Next to a home, a new car is probably the largest purchase you’ll ever make, averaging $34,372 as of fall 2016, according to Kelley Blue Book.
But two people can buy the same car for drastically different prices. That makes the process extra intimidating for those of us who don't love negotiating. Want to leave the dealership feeling like you were the one in the driver’s seat? Read on.
Before You Go
Your prep work needs to begin before you even set foot in a dealership. Here are four preliminary steps to take:
1. Work the web.
Visit sites dedicated to demystifying the car-pricing game: “TrueCar is one of these — you can type in a model and see how much money customers in your area have been paying for it, plus some other data points,” says Kevin Smith, owner of Carsmith Motors, a licensed new-auto brokerage and used-car dealership in the San Francisco Bay area. CarGurus also offers similar price estimates. “No system is perfect, so also look at Kelley Blue Book and Edmunds,” he adds. “Assemble several data points to get an idea of a range that is reasonable.” Also check out CarLeasingConcierge, which offers wholesale prices on certain new-car models.
2. Get preapproved for a car loan.
If you plan on taking out a loan, take this step early on. You’ll have a better idea of how much car you can afford, and then can concentrate on price negotiations instead of worrying about haggling later. “You’ll also have something to shop against” when the dealership offers a loan of its own, says Brian Moody, executive editor for Autotrader.
3. Factor in additional costs.
The sticker price is not the only number to consider. Research your model's fuel and insurance costs, along with sales tax, Moody says. Factor in these extras when figuring out overall ownership costs. Edmunds has a “True Cost to Own” calculator that can give you a five-year overview that includes maintenance and depreciation.
4. Get the lowdown on local dealerships.
Some auto sellers are easier to deal with than others. Ask friends, family members and coworkers for the names of trusted dealers and salespeople, and visit sites such as DealerRater, Cars.com and Edmunds for customer feedback.
At the Dealership
Once you’ve done your research, you’re ready for the dealership. Try these strategies:
1. Time your trip right.
“Go at the end of the year or the end of the month, when the salespeople may be trying to make quotas. Or show up in the middle of the week, or when it’s rainy and snowy, because those are slow times,” Moody shares. Avoid sunny days when there’s likely to be a crowd, he adds. “If you’re shopping for a popular model on a busy day and won’t budge on the price, the salesperson figures there are five other guys who will.”
2. Examine the existing inventory.
Sure, you wanted a sunroof or a blue model instead of red, but can you be flexible and settle for something on the lot? “The dealership buys these cars from the manufacturer and resells them at a profit,” Moody says. “If you can take one of the cars off their hands that they have already purchased, you can often get a better deal.”
3. Switch salespeople if you need to.
If you two aren’t clicking, ask for someone else. Negotiating is hard enough without finding yourself trying to deal with a salesperson who you can barely communicate with.
4. Ask for the all-in purchase price.
The dealership will likely tack on some extra charges from documentation costs (a fee from the dealership for preparing the contract) to advertising costs (a charge that passes some of the manufacturer’s or dealership’s advertising fees on to you). By having your sales rep explain them all, he may keep the extra fees to a minimum so you aren’t scared off.
5. Start at the bottom of your target price range.
The first number you throw out during negotiations should never be your maximum, because chances are good it will be countered. Instead, start at the bottom and work your way up from there. Since you already know how much car you can afford — and what people in your area pay on average for the car — you should be in a strong position.
6. Walk away.
If the salesperson refuses the maximum price you’re willing to pay, leave. “You flip the script when you walk,” explains Jonathan Alpert, a psychotherapist and author of “Be Fearless: Change Your Life in 28 Days.” “Now it’s up the salesperson to win you back.” Go out for lunch, or leave altogether — just make sure the dealership has your cell number in case they want to reconsider (you’ve got a good chance!). Meanwhile, continue on to another dealer; there are plenty of people willing to sell you a car.
7. Don’t discuss a trade-in until you’ve settled on a price for your new car.
“As soon as you mention you have a trade-in, it gets factored into the deal,” says Moody; and you don’t want to lose your old car’s full trade-in value. There are a couple of exceptions, such as if you’re still making payments on your trade-in car. The dealership might be willing to waive some of its usual fees (such as charges for dings or over-the-limit mileage), especially if it’s a car from the same manufacturer as your new one will be.
8. Go easy on dealer add-on accessories.
“The information on car pricing is so available and pervasive these days that to make more profits, a lot of dealerships have taken a real interest in the after-market stuff,” says Smith. But many of these same items, such as wheel locks, can be purchased at an ordinary auto-supply store for far less.
9. Ask for a few extras.
If the dealer throws in an extra set of keys or floor mats, you'll leave with the knowledge that you made your hard-earned money go the extra mile.