Before you talk to a car dealer, read these five easy steps to getting the new car price you want.
Buying a new car can be stressful—especially when it comes to getting the best deal possible. By following these tips, you can put yourself in the driver’s seat when negotiating a price with the car dealer.
If you want to negotiate like a pro, you’ve got to think like one. Knowledge is power, and it could end up saving you hundreds of dollars on the final sale price. There are plenty of online resources like Edmunds.com and Kelly Blue Book that will help you determine the true market value of a specific new car in your area and provide you with estimates on what the dealer paid, the vehicle's listed price and what you should expect to pay. If you get stuck with the sticker price, you paid too much.
It’s also beneficial to research the different options and packages on the vehicle you’re looking to buy. Visit the manufacturer’s website and determine what comes standard and what’s extra. When you get to the dealership, ask if they have a model that fits your specifications and don’t pay more for a sunroof or backup camera if those features aren’t important to you.
Once you know which car you want to buy and have researched how much you expect to pay, apply for preapproved financing through a trusted financial institution in your area. By getting pre-approved, you know exactly how much you can spend, what your interest rate will be, and estimated monthly payments before you ever talk with a salesperson. Pre-approval also means you won’t have to make an important financial decision at the car dealership. Instead, you can ask financing questions, such as the ‘what if they offer me 0% financing’, at the credit union or bank without the “pressure to purchase” looming over your head.
Discussing monthly payment amounts is a classic strategy for a salesperson. Refocus their attention on the final sale price and let them know you are preapproved for the amount you wish to pay. This way you don’t get stuck with a longer loan term and pay more in interest over the life of the loan.
Consumer Reports suggests that new car buyers politely explain the following to the salesperson before getting too deep into the conversation:
Consumer Reports also suggests that you start by showing the salesperson your rock-bottom offering price, but don’t disclose your competitive bids, which are the upper range of what’s acceptable. Otherwise, he or she will focus on undercutting that higher figure by a token amount instead of working off the lower figure. You will want to come across as friendly and confident, well-informed but not argumentative. If the salesperson turns you over to a more senior colleague, simply repeat the same ground rules to the next salesperson or manager you meet. But no matter who ends up sitting across the desk from you, your clear explanation of what you’re looking for will help counteract the diversionary tactics that salespeople often count on to give them the all-important bargaining edge. You’re in command.
So what’s considered a diversionary tactic? If the salesperson asks about a trade-in, manufacturer rebates and discounts, or monthly payment amounts, steer them back to the final sale price. Trade-in value should only be discussed once the final price is agreed upon; simply state that you have considered a variety of options for selling your old car and that a trade-in could happen, but only after the new car deal is finalized.
Investopedia.com also warns about additional services getting slipped through. When you finalize the sale of a new car, you'll work with the dealership's finance officer to sign all your paperwork. This offer will try to sell you a number of additional services like an extended warranty, paint protection, and more. You likely don't need any of these services, and it’s best to turn them all down and purchase the car like you originally intended.
Sometimes, despite your best efforts, the negotiation will hit a snag.
You should consider walking away if:
So how do you know when you’ve negotiated a good deal?
Be prepared to sign the dotted line if:
Negotiating the price of a new car can be stressful, but it’s important that you remain polite. In most cases, the salesperson is simply doing what they get paid to do —trying to get the best price for the dealership on each sale. Forbes.com advises that if you’re a genuinely nice person, a salesperson is far more likely to do something unusual for you (like selling a car for less than invoice) than if you’re being argumentative.
If, however, you feel pressured and uncomfortable while negotiating, remember you always have the power to walk away and find a dealership that is more in line with your vision of customer service. At the end of the day, the most important thing is that you find a vehicle that is right for you and that meets your price point. You’re the one with the loan — make sure it’s at a cost you’ll be happy with several months later.
Use United Federal Credit Union’s free vehicle financing calculator to estimate payments, terms and loan amounts for your next car.
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