|Chapter 4: Getting the Best Price
Few people would go into a clothing store and try to negotiate the price of a pair of jeans, but negotiating the price of a car is practically a national pastime. The following are some tips on how you can negotiate effectively:
- Don’t reveal too much: Don’t let the salesperson know the maximum you can or are willing to spend. If you are seeking financing from the dealership, supply them with your financial information after you have negotiated the price of the car.
- Avoid being overly enthusiastic: Don’t say, “I love this car and I have to have it”, even if that is how you feel. Try to appear detached and calm.
- Do your homework: Know what is a fair price for the vehicle you are interested in. If you are buying a new car, find out what it cost the dealership (the invoice price minus any holdback – the rebate the manufacturer gives to the dealer for selling the car). The dealership may not tell you, but there are many websites that provide this information for a fee. Negotiate up from the dealership’s cost, not down from the MSRP (manufacturer’s suggested retail price). For a used car, you can look up its Kelley Blue Book value.
- Search around: If you are buying new, there are probably a few dealerships in your area that sell the model you want. Visit them all and see who offers the best price. If you are buying used and interested in a popular model, you will probably have your choice of sellers as well.
- Go at the right time: You can often get a better deal on a new car at the end of the month or year, with salespeople concerned about meeting their quotas. July-October is another good time to buy a new car since dealerships are looking to clear space for next year’s models.
Ultimately, if you are uncomfortable negotiating, you may want to have a friend or family member do it for you instead.
Do You Need the Extras?
Many salespeople will try to sell you extras: rust-proofing, an extended warranty, fabric protection, etc. While extras can sometimes be beneficial, they are usually unnecessary. Think about what you want before you go to the dealership – don’t let the salesperson talk you into getting something at the last minute.
Negotiating a Lease
If you plan to lease instead of buy, can you still negotiate? Yes. The monthly payment under a lease is based on the difference between its current price and residual value (value of the car at the end of the lease), plus taxes, a rent charge, and other fees. The fees and residual value are typically not negotiable, but the current price is – the lower the price you negotiate, the lower the monthly payment. Many experts recommend that you negotiate a price before you tell the dealership that you are interested in leasing, not buying.
Selling Your Old Car
Are you planning to sell your old car when you get your new one? You can usually get the highest price if you sell the car yourself, but it generally takes more time and effort than if you trade it in to the dealership. You may have to place ads in the paper and/or on-line and meet with several potential buyers before the car actually sells. If you are going to trade the car in to the dealership, you should negotiate the price of the new car first before discussing the trade-in. However you decide to sell, make sure to put your car’s best foot forward – fix minor dings and scratches and clean it thoroughly inside and out.