Negotiating, haggling, horse trading, whatever you like calling it, is essential when it comes to buying a car. If you don’t partake, for any reason, then you’ll pay more for the car than you had to. And don’t forget, you’ll be paying interest throughout the life of your loan on an amount that could have been lower.
Negotiating the price of a car puts a lot of people into their uncomfortable zone. But, it really should not; especially today with all of the information available to the consumer. The key to confidence and a higher level of comfort comes in the form of knowledge and research.
Let’s get a bit of a jump start on your research with some key points to keep in mind when you have decided that it’s about time to change your ride.
Since there is so much information available to you, don’t try to commit your research to memory; even if you are only considering a couple of choices of vehicles. Take the time to organize your notes into a car buying possibilities folder. Make sure that you take your folder with you to the car dealer. Don’t be embarrassed or self conscious about doing this; this is a business transaction and you should treat it as such.
As a rule of thumb, car dealers have a profit margin of about 10 to 20 percent. The 20% is theirs if you pay the sticker price and it’s 10% for the car dealer if you get closer to the dealer invoice price. Keep in mind if you want a specific car with specific options that you can’t find on a dealer’s lot and you order the car; you’ll get exactly what you want, but your ability to negotiate the selling price will be greatly diminished.
Don’t let emotions or car shopping fatigue get the best of you. If you find the exact car that you want and are ready to become a buyer, keep you thinking and your emotions close to the vest. If you find yourself getting tired and mentally beaten down to where you ‘just want to get this over with’ take a break or come back another time. Remember, emotionally buying a car or buying when tired and fatigued will probably cost you money. It’s important to remember that you have the ultimate trump card. You can always walk out of the dealership at any time. Without you there is no deal and car dealers certainly know this.
The early part of the car buying process is getting competitive prices. This may not be as easy for you as it sounds on the surface. Selling cars is an extremely competitive business for car dealers. They don’t like to give out their ‘very best price’ over the phone or with just a short visit to their lot. They know that no matter what price they quote you, if you take that price a few blocks down the road to the next dealer; of course they’ll beat that price (if even by just a few dollars) just to get your business. So, you can’t blame them for being a bit protective of what their actual bottom line figure to you may be.
But remember, you control the negotiations. At some point during the car buying process, if you are serious about getting your best deal, you will have to sit down and tell the salesperson straight out that you are a buyer and if they will work with you to put the deal together then a deal may very well come together. Be very serious about this. Get the car salesperson and the dealer excited about selling you car not you getting excited about buying a car from them.
Once the negotiating sleeves are rolled up, you’ll want to negotiate from the dealer invoice price up. Never, never, negotiate from the sticker price down. And never, never, never (notice the 3 nevers!) negotiate, buy, or otherwise discuss or reveal what you’d like your monthly payments to be. DON’T even discuss a monthly payment range! You’ve done your research. You know the numbers. You know that if you get this car for that price; you’ll be in budget. Don’t discuss this with ANYONE!
And finally as you move closer to closing the car negotiating, don’t pay for things you don’t need. Everyone at a car dealership is tasked with selling and making profit for the dealer. You will, of course, have to pay for taxes, registration fees, and destination charges. But don’t pay for additional delivery charges, handling, marketing, promotional, floor charges, administrative fees, or any other dealer verbiage for things they are trying to add on to the deal. And be sure to say “thanks, but not thanks” to extras like pin stripping, rust proofing, fabric protection, paint sealant, or any thing else. These are just 99.44 percent pure profit for the dealer. And you sure don’t want them in your financial contract where you’ll even be paying interest on them.
In summary, do your research and put your findings in a folder and use it. Knowledge is confidence and comfort level. Negotiate honestly and reasonably. Don’t toss out ridiculous numbers and expect to be taken seriously. You want to be taken as a serious buyer. Don’t get emotional or fatigued. If you do, take a break and come back later. Be prepared to spend some time and work getting your best car deal and a good deal you will get.