Dealer markups on new vehicles can vary dramatically. Small cars and high-volume vehicles usually have retail prices approximately 5 percent over the manufacturer’s suggested retail price.
However, the markup on luxury brands and upgraded models may be closer to 10 percent.
While this definitely means you have room to negotiate, you do need to know how to approach the discussion to get positive results.
1. Timing is Everything
Most car salespeople and dealerships receive commissions based o their sales, at times according to specific thresholds. Typically, these bonuses are awarded at the end of the month, quarter, and year.
By waiting until the end of one of these periods to buy your car, you may get a better deal.
Also, if a salesperson is close to crossing a threshold to the next tier’s bonus or commission rate, she may be more willing to bargain. Even if she takes a loss, the incentive increase could offset it, making the deal more attractive to her.
2. Know the Value
Before you begin negotiating a car price down, you need to know the vehicle’s real value. Luckily, a range of online resources can help you do just that.
Usually, these prices are based on recent sales data from your region and other information about the car’s actual worth.
3. Find Discounts
Car dealers offer a range of discounts to buyers, but you have to know they exist to get them.
For example, military members, veterans, and their families may qualify for automatic price reductions; AAA members may also be eligible. In some cases, new graduates can get a discount in the months near graduations. Teachers, firefighters, and police officers may also receive price reductions.
Being loyal can result in cash off too. If you currently own a vehicle of the same make or previously made a purchase at that dealership, see if the seller offers loyalty discounts.
Sometimes, details about these reductions are available on the dealership’s website. However, you can also ask toward the end of the negotiation process.
4. Say “No” to Add-Ons
After negotiating a price, you are typically sent to the office to solidify the sale. But, even at this juncture, that doesn’t mean the dealership is done trying to upsell you.
At this phase, attempts to sell add-ons are common. This can include anything from sealants and rust proofing to insurance and maintenance packages.
Generally, these add-ons won’t be the best possible deals, so stand firm and don’t hesitate to say “no.”
5. Don’t Mention Trade-Ins
When you negotiate the price of a new car, mentioning your trade-in can actually hurt your position. Dealers will use your current vehicle to make it seem like you are getting a better deal than you actually are.
Instead, act as if you don’t have a trade-in. Negotiate the sales price of the new vehicle completely and make sure to get everything in writing. After that, pretend you had a change of heart about the trade-in and negotiate that separately.
Ultimately, this increases your odds of getting a good deal on both arrangements, providing you with the most value.
6. Shop Around
Playing dealerships against each other can result in significant savings. However, you have to do the legwork to make that happen.
Before you commit to a purchase, speak with multiple dealers. That way, if one location offers a lower price, you can mention it to the other dealership and see if they can beat it. Plus, if that second salesperson tells you to take the other offer, you know you’ve hit a reasonable price.
Just make sure you get a commitment from each dealership in writing. Otherwise, you only have your own word when speaking to other salespeople, and that usually isn’t enough. Plus, if the first price really was good, you’ll have something to fall back on. If you don’t get it in writing, the first dealership doesn’t have to offer you that deal again, so you may miss out.
7. Don’t Be Afraid to Walk Away
If a dealership isn’t willing to negotiate a fair price, there’s no obligation for you to keep trying. Present your bottom line and don’t be afraid to be firm. Additionally, let them know that you are willing to walk and be ready to follow through.
Then, if they still can’t meet your price, head to another dealership and see what they can do. Another dealer may be more willing to bargain. Plus, if the first salesperson was bluffing, they may contact you later to try to save the sale.
However, it’s important to understand that walking away can be risky, especially if you don’t have anything in writing.
As mentioned above, a dealership doesn’t have to honor a previous verbal quote. This means that if you have a good deal in front of you, you need to be smart.
Don’t just make a hasty exit in the hopes of getting an even better price (essentially by bluffing). Doing so could backfire, so it’s vital that you keep that in mind.
By following the tips above, you can negotiate a car price down. Just make sure to do your research, are ready to wheel and deal, and won’t hesitate to walk away if the need arises.
Readers, do you have a favorite tactic for negotiating a car price down? Tell us about it in the comments section beneath this post.
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