6 Tips for Negotiating Price When Buying a Car

By: Kathy Teel July 29, 2012
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Few of us know how to negotiate auto sales, preferring instead to ask a few questions and then agree to whatever the dealership wants - sometimes, whether or not we can afford it.

Sometimes, buying a car is stressful, and the list of fees and taxes that go along with it seem set in stone when we see them at a salesman's desk.

You can, however, negotiate a new car price, if you follow these simple tips.

1. Know Your Car Price Limit.

Know the highest you're willing to go before visiting the dealership; once you've reached your upper limit, don't budge. If the salesman can sell you the car at that price, he will; if he can't, thank him for his time and leave.

Don't take it personally if he says, "I'm not sure I can do anything for you today." That's his way of saying that he's reached his own limit.

Remember: The salesman needs to sell the car at a reasonable profit. He can’t give the car away...but he usually has more wiggle room than he's letting on.

2. Negotiate Selling Price, not Monthly Payments.

When a salesman asks you how much you've budgeted for payments, kindly but firmly tell him that you'd rather discuss the price of the car. Keeping your focus on the price will actually lower your payments.

3. Focus On Dealer Cost, not Sticker Price.

The dealer's cost (called the invoice price on new cars, or the wholesale price on used cars) is the amount the car for sale is worth.

Now, the salesman isn't going to let you walk away with the car for nothing; he needs to make a profit. Still, the sticker price is usually much higher than the dealer's cost, because the dealership wants to make a profit.

By negotiating up instead of down, you're still going to be paying significantly less than you would otherwise.

4. Wait for a Counter Offer.

Do not raise your bid until the salesman gives you a counteroffer. If you bid two hundred dollars over the dealer's cost, and the salesman says, "I can't do that," do not immediately raise your bid to three hundred. Wait until he says, "I can take two hundred off the sticker price."

5. Use $100-$200 Increments.

Keep your bid low; they'll have to come down on the price to meet you. They want to sell the car; they need to make a profit. If you remain calm and don't raise your bid all at once, you might drive that car out of the dealership that very day.

6. Remain Calm.

Yes, he's throwing a lot of numbers at you. Yes, it sounds like too much money. But if you appear anxious or worried, you're giving him control over the negotiation.

You're the one paying: you stay in control of the proceedings. You must work from a position of strength.

Do you have any experience negotiating price when buying a car? Share with our community in the comments below!

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