Want to unlock the secrets of negotiating with a car dealership for the best deal? Here’s how to deal with car dealers and save money in the process.
A whopping 3.7% increase — that’s how much car prices have gone up from May 2018 to May 2019. In actual dollars, that represents a $1,320 spike, bringing the average transaction price to $37,185.
While that doesn’t include consumer incentives, that price is no doubt still high.
It’s no wonder then that experts estimate there would be up to 41 million used vehicles sold this year! After all, used cars are so much cheaper than spanking brand-new ones.
This doesn’t mean you should forget all about your dream car though. If you can master the art and science of negotiating with a car dealership, you could afford a brand-new car. And even if you decide to stick to a certified pre-owned vehicle, you can still negotiate a better deal.
So, how exactly do you negotiate within reason? How can you justify that lower purchase price you’ll ask for?
All these, we’ll answer in this guide on how to deal with car dealers, so be sure to keep reading!
Before you start going head to head with the sales folks at dealerships, be sure to do the following first.
Get Pre-Approved for Financing Outside of Dealerships
Granted, most car dealerships have their own financing offers. The thing is, these are often pricier than auto loans from banks and credit unions.
One reason is that some dealership financing programs come from banks themselves. The difference is, the dealership handles the loan application turnover to the bank. You’ll provide the information for the loan to the dealer, which the dealer then provides to the bank.
Since there’s extra work involved, the dealer may then charge you a higher loan interest rate.
That said, one of the most important car buying negotiating tips is to get pre-approved for a bank loan. You may get a better financing deal if you apply directly with a bank or a credit union. You can then use that pre-approval as a tool during your negotiation with a dealership.
Pro Tip: If you get pre-approved, don’t mention this to the salesperson right away. You need to time it right (we’ll go deeper into this later).
Get as Much Info as You Can About the Car You Want
From the current market value to the trim you want to all the bells and whistles — research all of these. The more informed you are, the more negotiating tools you have at your disposal.
Let’s say your goal is to switch gears in a brand new 2019 Ford Mustang. Then you should know the basics of each trim, their pros and cons, and what the 2019 model has that the 2018 model doesn’t. You may also want to start your research by reading more here.
You should also check the websites of other dealerships near you. Take a close look at their specials and financing offers, so at least you have an idea in case you don’t get a yes from a bank.
Ring Up a Few Dealers for an Estimate
Once you have a list of what you want from a new car, contact a few dealerships near you. Tell them what you’re looking for and ask if they can give you a quote. You’ll use these estimates later on during all your negotiating sessions.
Mum’s the Word
One of the most crucial tips for negotiating a new car (and its price) is to not say a word about your budget right away. After asking for your name, most salespeople will ask how much you can afford to pay monthly for a new car.
Don’t answer the question yet. Instead, gently tell the salesperson you’ll talk about it later. Then, ask for the purchase price of the vehicle.
Present Your Researched Facts to the Salesperson
Expect the salesperson to give you a price that’s higher than what you learned from your research. This is normal, and in fact, one of the most common car dealership tricks. After all, they know that most buyers will haggle.
This is where the actual negotiation process will start.
After hearing the purchase price, bring out your list of previously-acquired estimates. Seeing this piece of paper alone will already tell the salesperson you did your research. They know that you’ve armed yourself with the knowledge to counter their high offers.
Next, tell the sales staff that you did your research and mention the vehicle’s market value. It’s best to cite the name of the reputable site or source you got the info from.
If the salesperson offers to drop the price, check your list again. Compare the offer with the estimates you received from the dealers you rang up. If there’s still a lower price, use that to your advantage and again, cite your source.
Follow that up by saying that if they can beat the price, then you’ll be more willing to choose them as your dealer.
These are all unspoken ways of informing the dealer that their store isn’t your only option. After all, they really aren’t, since there are actually 18,275 dealerships throughout the US.
These will tell them that if they don’t make a better offer, they’ll likely lose you to the competition. As such, rather than seeing you walk away, they may offer you an even lower purchase price.
Let Them Know About Your Pre-Approved Loan
Once they offer you a lower price, it’s time to mention that you have a pre-approved bank loan.
Why only now? Because if you brought it up at the very beginning, they might have treated you differently. That’s because they’ll know right away that they won’t make profits off of a financing deal with you.
As such, it’s best you mention this only after a successful negotiation.
Negotiating with a Car Dealership Doesn’t Have to Be Scary
There you have it, everything you need to know about negotiating with a car dealership. So long as you can justify that lower price you’re offering, then you have good chances of getting a good deal. Prove to those sales folks that you did your research and that they’re dealing with an informed buyer.
Just make sure you negotiate within reason and that you don’t end up being a lowballer! You want the lowest price possible, but you also don’t want the salesperson to end up not even making a penny.
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