Negotiating the sales price on a new car can be draining and time-consuming. However, following basic steps can simplify the entire process and ensure that you acquire a vehicle that gives you the best bang for your buck.
Get a Figure of the Vehicle Cost
Before you can begin negotiating, you will need to find the average dealer price, manufacturer's suggested retail price (msrp), and the actual transaction information nationwide on the vehicle of your choice. You can find this information at:
Also, you may want to obtain quotes from local dealerships via telephone or email to learn the invoice price of the vehicle in your area of residence. Consider any fees incurred by the dealer for advertising and to ship the vehicle to the lot. Use this information will help you come up with a ballpark figure of what you should be looking to spend on the purchase of your new car.
Secure Financing
If at all possible, secure financing before heading to the dealership so that you can be treated as a cash paying customer. This will shift the focus away from the monthly payment and toward the actual purchase price during the negotiation process.
Dealer Financing
However, if you choose to finance through the dealership, they may be willing to give you a better deal because of the opportunities that they will now be granted to sell you additional items, such as extended warranties and GAP coverage. The key is to compare financing offers if they agree to match your bank's rate, skip add-ons, collect any cash incentives on the table, and re-finance with your financial institution within 30 days if you decide to use the dealership at a higher rate to take advantage of the perks.
Shop at the End of the Month
To test drive the vehicle, pay a visit to the dealership. Avoid shopping during busy periods, such as weekends or holiday sales, because sales representatives tend to be a bit more aggressive in an effort to meet monthly quotas and secure bonuses. However, to get the best price and put the bargaining power firmly in your court, do consider shopping at the end of the month.
Everett Young, a seasoned car salesman at Gainesville Nissan shares that, "It's best to shop for a new vehicle the last three days of the month. Dealerships really want to meet that sales target for the month to receive the rewards from manufacturers, so they aren't going to lose out on a purchase for a few hundred bucks."
Negotiating the Best Price of Your Car
To finalize the deal, you will be asked to make an offer based on a monthly payment that you are comfortable with making assuming that you plan to use the dealership to finance your purchase. Using the information retrieved from your quotes and paid consumer reports, make a general statement that includes a ballpark figure of what the vehicle is selling for, but refrain from throwing out the actual amount that your are willing to pay. This will demonstrate to the salesman that you are a serious customer that has done his research.
How Much You Should Offer
When the salesman indicates the amount they are anticipating on receiving for the vehicle, make an offer for the total purchase price that lies somewhere between the dealer's invoice price and the msrp. You should start at a figure below what you plan to pay, and work your way upwards in increments of $250 to $500.
To avoid insulting the sales representative or having your offer shot down instantaneously, do not hesitate to reveal to them how you computed your figures. Ultimately, the goal is to stay firm at all times and be willing to leave the car with the seller if they do not agree with your terms.
Understand the Rebates
New cars come with an array of rebates from the manufacturer, some of which are very valuable. "Rebates are one of the most important items that you should consider before you purchase a new car. Always do your homework before going to the lot so you are well aware of what they are, and how much value they add to the car. This information will also provide you with a better figure of how much the dealership paid for the car and how much they are willing to negotiate," stated Young.
In some cases, consumers are not aware of the perks that they can take advantage of, and really miss out on big deals if they fail to head to the dealership equipped with this information. Common rebates include, but are not limited to:
- Special financing offers
- Cash back
- Low-interest financing
- Leasing specials
To learn more about the particular rebates that the vehicle you desire to purchase offers, visit the dealer's website or use the tool offered by Edmunds.
Trade-Ins
Do not disclose any information regarding your trade-in (unless you still have an outstanding loan) until both parties have reached an agreement on the purchase price. If you do otherwise, the dealer may divert your attention away from the padded purchase price and direct it towards the value of the trade-in.
Internet Sales
According to Philip Reed of Edmunds, the Internet sales department at most dealerships almost always offer lower pricing than the floor sales team because they are rewarded bonuses based on the volume of sales, and not by commissions. This route is also very convenient, and can streamline the purchasing process.
To get started, request a detailed quote online that includes exactly what your are looking for. From that point, all negotiation can take place electronically, and you will not have to leave your home until it is time to finalize the sale and pick up your new vehicle.
"No Haggle Policies"
Certain dealerships, such as Carmax, have a "no haggle policy" and insist that the sticker price is non-negotiable. However, you should still take a shot at presenting a competitive offer that is supported by your market research.
Make a Plan of Action
Having a clear plan of action and following these pertinent tips will greatly simplify the new-car buying process. Before executing any sort of agreement, be sure that you are aware of the actual purchase price, and not just monthly payment, so that you can rest assured that you are getting a good deal on the vehicle.
