How do you negotiate car prices? (2024)

The Covid-19 pandemic coupled with supply chain disruptions have sent car prices soaring, making it even more important to try to negotiate a more affordable price.

Consumer prices for new and used vehicles are expected to remain at current high levels through 2022 before returning to some semblance of normal. However, not everyone has the luxury of waiting for prices to drop before buying a car.

If you need to buy a car in an expensive area, there are still ways you can do itget the best offer. We will guide you on the ways to negotiate for a lower price.

6 tips for negotiating a car price

1. Do your research first

Before you go to the car dealer, do your homework. There are some established online resources, such as Kelly Blue Book or Autotrader, that will show you the manufacturer's suggested retail price, which is their suggested retail price to sell the vehicle. It can also give you an idea of ​​the price you may be able to negotiate with a dealer versus a private seller.

You can also research different retailers in your area to find out what special incentives they offer that could lower your bottom line. These include cashback offers, price discounts on certain models, zero percent financing deals or leasing deals.

2. Know what you can afford

Part of the reason for doing the research first is to helpset your budget. If you plan to use cash, the amount available will determine your negotiating room. But if you want to take advantage of a car loan, you may have a bigger budget, a wider range of car purchasing options, and more room to negotiate.

Even if you plan to take out a car loan, you may need (or want) a down payment to lower your closing costs or reduce the total loan amount. Take the time to assess how much extra money you are comfortable putting down.

3. Take advantage of dealer fees

Online resources available through sites like Kelly Blue Book and Autotrader will also tell you the dealer cost (or invoice price) of your preferred vehicle. If it is a used vehicle, look for the book value of the car. This is the original price minus depreciation. Use this information as a basis for your negotiation.

Instead of negotiating based on the manufacturer's suggested retail price (MSRP), focus your offer on the dealer's invoice cost (or the car's book value). Your wiggle room is usually between what the dealer paid the manufacturer (or previous owner) for the vehicle and the price listed on the item.

4. Know your trade-in value

If you plan to trade in your current car as part of the transaction, use the resources mentioned earlier to find out its value before you enter the dealership. You can also browse sales listings for similar vehicles (make, model, year) to determine their market value.

If your car is in good condition and is a popular model, you can benefit from this during negotiations with the dealer. This is especially true in today's environment where the dealer may be enticed by the opportunity to make money selling your used car.

If you get a good exchange offer, take it up. If not, you can always sell the car yourself to get more money, or take it to a dealer that specializes in used cars for competitive offers.

5. It's okay to walk away

Prepare for the possibility that you may leave that day without your desired vehicle. It's better for your state of mind and your bank account if you don't allow yourself to be pressured into a bad deal.

It will be easier for you to walk away if you have a list of dealers and private sellers when buying a used car for your desired vehicle.

Read the papers after the negotiation (before signing)

You've done the hard work: researched, negotiated and agreed on a price. Now it's time to sign the papers to complete the purchase. Be vigilant before signing the papers and make sure you don't skip the fine print of the sales contract for any fees and hidden charges. The dealer may try to throw in extras - usually unnecessary extras - such as extended warranties, puncture insurance and tire protection.

When you consider how much it costs to buy a car, the last thing you want to do is pay even more for add-ons when you don't need them.

Don't be afraid to ask a lot of questions and let the dealer remove any unwanted extras.

Negotiate fees in the paperwork

Also be sure to ask questions about any fees the dealer may charge you, including destination, documentation, title, and registration fees. Some of these costs are dealer costs that are passed on to the customer and cannot be avoided. However, you may be able to negotiate with others or compare dealers in advance to see which ones don't charge exorbitant fees.

It doesn't hurt to ask questions and negotiate unreasonable fees.

Negotiating used vs. New cars

Regardless of whether a car is new or used, there is one principle that applies to both situations: if you have negotiated the purchase price, you can save a lot of money.

The biggest difference is how much you can haggle on the sales price:

• New cars. It is considered reasonable to start by asking for 5% of the invoice price of a new car and negotiate from there. Depending on how the negotiation goes, you may end up paying between the invoice price and the sticker price.
• Cards used. You usually have more leeway with used cars. Depending on how much information you already have about the car's value and condition, you can start by asking for a larger price discount and negotiate from there.

Either way, it's important to shop around and be prepared to walk away if you don't get the perfect deal that works for you. The dealer may try to tempt you with the attractiveness of the total package, but ultimately the price of the car is important for your bottom line. If the price isn't right, walk away. Probably along the way there will be another opportunity to buy a car.