Tips for Negotiating the Best Car Price

Negotiating with dealerships can save you thousands of dollars on your new car. But many buyers hesitate to haggle and end up spending more than they should. Follow the tips below to make sure you're not leaving any money on the table when you buy your next car. 

New Car

1) Know exactly what you want BEFORE you start negotiating

Let's start with one of the most common mistakes car buyers make. You visit the dealership, look at a few cars, choose one you like, test drive it, and get a quote from the dealer. What's the problem? Since you don't know what you want, you're making it easy for the dealer to sell you a fancier, more expensive version of the model you want or provide an unfair quote. 

So before you start seriously talking to dealers, you need to determine exactly what kind of car you want. Not just the make and model, but the trim, hatchback vs. sedan, automatic vs. manual, any extra options, etc. 

Online research is perfect for this - no pressure, no slick salesmen, all the info at your fingertips. Once you've chosen a make and model, you can visit the manufacturer's website as well.

If you don't know what you want, and simply must go to a dealer, visit a different dealership than the one where you ultimately want to buy. Ask them to show you a full range of vehicles ("Do you have anything cheaper/smaller?" or "Is there a base model available?" can do wonders). Write down the exact trim/options package/etc of the cars that appeal to you and check online for simpler, cheaper version of the same model.

2) Get an online estimate of the car's true value

Once you know exactly what you want, find out what real buyers in your area have been paying recently. There are a number of reputable sites providing this information for free. This will give you an idea of the highest possible price you should be willing to pay.

3) Start Dialing: Call 4-5 nearby dealers 

There is no substitute for comparison shopping if you want to drive car prices down. But visiting dealers in person takes valuable time, so take advantage of your phone. The dealer may try to invite you in to look at the car, but just tell them you don't have much time and want to make sure they can offer a competitive price before you come by in person.

Of course, to compare quotes, you need to know exactly which car you want. So don't do this without completing Tip #1. You might ask two dealers for a quote on a 2014 Subaru Impreza and get numbers that vary by $1,000-$4,000. But if one dealer was quoting a base model, while the other was quoting the premium model, and one was referring to a manual transmission and the other to an automatic, the comparison is meaningless. 

If they try the old, "How much do you want to pay?" approach instead of giving you a quote, reply, "I want to pay the lowest price possible, and I am planning to contact several dealers and purchase wherever I can get the best deal. What is the best price you can offer me?"

If their number seems too high, simply ask, "Is this the best price you can offer?" No need to get involved in haggling beyond that.

Once you get a quote, ask the dealer to walk you through all other costs - fees, taxes, registration to get a grand total number. 

P.S. These days, nearly every dealership has a dedicated internet salesperson, so email can work here too, but phone will ultimately speed up your work -- one 5-10 minute conversation should be enough to get a comprehensive quote.


4) Compare dealer fees in nearby states

Most buyers automatically purchase a car in their home state. Some even assume that this is required by law. This couldn't be further from the truth - you can buy a car wherever you'd like! But why go through the extra effort of driving to a distant dealership? Believe it or not, a little trip could save you hundreds, if not thousands, of dollars.

First, each state has different limits on dealer fees - hidden costs like "documentation fees", "plate fees", and so on that ratchet up the price of your new car. For example, dealers in Connecticut charge $400 or more in documentation fees. In nearby New York state, they are capped by law at $75. That's an automatic $300+ savings just for driving a little further to pick up your new car. And the dealer will happily register the car in Connecticut for you.

For even more savings, consider if you will be visiting some a distant, lower-cost location anytime in the near future. Base car prices vary by state due to something called a destination fee. Typically, destination fees will be similar in your general area, but if you're planning a trip somewhere farther out - a conference for work, a vacation, etc - check prices at your destination for potential savings. Don't plan a long trip just to buy a car, though -- the savings generally won't outweigh the price of a plane ticket, hotels, etc.


5) Choose your dealer and get your price

This is where the magic happens. Call the dealer with the highest price, thank them for their time, and explain that you will need to go with another dealer since you got a lower price. Chances are, they'll offer to match or beat the price. With this lower price, you can call another dealer, apologize that you can't purchase from them, and perhaps get an even lower offer. 

Notice the simplicity of this approach. You're not haggling or asking for a discount. You're simply thanking the people you've spoken to. And don't worry, you're not taking advantage of the dealer. If they are already offering you the best price they can, they will simply bow out. (Or they might tell you that the other dealer is lying, in which case you can reply "Okay. If they are, I'll buy from you.")

It helps if, during your initial call, you've made it clear that you are a serious buyer, which shows the dealer that you're not wasting their time. Knowing exactly what kind of car you want will have helped create this impression. You can also straight-out state that you are looking to buy as soon as you find the best deal, ask about good times to come by the dealership, run through the list of documents to bring with you to closing, and so on. 

After a few follow-up calls, you'll see the prices starting to look pretty similar. At this point, you'll know you've gotten the best deal. Choose your favorite dealer from those who are offering the lowest prices (nicest guy, closest to home, has car in your desired color, whatever).  

6) Get an out-the-door price in writing

"Sure, I can sell you that car for $18,300," the dealer agrees. You can practically hear him smiling into the phone.  

"Does that include the fees and taxes?"

"Yes, sir!"

"Great, I'll be right over."

You make the trip to the dealership, test drive your car, grab the paperwork, and...suddenly you're staring at a price tag of $19,500.

"But...but I thought the car was $18,300 including all fees and taxes?"

"Oh, no, I said the documentation fees and taxes, but there is this registration fee as well that the state charges, and of course the price for this color, and..."

Don't let this happen to you. Request an "out-the-door" price by email. Make sure the quotation is not a single number, but rather a line-by-line breakdown. Even better is a copy of your purchase agreement. If the dealer won't send you a breakdown, email them your understanding of the cost (again, line-by-line, including all fees), and ask them to confirm that this is the final price. Then bring it with you to the dealership, and you should be out of there with your new car in no time.

And that's that - follow these 6 tips, and you'll see that you don't need to be a negotiations ninja or devote hours to haggling to get a great deal on your next car. Good luck!