing them with pricing reports from other sources. This will give you a powerful negotiating tool when it comes to the final offer on your vehicle. In particular, be sure to focus on negotiating the final purchase price—or out-the-door price, as it’s sometimes called—and not all of the add-ons.
3. Don’t Tell The Dealer How Much You Want Your Monthly Payment To Be
It’s common for dealers to ask potential customers how much they can afford to spend per month. This is a tactic to help them determine how serious you are about buying the vehicle. It is important to keep the conversation focused on the purchase price of the car and not monthly payments.
It is also helpful to avoid telling them how many miles you want the car to have, as this can affect the resale value later on. Finally, don’t get pressured into purchasing additional add-ons like paint and fabric protection plans, rust-proofing or extra insurance policies. Oftentimes these can be purchased elsewhere for significantly cheaper prices.
Be sure to keep in mind that dealerships have a lot of strategies to maximize their profit. However, you can arm yourself with knowledge and negotiation skills to get the best deal possible. Always be prepared to walk away, if necessary. Your goal is to find a car that is within your budget and a good fit for your lifestyle.
4. Don’t Get Too Attached
Car salespeople get a bad rap, but the truth is that most of them are hard-working, honest brokers who want to sell you a vehicle. However, they also have to keep the lights on, pay their employees and turn a profit – just like any business. As a result, they can’t afford to give away the store to unreasonable buyers.
As you are negotiating, remember that you should stay firm but polite. If you come across as too demanding, they may not make any concessions in your favor. On the other hand, if you are too soft, they might view you as a pushover.
Another thing to remember is that you should be prepared to walk away if you can’t reach an agreement. This will help to keep your emotions in check and prevent you from getting too attached to any one particular vehicle. Just remember that there are plenty of other options available to you if you can’t find a deal with the dealer on the vehicle you have your heart set on.