Negotiating
Do some research on the dealership online before visiting them. The MSRP and the dealer’s pricing for any vehicle can be found on price comparison websites like Edmunds.com and Kelley Blue Book. You can also inquire about discounts such as customer or dealer rebates, subsidized lease arrangements, and other special breaks. Compile a folder showcasing your research materials and methods.
That dealer cost should be the primary point of discussion in every agreement. You should pay at most two percent more than the dealer’s invoice price to get a decent deal on a mid-range vehicle. There may be little opportunity for bargaining if a car is selling like hotcakes. Still, you may get an even better deal if sales are slow.
The suggested retail price (MSRP) is the starting point for most sales negotiations. Keep the conversation centered on the amount you intend to offer beyond the dealer’s invoice cost and away from the list price. Prepare to present your findings from your research. Because most dealers don’t provide their sales staff with invoice costs, the salesperson can understand less than you do.
Set the first bid as cheaply as possible without appearing as an inexperienced buyer. Even if 2% above the invoice is your goal, you should still give the dealership some leeway to negotiate.
Trade-in
Negotiate a price as soon as you reach your goal or as near as you believe you can get. The time to discuss doing a trade-in is now; you shouldn’t do so any earlier. Suppose you have been watching the classifieds and researching your vehicle on sites like Kelley Blue Book and Edmunds.com. In that case, you know precisely how much your car is worth. You can negotiate a better price from your new car dealer if you have a popular model in good shape and are continuing with the same manufacturer.
Consider the offer for a trade-in and accept it if it’s decent. If not, consider selling it independently or getting an estimate from a few different dealerships.
Financing
Having your loan pre-approved will give you more bargaining power at the dealership. A regional bank or credit union loan is expected to have a lower interest rate than one obtained through a manufacturer-backed special financing program. You can often use a rebate instead of low-interest financing to reduce the overall cost further.
Typically, a pre-approval for a loan lasts for at least a month.
Car loans from credit unions often have rates of 0.5 percentage points to 1 percentage point cheaper than those offered by banks. A credit union might be available to you if you work for a company with one or join one if you belong to a particular trade group (teachers or government employees). If a credit union isn’t convenient for you, research what your local bank offers. If you go to a website focusing on loan data, you can quickly find the going rates and where you may get the best rates.
Finish the sale
The salesman may refer to it as “just doing paperwork” or another seemingly harmless term. The finance manager you’re about to meet with hopes you’ll fall for their trap and spend more money on unnecessary mechanical and financial upgrades so that the dealership can increase its earnings. Just say “no” to everything. A few notable exceptions, however, exist.
Allow the dealership’s financial officer to make you an offer, regardless if you have financing. It could still be an improvement over what you now have.
You can expect to hear about an extended warranty as the next upsell. It is recommended that you refrain from pursuing this option in most situations. If you’re not buying a used car with a history of reliability problems, paying extra for an extended warranty is not worth it.
Security etching is a popular add-on. It’s been said that engraving your vehicle identification number into the glass of your car’s windows will make it slightly less likely that someone will steal your vehicle. However, it is far from worth the hundreds of dollars some dealers ask for.
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