Avoid the sinking feeling that you paid way more than the next driver for the same vehicle
By Vanessa Young
You’ve compared vehicles online and narrowed down your new car options to those that suit your needs and budget. Now it’s time to find the best deal. Whether you’ve negotiated successfully in the past or never mastered the process, these tips can help you avoid the sinking feeling that you paid way more than the next driver for the same vehicle.
RESEARCH NEW CAR PRICES TO DETERMINE A FAIR OPENING BID
Most car shoppers dread haggling with a salesperson, but the negotiation process is less stressful when you begin on solid footing, which is an informed idea of what you can expect to pay. Research prices before you speak with a dealer so that you can arrive at a fair value for your preferred vehicle. Brand websites allow you to build the exact model you want and see the manufacturer’s suggested retail price. Also known as the sticker price, the MSRP will be displayed on the dealer lot or advertised, and it is the price to which the dealer will try to stay closest.
Car buyers should have a lower opening bid informed by online tools that show the average range of what other buyers have paid for a specific model. The ideal opening bid is on the low end of that spectrum. These tools also reveal the invoice price of the vehicle, which is the dealer’s approximate cost. Due to the way manufacturers structure dealer discounts and incentives, it’s difficult to determine the exact invoice price, but the rough figure helps you to understand how much a dealer will profit from your purchase. Let the salesperson know that you’ve arrived at a fair price after thorough research, and always steer the conversation away from the MSRP.
Even if you plan to lease a new car, begin with this step. The full price of a leased car is known as cap cost, short for capitalized cost, and it will appear on your contract. Dealers often try to steer discussions toward monthly lease payments, often lowering them by extending the length of the lease, but a low cap cost is a better way to lower your monthly payment.
REQUEST MULTIPLE QUOTES
Gathering competitive bids also gives you some leverage. For those who are particularly stressed about how to negotiate a new car price, a car buying service will do the legwork in exchange for a flat fee or percentage of your purchase or lease. Otherwise, contact multiple dealers so that you can compare quotes and use these to possibly secure an even lower price.
Most manufacturer websites incorporate tools that allow you to compare prices within a certain geographic radius. Depending on how far you’re willing to travel, or how much delivery will cost, extend your search beyond the local area. Take your lowest quote to other dealers and see if they’ll beat it, shopping around until you feel comfortable with the deal.
TAKE ADVANTAGE OF MANUFACTURER INCENTIVES
While you want to avoid paying the retail price listed on manufacturer websites, look there for any incentives that can be applied to your new car deal. Since special offers are determined by location, you’ll need to provide your zip code to see a list of incentives that apply to purchases and leases. The most common incentives are rebates, finance offers, and special programs that often are available for recent graduates and veterans.
DISCUSS TRADE-IN VALUE AND MONTHLY PAYMENTS LATER IN THE PROCESS
Have you ever tried to negotiate a new car price only to be asked what your ideal monthly payment would be? Perhaps the most challenging part of negotiations is keeping the conversation on track. Dealers want to stay as close to the MSRP as possible, so salespeople will often steer the discussion away from price toward monthly payments and trade-in values. They can meet your ideal payment in a number of ways that won’t benefit you, including extending the length of a loan or lease. Since cars depreciate quickly and interest adds up, you’ll wind up owing quite a lot more than the car is worth.
The time to discuss trade-in value and monthly payments is after you’ve agreed to price. As with the fair price you researched for your new car, come prepared with the value of your trade-in. Use a reputable online tool to determine the amount you can expect to receive based on the make, model, age, and condition of your car.
Even after following these tips, it can be hard to know when to accept a deal. Certainly, if a dealer can’t come reasonably near your price, it’s time to move on. The same holds true for pressuring tactics. However, if you receive a good offer from a reputable dealer, have the confidence to stop negotiating and move on to the enjoyment of your new vehicle.