A Thorough Guide About Negotiating Car Prices

Picking a vehicle to buy nowadays is just as easy as going to the internet, read pamphlets, and browse for the best prices, deals, regional discounts, and a whole lot more. With that being said, we have a lot of resources when buying a vehicle. But when it comes to negotiating one, can you make a deal with an expert?

Sitting down with a professional car salesperson to negotiate a deal can be a make or break situation. You must choose the right questions to ask in order to get the deal you’ve been wanting for. Don’t be afraid to ask questions such as “What is a good price for this vehicle?” or “What is a reasonable offer?”

Let’s say, for example, the manufacturer price of a particular vehicle costs $35,000 and you’ll negotiate it with $25,000. Are you willing to takes the risk of negotiating it with such a price? Or you’re already thinking that they’ll laugh at you and just call it a day? Well, probably not.

The Price Says It All

  • Isn’t the price on the car the actual price? Well? No. Purchasing brand new vehicles also means investment and this is definitely a negotiable one. Some things, however, are completely non-negotiable. For example, you can’t just get a TV for $1,500 if the original price is $2,000. The same thing goes for supermarkets, and so on. However, when you want to spend thousands of dollars on something such as buying a new car, then negotiating is your best friend.

Car Negotiation Tips

  • Dress formally so the car salesman will take you seriously.
  • Research ahead of time.
  • Know how much you’re willing to pay.
  • Work with your preferred bank or credit union yourself. Don’t let the dealer do it.
  • Be direct to the point if you want something.
  • Don’t make promises of something that you cannot pay.
  • Make sure you understand the numbers while negotiating.
  • Confidence is key

A Car Salesman’s Goal

  • Many of us think that the only goal a car salesman had is to sell vehicles. In reality, this isn’t the case after all. Selling vehicles is what the car or truck dealership does, the salesman, on the other hand, wants something more than that.
  • A car salesman’s goal is to make the deal the most profitable while ensuring the customer is also satisfied at the same time. When we look at the buyer’s side, what’s their purpose? What is his/her goal? Is it to just buy a vehicle? No. Well, sort of. But the real goal of a buyer is to negotiate the most favorable deal as possible to get his/her much-wanted vehicle.
  • Profit is not something that you should be worried about. Don’t overthink that the salesman is milking money from you while making the deal. Be positive, because a good deal is just one conversation away. Besides, the dealership can benefit both you and the car salesman. You get a nice and beautiful car to bring home, while the salesman can make a living. As you can see, balance is the real deal here. However, “Excessive profit” is something you should avoid. This kind of profit takes equity away from the buyer. No matter what you do, always avoid negative equity once you encountered something like this.

What in The World is MSRP?

  • MSRP stands for “Manufacturer’s Suggested Retail Price”. This is a price that’s made by the manufacturer, not the dealer. MSRP is the starting price when making such negotiations. There will also be times where the dealer will offer an “invoice” price for the vehicle and use this as a selling point. A sample conversation will go as follows:

 

Salesman: “Look at the invoice price, we’re only making a few hundred dollars selling you this car at this price, and plus, you’re getting almost one thousand dollars off MSRP.”

Sally: “That’s not too bad. I guess you can’t really do much better than that, right?”

Salesman: “Exactly. You know you’re getting a good deal, and we’ve got to make a little something on the vehicle …”

 

  • The buyer didn’t know that the salesman gets a $2,000 rebate right from the manufacturer every time they offer an invoice price when selling a vehicle. This sales also shows that the salesman is one step closer to their quota and dealer bonus payroll.
  • Invoice price dealership is something between $2,000 and $4,000 of profit in order to get on to the next vehicle. How much more when their margin starts at the MSRP.

Strategic Tips While Negotiating for a New Vehicle

  • Negotiating is like a two-player battle. You have to be smarter or else you’ll be played by the salesman. Some salesmen are highly trained by their companies, while there are others who are chill about it, and there are ones that only works for the sake of buying something to eat for their kids. To sum it all up, all salesman had experience and knowledge to trick you whenever possible. So what can you do to prepare yourself? Here are some tips for you.
  1. The internet is your best friend

  • Shop for vehicles on various consumer sites.
  • Know what you really want.
  • Check the MSRP.
  • Know which options suit your needs and how much they cost.
  • Join in community forums where you can ask for advice about purchasing a vehicle.
  1. Know how much you can spend

  • Obviously, you must have the money whenever you show up and have a little chit chat with the dealer. Don’t go there still undecided how much your monthly payment will be, you’ll probably lose in the game.
  1. Bring the money with you

  • Deal with your bank or credit union when it comes to financing. Don’t ever go through the dealer. They sometimes trick buyers by using the terms of loan to confuse you. Once they do, they’ll mark up the interest rate they get from the lender.
  1. Be direct to the point

  • Salesmen like to play games, and negotiating is no exception. They’re observing you, figuring out what you need, and try to get you emotionally about your desired purchase. What you can do is to stay cooperative and down to earth as possible. Let them know what you really want, and be honest about it. Be open and ask as many questions as you want.
  1. Don’t get too emotional

  • Don’t be carried away easily. Once he shows you the vehicle you’ve been dying for, don’t think of raising your hands quickly and purchase that one. Check it first if it’s worth the price. Do you like the color? How about the quality of the seats inside? Don’t forget to check every nook and corner of the vehicle both inside and out. Don’t ever gush and beg the salesman to test drive it. Wait for him/her to offer you a test drive. Getting too emotional won’t get you far.
  1. Watch the numbers carefully

  • Get ready by jotting down all the numbers they tell you on a piece of paper. You need to be aware of the current figure of every number any time changes are made. Here are typical numbers you should track throughout the while dealing process:
  • MSRP
  • Discounts
  • Rebates
  • Purchase price
  • Trade allowance
  • Dealer fee
  • Tax
  • Title and registration fees
  • Down payment
  • Balance
  1. Confidence is key

  • Some salesmen tend to use the term “limited” a lot. Which in reality, is not really true at all. You say limited but there are exactly hundreds of more vehicles that look exactly the same as that. If you feel that something is wrong, walk out and find another deal. Don’t look back, just do it. Be confident!

Making the Deal

  • Now that you’re done test driving that beast, before taking it home, here are things that you should do for a successful deal.
  • Whenever the salesman asks “So what do you think?”, compliment the looks of the car, everything about the car and say something about the price like “We’re not really at my number yet.”
  • This is where the fun starts. The salesman looks at you and starts to offer deal “How about slashing it to $1,500. Is that enough for you?” Then get out your mighty weapon which is your notes and start looking at some figures. Tell the salesman about the offer choices. Convince him that the offer he showed is not really the deal you want.
  • Use options to your advantage. Once the number goes down, they’ll probably offer you a vehicle that’s cheaper in some way, unless your number is unrealistic, which is not acceptable in the first place. Say something like “This offer looks great, but it doesn’t have this *insert feature here*, this and that.”
  • Don’t forget your goal that you have to get what you really want. Don’t be tempted about anything the salesman will throw at you. Don’t say YES easily, always say “We’re getting closer” whenever he gives you a deal. Be confident, after minutes of chit chat about offers, demands, counter-offers, now’s the time to pull the trigger. Tell him what you want and make him work for it.
  • The salesman will probably go and have a conversation with the manager, and once he comes back, he probably had a lot of great things in store for you. The salesman will say thing like “Ok you can have this color, you can have this bell here, this feature there, etc., but only if we have a commitment from you right now.”
  • It’s time to drop the bomb to the salesman, tell him something like “Ok I like the vehicle and this offer is pretty good. But anyways, I have other dealers who are offering me something too, so I might check that out if the deal is more worth it than this.”
  • The salesman will probably enter panic mode at this moment. He’s probably afraid that the vehicle won’t sell well in his hands. So he’ll probably think of ways to make his deal the best deal you can get to keep you from walking. A trip to the manager again is the likely situation here, and once he comes back and offers lots of deals and asks for a commitment, decide if you’re finally going to take the car.
  • If you like the final offer, then it’s a deal! Now you’re done. Problem solved, you got yourself a new car just the way you want it.

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