Shopping for a New Vehicle? Here’s Everything You Need To Know To Negotiate the Price When You’re in the Market for a New Car
Shopping for a new car, truck, or SUV can be exciting yet intimidating. Purchasing a new vehicle is a significant investment, and you want to ensure you’re getting your money’s worth. While you might not pay the precise amount you want for your new automobile, you don’t always have to pay the sticker price. Here’s how to negotiate a car price that’s less likely to break the bank.
Do Your Research
Before you head to the dealership, it’s essential that you do some research. First, you should decide if you want to buy a brand-new car, truck, or SUV or if you prefer a pre-owned vehicle. While a pre-owned vehicle might cost less at the dealership, a brand-new model will come with a longer warranty and no wear and tear. Remember, however, that a brand-new car starts to depreciate as soon as you drive it off the lot. A pre-owned vehicle with a good maintenance history might be a better bargain.
Once you’ve decided whether you want to buy new or used, research your preferred make and model. Go to the manufacturer’s website, read reviews from experts and consumers, and get as much information as you can about standard features and available add-ons. If you know someone who already owns the type of car you want, talk to them too. You’ll want to know how often they’ve had to take their car into the shop, how often they have to fill up the gas tank, and other pros and cons of owning the vehicle.
When conducting your research, follow these rules:
- Use credible sources. Make sure you’re using the most accurate and up-to-date sources of information. For example, if you’re researching vehicle features and available options, the manufacturer’s website will have the most accurate information regarding this topic.
- Be thorough. Take your time when researching; don’t wait until the last minute. You want to research your potential new vehicle before you head to the dealership, so you can spread your research over time. Cramming too much information at once may cause you to get burnt out and give up, as well as forget vital information when you need it.
- Confirm your information. Remember, “credible” doesn’t always mean “infallible.” That’s why you want to confirm your information with at least two other credible sources. You’re using this information to negotiate the best price, so you need it to be as accurate as possible.
After you’ve confirmed your information, compare prices at local dealerships and schedule a test drive for the vehicle you want. It’s your right as a consumer to test drive a vehicle, even if you don’t plan on purchasing it that day.
Apply for Financing Before You Shop
Getting preapproval for a car loan helps you set a budget and gives you another tool that you can use in your negotiations. Make sure your lender provides your preapproval in writing. Proving to the dealership that you qualify for an automotive loan gives them an incentive to match or beat your lender’s interest rates.
Sell Your Current Vehicle Yourself
You can simplify the negotiation process by selling your vehicle through a private-party sale instead of trading it in at the dealership. By selling it yourself, you have one less item to haggle over with the salesperson. If you aren’t comfortable with a private-party sale, you can take it to a used car superstore like Carvana or a franchised dealer.
What You Can and Can’t Negotiate When Buying a Car
While a dealership can sell you a vehicle for less than the sticker price, there are some things that the dealership has no control over, and you don’t want to waste your time haggling over those items. For example, the dealership can’t lower the sales tax or your registration fees because that would be against the law. However, a dealership can’t make you purchase credit insurance, gap insurance, maintenance contracts, or extended warranties. If they pressure you into making unnecessary purchases, that’s a sign that you should go somewhere else.
When you’re negotiating car prices, set the terms yourself instead of letting the salesperson set them. As soon as they greet you, let them know:
- That you’ve already decided what vehicle you want, and you’ve already taken a test drive
- That you know which trim level and add-ons you want, how much the configuration costs, and what the dealership paid for it
- That you’ve already made up your mind regarding how much you’re willing to pay
- That you’re prepared to purchase the vehicle right away if they can meet your price, but you won’t hesitate to go to another dealership if they can’t
The salesperson will likely try to shift the focus of the conversation to the vehicle’s Manufacturer’s Retail Sales Price (MSRP). However, start with the lowest price you’re willing to pay and negotiate up to the sticker price instead of trying to negotiate down.
Another common sales tactic is for the salesperson to shift the focus to your monthly payments, lumping in your trade-in and financing options. If this happens, you should bring the conversation back to the price of the vehicle. Once you’ve locked in a price that works for you, negotiate your trade-in value and financing package. Remember to focus on one item at a time, not moving on to the next item until you get a price you’re comfortable with.
Don’t Feel Bad About Walking Away
If the dealership refuses to sell you a vehicle at a price you’re comfortable paying, it’s OK to walk away. You aren’t obligated to the dealership if you haven’t signed any paperwork. Make sure to be polite and leave your contact information with the salesperson. It’s likely you’ll receive a call if they need to make a sale and want to negotiate further.
Now that you know how to negotiate car prices, you can set your sights on a new car, truck, or SUV without breaking the bank. Good luck, and enjoy your purchase.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.