When it comes to buying a new car, skillful negotiation is the golden ticket to saving money. What all car buyers should know is that it’s possible to cut the manufacturer’s suggested retail price (MSRP) to a very reasonable amount since most dealers are actually willing to do so – with a bit of persuasion.
Understand that car dealers are not the tricky, manipulative scumbags they appear to be in movies and television shows. They are just people trying to make a living.
What’s true is that not all car buyers are quality negotiators, which is why they fail to get what they perceive as a fair price. However, that doesn’t mean you can’t become good at it. A negotiation is actually a very simple process, which boils down to a discussion and subsequent arrival at a fair price for both parties. In other words, negotiating does not mean outwitting your opponent; it means communicating your needs and wants intelligently.
Here are a few steps you can take to become a better negotiator:
Learn the Value of Your Car
Before you step into a dealership, arm yourself with knowledge. You should know the make and model of the vehicle you want, along with its MSRP and dealer cost. You should also know how much you are willing to pay (which should be below the MSRP, but at least three per cent above the dealer) as well as the trim level and additional features you would like to get.
Preliminary research will keep you from accidentally getting something you don’t want. The Internet is a terrific place to analyze a car’s true market value and dealer’s invoice price.
Let the dealer know that you recognize the market value of the vehicle by naming the lowest possible offering price (which will give the dealer the boundaries to negotiate within) and then mention calmly that your time is valuable. By presenting an air of confidence and friendliness, you will be able to move the negotiation process along and assist both parties in reaching a fair deal – one that saves you money and offers a modest profit for the dealership.
Convince the Dealer That You Know Your Stuff
While some dealers may be submissive, others will be dismissive, stating that the price is set by management and there is nothing they can do. And as professional salespeople, some may even be so bold as to tell you that your numbers are wrong. Don’t be daunted – bring proper paperwork with you, such as our free dealer cost report, and compare it to the pricing information offered by the dealership. That way, you can show the dealer that you know what you are talking about.
Now and then, the dealer may steer the conversation away from the price of the vehicle and target your method of payment. To make sure this discussion doesn’t faze you, explain that you are pre-approved for a loan or ready to pay in cash or finance through the dealership (if the rate is competitive) once a fair price is reached.
Finally, it never hurts to casually mention that you have spoken with other dealerships about prices, though it may be tactful to be discreet. However, if the dealer refuses to budge, tell them you are not afraid to move on to their competitors.
Set Your Price and Stick to It
One technique to lower the car price is to avoid negotiating altogether and simply stick to a specific figure without wavering. Some believe that negotiating is just a waiting game and sooner or later one side will give in. If you have done your research, you can calculate a fair price for both parties. Calmly and confidently tell the dealer that you’ll sign the paperwork and buy the vehicle right away if they are willing to accept your offer. Then politely decline any counter-offers. If they don’t give in, exchange contacts and leave.
After some time passes, follow up an hour before they close on the weekend or the last day of the month. Remember to stay firm on your price. The dealer may be compelled to accept your offer just to make one more sale in the day or meet their monthly quota.
Apply this strategy on a number of dealers and see which one will give in first.
Negotiation is a skill and, like most skills, it requires practice. If you are hesitant to start haggling for a car, try doing so for items or services that cost a little less, such as large appliances, furniture, clothing, jewellery, gym membership, rent or health insurance. But, before you begin negotiating for anything, make research your first step.