Buying a new car is a big purchase – second only to a new home – and the process can be stressful, intimidating and confusing. Negotiating for a lower price can save thousands in interest over the course of a loan, so it’s important to be prepared before you visit a dealership. Adding to the difficulty, sales personnel are trained to sell cars. They know what they’re doing because they do it every day, so you must do your research to overcome this built-in advantage. Nothing can make negotiations easy, but there are some simple principles to keep in mind that can make the process more palatable and, hopefully, ensure that you negotiate effectively and drive away in your new car satisfied with the deal.
Knowledge is Power
Research should not be confined to deciding on the make and model of the car, safety features, mileage or optional add-ons. You can also check out websites and services that list dealer invoices, the latest incentives, rebates and other perks that can add value or save money. If you have a trade-in, look at the Kelley Blue Book value so you’ll know what your car is worth ahead of time.
It’s the Price, Not the Monthly Payment
Invariably, the salesperson will ask you a version of the following question: “What kind of monthly payment can you afford?” While this question sounds logical to the unprepared buyer, it is irrelevant when you’re trying to negotiate the lowest possible price. If you use dealer financing, they will be happy to structure a lower monthly payment and stretch out the repayment terms because they will make their money back on interest – but it will cost you more in the long run. Negotiate the lowest price and get the best interest rate available first. If you need to reduce the monthly payment, then ask to adjust the length of the loan after the final price is in writing.
Don’t Discuss Your Trade-In
Discussing your trade-in before locking down a final price is a bad idea. This will confuse the negotiation process and put you at a disadvantage. You might end up paying more for the car than you should have – and get less for your trade-in than you realize. What does that mean? It means that they might have come down to the same price for the new car even without your trade-in. Negotiate the lowest price first, and then discuss your trade-in to avoid any sleight of hand by the salesperson.
Time Your Visit
The day of the week, time of day, time of year – even the weather – can all be important factors when negotiating for a good deal on a new car. It’s all about the dealer’s motivation to sell cars. For example, visit the dealership on a weekday when they’re not as busy and you might improve your odds because the dealer needs to sell cars and the salesperson needs to make a quota. At month- or year-end, dealers and salespeople need to sell cars to qualify for manufacturers’ bonuses and to meet sales quotas. At closing time on any day, salespeople might be easier to negotiate with because they are ready to close the sale and quit for the day. In late summer, dealerships need to move vehicles from their lots to make room for new models, making this an ideal time to shop for a new car. Even the weather can affect your odds of a good deal. Visiting a dealership during bad weather, when business is slow, can improve your chances of getting a better deal. Finally, time your visit to coincide with rebates and other incentives. Combining two or more of these strategies can amplify your chances of getting a better deal.
Negotiating with experienced salespeople can be an intimidating process. But by doing your research and using some common sense tactics, you can be confident that you’re getting the best deal possible on your next new car.