Can you negotiate the prices of new cars? | Capital One automatic navigation (2024)

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It's a question many car dealers want to know: Can you negotiate new car prices? The short answer is yes. But for many, even the thought of negotiating new car prices can seem daunting.

Treat this experience like any negotiation and get started with a plan. The more you think about it in advance, the more confident you will be when talking to your dealer about the price of your new car.

Here's what you need to know to start developing your negotiation plan.

Important numbers you should know in advance

Invoice price? Manufacturer's Suggested Retail Price (MSRP)? Which number is correct? When it comes to determining the price of a car, there can be quite a bit of confusion about the numbers involved. Start with a basic understanding of some of these key terms so you know what they mean before you start negotiating.

• Recommended retail price: MSRP is the manufacturer's chosen retail price. When you try to drive a car, you will see this on the sticker on the window. You will often see the "brand price" referenced in advertisem*nts or by retailers
• Invoice price: The dealer's invoice is what the dealer paid to the manufacturer for the vehicle. In most cases, the dealer's invoice is lower than the recommended retail price. Knowing the difference between these two numbers for the vehicle you are looking for is a good place to start your research. Finding the specific number can be challenging, but several online resources can give you data points to start with
• Local market prices: The final figure to examine is the local market prices of the car you want to buy. Car prices can fluctuate depending on several factors, and location is one of them. If you spend some time researching vehicles, you can see which ranges your make and model operates in your area. Keeping track of these figures is possiblemake the negotiation process easier

What else should you take into account?

There are of course a number of other things to consider before negotiating the price of a new car.

• Budget: A good place to start is your budget. Although the MSRP and dealer invoice emphasize the total price of the car, you can think of this in terms of the maximum totalcar price you can affordto stay within your budget in terms of focusonly look at monthly payments. Also, make sure you don't get stuck on the payment amount during a negotiation, as stretching the loan terms can affect a certain loan amount while dramatically increasing the total amount you pay over the life of the loan.
• Financing: If you are planning banking ordealer financingto pay for the vehicle, you must also take these costs into account. Many people shop around with a few lenders to present to the dealer to get a better rate. You can also consider gettingpre-qualifiedto show the dealer that you are a serious buyer
• Cash on hand: Your trade-in, if you have one, orpaymentcould also be a factor. Having a down payment is one way to secure a loan. It shows that you have money on hand, reducing the potential risk of a lender. The money you have available to spend on the vehicle can help your negotiations
• Functions: You want to determine not only the make and model of the car you want, but also its features. The car youtest drive from the groundcan be fully loaded with all kinds of features that you may not want or need. Usually these features and their cost are included in the sticker price, so you can deduct them and play ball
• Discounts: Depending on the manufacturer and retailer, rebates or other special incentives may also be available. Common ones include $500 cash for a new car or incentives for teachers or veterans. Keep an eye on them while you do your research; it could be something that could come up during negotiations

Keep the big picture in mind

As you prepare to start the negotiation process, take a step back and look at your numbers. You've done your homework. You know the vehicle and the desired functions. You understand the different pricing structures and you've put yourself in a good financing position.

All this information can help you in negotiations with your dealer. Knowing that the price is often flexible and that you are confident in your budget and financing options can help you work with the dealer to find a price that everyone is happy with.

Keep in mind that negotiating the price of a new car with a dealer is basically the same as any other negotiation. The dealer still wants to make money, but by taking a more informed approach to the process, you can use traditional negotiating tactics to get the best possible deal when purchasing a new car.

How do you negotiate the price of a new car?

If possible, test drive a few examples of the vehicle you want and then take it to the dealer if you find it with all the right options and non-negotiable features. It is best to start the negotiation process after you have driven the vehicle you want. You want your visit to be about negotiating the price of the one you want.

First, you'll want to focus your conversation with the seller on the topic of the vehicle you want, working on the price of the new vehicle initially. Try to stay focused! While a dealer may want to engage you in a conversation about monthly payments, you can refer to the total price and try to agree on an amount.

Once that's done, you'll want to let them know if you've already secured financing or if you want to pay cash. Wait to bring this up until the price has been agreed upon, as some dealers make money from the financing process and are less likely to offer a lower price if they already know you have secured financing elsewhere. If you have time, it might be a good idea to have them make a competitive credit offer. Check it carefully to make sure the terms are the same as what you have already insured.

That's how simple the process can be, especially if you don't have another vehicletrade with. If you have a trade-in car, it's smart to plan ahead and get multiple quotes from local dealers or online car appraisal services so you can get a realistic idea of ​​how much your car is worth.

Can you negotiate the prices of new cars? Now you know the answer is usually yes. As nerve-wracking as it may feel at first, entering into negotiations with your research and a game plan can help you become much more confident in your approach.