Negotiating for a new car might feel comical—like pitting an amateur against a team of professionals. But by setting the ground rules early, you can level the playing field.
There’s more to choosing a car than just finding the lowest possible price. You can’t expect a salesperson to send you to the rival across the street, but good ones know a heck of a lot about the cars they’re selling and whom they might suit. And they’ll try very hard to find the right one for you. If you’re still in shopping mode rather than buy-it-now mode, it would be a mistake to dismiss what they have to say out of hand.
In any case, whether you do your price negotiation by email, using an intermediary buying service, or going one-on-one with a salesperson and, inevitably, her boss, you’re going to wind up at a dealership to sign the papers and get the keys.
When you start bargaining, work from your positions of strength:
- Your opening bid, based on what the dealer paid for the vehicle or what you’ve established is a fair price.
- Competing bids from other local dealerships or car-buying websites.
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The salesperson will probably begin the discussion by focusing on the vehicle’s MSRP (Manufacturer’s Retail Sales Price) or on your monthly payment. Don’t take that detour.
If he starts with price, make sure you negotiate from the bottom-most price and work up, not down from the MSRP.
By starting with your monthly payment as the focus, the salesperson can lump the whole process together: the price for the new vehicle, the trade-in, and financing, if appropriate. This gives him too much latitude to sow confusion.
Instead, insist on negotiating one thing at a time. Your first priority is to settle on the lowest price you can get on the new vehicle. Only after you’ve locked that in should you begin to discuss a trade-in or financing.
Set the Ground Rules
Rather than be drawn into a discussion on the salesperson’s terms, let her know:
- You have carefully researched the vehicle you want and have already taken a test drive.
- You know exactly which trim level and options you want, have researched the price for that configuration, and know approximately what the dealership paid for it.
- You have already calculated what you are prepared to pay. Reassure the salesperson that your offer includes a fair profit.
- If the salesperson can meet your target price, you’ll be ready to buy immediately; if not, you intend to visit other dealerships.
Getting Down to Brass Tacks
Start the negotiations with your precalculated low offer. You should base your offer on the average transaction price for the model and trim level(s) you are looking to buy. CR focuses on the actual transaction prices, rather than invoice, because we feel it is far more useful. It sets a target for what others are paying for the vehicle in your area. The invoice price has become far less meaningful, and it doesn’t reflect the impact of supply/demand—a big consideration in the current market. Aim for the low end of the transaction price spectrum, available on the model pages at cr.org/cars, knowing that you got a fair deal if you match the average transaction price.
What usually happens after you declare your starting offer is a back and forth while the salesperson submits your bids to the sales manager and returns with counteroffers. Be prepared for the offers to be far higher than your target price. And be prepared to wait several minutes at each step.
One gambit you can use is to mention that you have competitive bids in hand from other dealers, without disclosing what they are. Explain that you are looking for the lowest markup over your bottom price.
As an alternative, ask if the salesperson is willing to beat a price you got from a legitimate buying service. If so, tell him what it is, or better yet, show them a print out.
Try not to be argumentative. Keep working from your lower figure, raising it a little at a time, rather than taking the dealer’s counteroffer and hammering it down. If you use the average transaction price as a starting point you likely will have a quick negotiation process. If you start with a lower number, you’ll likely spend more time coming to an agreement.
From the outset, you want to stay on course and prevent the negotiation from veering off-track. If the salesperson asks about a trade-in, for instance, insist on locking down the new-car price first.
As for financing, explain that you are preapproved for a loan and prepared to pay in cash, but that you may be willing to consider financing through the dealership provided the offer is competitive. But make it known that coming to terms on the purchase price is the primary focus.
Reassure the salesperson that if you can both agree to terms you know to be fair, you can look forward to making a quick sale. If not, you’ll move on.
You may be shunted to a more senior sales associate or manager. If that happens, simply repeat the same ground rules to that person. But no matter who ends up sitting across the desk from you, a clear explanation of what you’re looking for will help counteract the common diversionary tactics you may come across.
Stay Firm and Hold Your Ground
A salesperson’s initial reaction might be dismissive. He may state flatly that there’s no way the sales manager will let the vehicle be sold at your price. He may even try to tell you that your numbers are wrong. If so, show a printout of your sources of information.
Even if he can’t find fault with your numbers, he may counter your bid with a barrage of objections, pleas, and ploys to get you to raise your offer. Because the manager wields the real power to approve deals, you can expect this. But make it clear that you don’t have a lot of time to sit around and wait. You also have some wiggle room. After all, the target price that you calculated allowed for a reasonable dealer profit.
While you can allow your target price to go up in small increments, don’t go above the lowest competing bid you’ve gathered. You don’t want to give the impression that you’re simply responding to pressure. It might help to state a rationale for your flexibility on price. For example, you could say that you value the fact the dealership is conveniently close or that you like the color of a particular car.
Remind the salesperson that you’re ready to complete the purchase on the spot if your price can be met. Otherwise, you’ll have to “think it over.”
If the negotiations are going nowhere, this is the time to excuse yourself and get up to leave. There’s no need for you to waste your time or the salesperson’s time any further.
Often a salesperson will try to stop you by saying she thinks “something can be worked out to make you happy.” But if you’re simply allowed to go, then the last price offered may be close to the dealer’s limit.
If the negotiation has stalled at a higher figure than the competitive prices you’ve gathered elsewhere, say so. Let the salesperson know she’s not even in the ballpark. This could motivate another visit to the sales manager for a lower price.
Know When to Walk
If your discussion gets stuck and the dealer’s offer is nowhere close to what you can accept, it might be time to throw in the towel. If you encounter these tactics, head to another dealer:
- The salesperson may try to convince you that the rebate (or low-cost financing) is available only to customers who pay the sticker price. This is not true. Rebates come directly from the manufacturer regardless of the price you agree to at a dealership. Don’t let the salesperson use rebates as a substitute for the discount you’ve haggled for. Keep in mind that some incentives do require financing the vehicle through the dealership, so paying cash or using a third-party bank or credit union may prevent you from taking advantage of the special deal.
- The salesperson suggests that you come back if another dealership offers you a better price, which he will then beat. Let him know that you plan to complete the purchase soon, you aren’t interested in shuttling back and forth between dealers, and that once you leave the showroom, you are done.
- If the salesperson makes a “final, take-it-or-leave-it offer,” accept it if it satisfies two conditions: (1) the price meets your target price; and (2) it’s a decent price for the only vehicle you have found that matches the configuration that you want. Otherwise, you needn’t panic. If the offer is good today, it should be good tomorrow.
Know When to Say Yes
If you’re offered a price that’s in your target range, you should probably accept it and move on to trade-in and financing arrangements.
You might consider saying thanks, taking the offer in writing, and trying to best it at another dealer. But if the price really does leave minimal profit for the dealer, it’s not likely to go that much lower somewhere else.
Before you chase the last penny of savings, consider your own preferences. Do you feel more comfortable working with one dealership over another? Is it worth it to pay a bit more to end up with a car you’ll be happier driving? Provided you’re satisfied that the more expensive deal is still a fair one, there’s no harm in paying a little extra.
Now You Can Talk Trade-In
Only after you agree on a price for the new car should you turn your attention to the trade-in. If you shopped it around to other dealerships, you also know what you can easily get for it. Armed with this information, there’s no reason a dealership shouldn’t give you at least its wholesale value as a trade-in allowance.
Tell the salesperson that you simply want what you know it’s worth. Provide the figures to back this up, along with printouts from several pricing sources. This defuses any attempt to pull out a used-car pricing book so the salesperson can “prove” that your figures are too high.
To lowball you on the trade-in, the salesperson may again try to stall the negotiations and wear you down with frequent visits to the sales manager. Minimize this by indicating up front that the new-car deal isn’t final unless you get a good allowance on your trade-in.
Remember, if the trade-in discussions become too burdensome but you’re not willing to pull out of the new-car deal, you can always sell the car elsewhere. But if you’re dependent on the trade-in to make the down payment, you’ll have to sell your car before you can sign a contract for the new one.
I owe my career to two fateful events: my father buying a 1965 Corvette and my purchase of an Audi A4 rather than a Chevy Tahoe. The Corvette jump-started my love of cars, and the Audi led me to automotive journalism, track days, and amateur car repair. In my free time I cycle as much as possible, no matter the season.
How much can you talk down the price of a new car? ›
The main difference will be how much you can negotiate off the retail price: New cars. It is considered reasonable to start by asking for 5% off the invoice price of a new car and negotiate from there. Depending on how the negotiation goes, you should end up paying between the invoice price and the sticker price.What are three tips you should remember when negotiating the purchase price on a vehicle? ›
- Do your research. Knowledge puts you in a better position to negotiate the price of a car. ...
- Keep your options open. ...
- Get preapproved. ...
- Focus on out-the-door price. ...
- Be willing to walk away.
Depending on the car company, dealer holdbacks might range between 2 and 3 percent of the invoice price or the manufacturer's suggested retail price. That can add up to more than $1,000, depending on the cost of the car.What must you do to negotiate a good car price besides haggle? ›
- 1) Be Prepared.
- 2) Arm Yourself With Information.
- 3) Get Your Financing First.
- 4) Find the Deals.
- 5) Head to the Dealership.
- 6) Get Your Timing Right.
- 7) Shop at Multiple Car Dealers.
- 8) Remember It's a Business Transaction.
According to Edmunds data, December has the year's highest discount off MSRP — 6.1% on average — and the highest incentives. Automakers and dealerships want to close the year with strong sales. They also want to get rid of the prior model-year cars that are taking up space, so they're motivated.How do you ask for a lower price? ›
- All I have in my budget is X.
- What would your cash price be?
- How far can you come down in price to meet me?
- What? or Wow.
- Is that the best you can do?
- Ill give you X if we can close the deal now.
- Ill agree to this price if you.
- Your competitor offers.
- “I'm ready to buy now.” ...
- “I can afford this much per month.” ...
- “Yes, I have a trade-in.” ...
- “I'm only buying the car with cash.” ...
- “I'm not sure…which model do you think I need?” ...
- “Oh, I've wanted one of these all my life.” ...
- “I'll take whatever the popular options are.”
Make a Reasonable Offer and Stick to It
Tell them that if they can hit that figure, you're ready to sign on the dotted line. Be sure to let them know that you're not budging. Be polite, but firm. If the dealer makes an offer first, use this same tactic with your counter-offer.
- Always tell the truth. Keep your character intact, people. ...
- Time it right. The end of the day is a great time to get your haggle on. ...
- Ask for a discount. ...
- Use the power of cash. ...
- Use your walk-away power. ...
- Know when to be quiet. ...
- Say, “That's not good enough.” ...
- Let them know your budget.
You can always ask for the dealer's "best price," or simply request a discount. But if the answer is no and you still want the car, you'll have to pay sticker.
Do dealers ever go below MSRP? ›
It's Possible. Although it may seem counterintuitive, it's actually possible for a dealership to sell a car for “below invoice.” There are three major reasons why this can happen: A special promotion, holdback, or financing deal.Will new car prices go down in 2023? ›
Prices could drop up 5% for new vehicles and 10% to 20% for used vehicles in 2023, according to a report in November from J.P. Morgan. The basis for the prediction is that demand has stabilized and vehicle inventory is improving.How much will a dealer reduce price used car? ›
Most car dealers will ultimately be willing to knock at least five percent off the asking price.How much should my car price drop? ›
“We currently estimate the average transaction price of a new vehicle in the U.S. to decline by around 2.5% to 5% year-over-year in 2023, supported by increasing inventory availability as supply constraints ease and as automakers produce more lower-end models equipped with fewer high-end features.Can you negotiate used car prices at a dealership? ›
Negotiating the price of a used car at a dealer should depend on the car's condition, market value, and how much you're willing to pay. Negotiating a used car price begins with your first impression, so strike a balance between friendly and confident.How much over MSRP should you pay for a car? ›
It depends on the car's make and model; however, paying a 10% markup at the most is ideal. According to Autoblog, “the average price for a new car hit $48,043 (as of August 2022).” That's a 12.7% increase from June 2021, as buyers were reportedly paying an average of $1,000 over MSRP.