5 tips for negotiating a car price | Loan Boom (2024)

Car loan

While the thought of negotiating with a car dealer may be enough to keep some people away from a showroom, there are ways to get the price you want. Often a little preparation and legwork makes all the difference. It might even save you some money. Read on to learn how to negotiate a car price and gain insight into how to beat sellers at their own game.

Whether you're not sure what car you want or have been looking for a particular model for a while, here are a few tips to help you succeed in your negotiations.

First car buyer?Here are 8 steps to buying your first car.

1. Examine the numbers

When you see the sticker price on the window of a car, it is usually the Manufacturer's Suggested Retail Price (MSRP). As the name suggests, it isRecommended retail priceis the price the manufacturer proposes the dealer to sell it for, with additional features added.

A car's MSRP is not the lowest price a dealer will accept, and you can use this as a starting point for negotiations. With that in mind, it's important to do some research to find outthe value of the car. You can find this information by visiting industry resources such asKelley blue book,NADAGIDSENofEdmunds. Please note that some external factors, such as supply and demand, can also affect the value.

While you're at it, make sure you look up a few other numbers to give you a better idea of ​​your overall bargaining power:

• The trade-in value of your current car:You can do this by consulting the industry guides above.
• Any premiums you may be eligible for:This may involve special financing orcar discounts. You can do this by visiting the retailer's and manufacturer's websites.
• Estimated local VAT:This number may vary by state or province, but is usually the same as your state's sales tax.
• Possible dealer costs:These may vary depending on your state and which store you visit.Negotiator costsmay include documentation, inspection and issuance fees.

2. Obtain pre-approved financing

It's smart to get onepre-approved car loanbefore going to dealers. A pre-approval can be a useful tool to ensure your purchase stays within budget. While pre-approved car loans aren't exactly firm deals, you'll likely receive the same or similar rates when you close your loan.

A pre-approval also gives the dealer a price to beat. Once the dealer sees your pre-approval offer, he/she may try to offer you oneinternal financingwith better rates or terms to compete with your pre-approved car loan.

3. Shop around for car loans

When you have a better idea of ​​yourbudget for a car, it's a good idea to shop around. This can help you find the most competitive onesinterest on car loansand functions of lenders. You can personally visit a dealer or do somethingonline car dealer.

The first step is to find reputable dealers that stock the make and model you want. Be sure to read reviews to learn about other customer experiences. You can also contact your country's consumer protection authorities to see if dealers have any complaints against them pending.

Once you have a handful of qualified dealers, ask each of them to send you the "outside price" in writing (more on that later). Make sure you give each dealer the same information so you can make an apples-to-apples comparison when you have the quotes in hand.

4. Focus on the “outside” price

Once you've gathered all your information, it's time to head to your dealer. Make sure you bring all your paperwork with you if the dealer asks for it.

Ask the dealer for the outside price for your desired vehicle. The outside price of a car is the total price of the car, before financing, including any taxes and duties. Also ask for an itemized breakdown of the costs so you can see how the dealer arrived at that amount.

It's important to focus on the outside price as some dealers may let you focus on other metrics such asmonthly payment amounts. In these cases, dealers can use the monthly payment to fit your budget, although this may mean extending the term of your loan. This can result in you paying more money in interest in the long run.

By focusing on the out-the-door price, you can stay focused on the overall price of the car and the lowest price the dealer is willing to sell it for.

5. Don't be afraid to walk away

There's no denying that buying a car is a big financial commitment. It's one that can feel even scarier when a salesperson pressures you or tells you a deal is only good for a limited time.

But it's crucial to remember that you have the upper hand. If you don't feel comfortable with the vehicle you're about to purchase or the price tag attached to it, don't be afraid to walk away. While it may not be an easy choice if you need a car right away, it doesn't hurt to consider another car or dealer.

Consider dealers without haggling

If the steps above don't seem appealing to you, consider choosing onenot a dirty car dealerinstead of. Many dealership chains, such as CarMax or Carvana, sell vehicles at a fixed price that is non-negotiable.

While this can certainly lead to an easier car buying experience, keep in mind that you may end up paying more for a car than you would if you negotiated upfront.

Now that you've heard our top tips for negotiating a car price, it's time to do itagainst every tactic of car salesmen. Here's what to do when you get to the dealer.

• Prepare for a pending game:To buy a carcan be a long process. Before a salesperson can offer you anything substantial, they usually have to get it done by their manager first. This can lead to long pauses in the negotiation process. To combat this, you can give the wait a break. Come to the dealer and prepare for a long stay.
• Discuss the monthly payment conversation:Your dealer may ask you what you hope to pay for your car each month. Instead, tell your seller that you would prefer to discuss the outside price and fair market value of the car. You can always consult if necessaryrefinancing your car loanAt the end of the road.
• Combating the hard sell:Do your research ahead of time and bring paperwork to justify your claims. That way, if you have a better deal in hand, you can show it to your dealer. Sellers can take you more seriously if you can substantiate your questions.

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