How to Negotiate With a Car Salesman

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1Starting to Shop

2Getting the Best Price

3Negotiating on a Used Car

4Having a Better Negotiating Experience

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If you're ready to shop for a new car, you might be a little worried about the process of price negotiation. Car salespeople might seem like impossible obstacles, but with the right tools and insight, you will be able to get the best price on your new vehicle.

Steps

Part 1

Part 1 of 4:

Starting to Shop

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   Try to secure financing before you shop. If you wait to get financing through the dealer, then the dealer will have the upperhand in the negotiation. If you come to the lot with financing secured already, you will have that as a tool in your negotiation.

   • Go to your bank or credit union to apply for an auto loan. You're likely to get a better deal with lower interest, depending on your credit score and if you already have an established relationship with that bank as a customer.
   • You can even apply for a loan through your bank and get approved, then take the approval to the dealer. They might give you a better deal just to earn your business.
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   Have a clear idea of what you want. If you go to the dealership knowing exactly what you want and how much you can pay for it, you will be less likely to be pressured into paying more or buying something you hadn't planned on purchasing.

   • You can use online services to compare different models, upgrades, and prices. If you go into the negotiation knowing what different models go for, you will have the upper hand.
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   Make sure you know the true value of the car you want. Use online services like Kelley Blue Book to value the car and see the fair price for that vehicle. By doing this, you will know if the salesperson is trying to overcharge you.

   • If you have your eye on a particular previously owned car, most dealerships will have all the details for it on their website or online inventory. Make sure you take into account model year, mileage, and any upgrades that are on the car when you value it.
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   Don't let a salesperson rush you. More than likely, a salesperson will approach you right when you enter the car lot. Let them know you are just looking and will tell them if you have any questions.

   • If you let the salesperson direct your search, he or she might take you towards the more expensive vehicles. Take your time and look at all of the available cars you are interested in.
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Part 2

Part 2 of 4:

Getting the Best Price

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   Be polite and courteous. It's common for people to take on an aggressive attitude when car shopping, since they think that this might help them keep the upper hand. But, as a general rule, it is always better to be polite.

   • Threatening to walk out if you do not get the price you want is not the best route to take. If you are rude to them, they will be more likely to be rude in response.
   • Keep in mind that these salespeople deal with a good amount of rude and aggressive people on a daily basis. If you are the one kind, amiable person they talk to that day, they may be even more likely to do something kind for you in return—like give you a better deal.
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   Don't tell the dealer you have a trade-in. Even if you are planning on trading in your old car, don't let the salesperson know this until you have already agreed to the price you want.

   • Dealers use trade-in values when they price the car. This way, they can make it seem like you are getting a lot more for your car than you really are. If you don't tell them you have a trade, they won't factor it into the price they give you.
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   Don't rush through the negotiation. Since the real goal for any salesperson is to sell as many cars as they can, they will want to get you to sign on a deal as quickly as possible so they can move onto the next person. Don't give into this—take your time.

   • If the salesperson doesn't agree to your price, tell them you would like to think about it for a day or two, and leave without signing anything. Within a few days, they might worry you found another deal, and they will follow up with you and possibly offer a better deal.
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   Shop at the right time. Since most salespeople work on commission, they likely have to meet a certain amount of sales each month. If you go in to negotiate near the end of the month, you might be more likely to get the deal you want, since the salesperson might be eager to meet his or her goal.

   • Additionally, try to shop when new models are being introduced. If a new model and the immediately preceding model are on the lot at the same time, you might be able to negotiate a good price on the older model. This happens because salespeople want to move older models to make room for the newer ones. New models are introduced throughout the year so keep an eye out regularly for new cars.
   • The same goes for shopping at the end of the year. You might notice that many dealers have big end-of-year sales, as they want to clear the lot of the previous year's models to make room for the new ones. Because of this, you might get a better deal when purchasing a car they are trying to get rid of.
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   Offer a price lower than your budget, but still in the general price range of the car. If you start out way too low, the salesperson might just write you off. Start at a price lower than your target, so that as you move through negotiations, you might land on that target.

   • If the initial asking price on the car is $25,000 and you offer $10,000, that would be too low. If your target price is $23,000, offer somewhere between $20k-$22k to start with.
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Part 3

Part 3 of 4:

Negotiating on a Used Car

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   Get all the information about the vehicle. Ask the dealer for the CarFax report for any used vehicle you are considering. This report details all owners, accidents, and even if it once was a rental car, which could lower its value. When you get a CarFax report, make sure the vehicle identification number (VIN) on the report matches the VIN on the car.

   • Getting a CarFax report yourself can cost almost $40, so it would be better to ask for one from the dealer.
2. 
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   Verify the car's value. There are online services such as Kelley Blue Book and AutoTrader that will help you get a good picture of the value of the specific car you want. This way, you will know if the salesperson is trying to overcharge you.

   • AutoTrader will help you figure out how much that specific car is going for in your area. Prices can fluctuate based on where you are, and how many cars of that kind are for sale in your area.
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   Negotiate in any repairs that might need to be done. If you want certain maintenance or repairs done to it as a condition of purchasing it, hold fast to these demands as well. Don't settle for anything less than what you want.

   • For example, if you notice the car needs new tires, you might negotiate a set of tires into the cost of the car. Or, you might ask that the car be tuned up or given an oil change prior to the sale.
4. 
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   Understand any “extras” the salesperson might try to add in. These extras can be anything from dealer warranties to detailing to rust prevention. It's likely the dealer will charge more for these services than if you purchase them elsewhere.

   • If the salesperson offers a detailing service, for example, you might end up paying less for that same service if you had it done somewhere else after you purchase the vehicle. Make sure you find out what exactly is being included in the total cost of your used vehicle.
   • In general, avoid purchasing extended warranties and other extras. Consumer experts tend to agree that these additions are not worth the money. Instead of buying extended warranties, buy a reliable car and take care of it.
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   Try to buy a used car that is at least two years old. After two years, a car's value decreases by almost half of its original value, so you can usually get a pretty good bargain on these cars.

   • If you stay around the 2-year-old mark, the mileage will likely still be pretty low, and the car may not have had or need many repairs yet.
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Part 4

Part 4 of 4:

Having a Better Negotiating Experience

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   Understand that you may have to walk away. If you enter the car lot and find that the salesperson you end up working with is not right for you, you can walk away. You want to make a deal with someone you are comfortable with, and who is willing to work with you.

   • This is another instance where patience is important. If you don't find the right dealership or salesperson on the first try, there are plenty of other salespeople and dealerships for you to try.
2. 
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   Keep a level head. It's easy to get emotional in the car buying process. Try not to get emotionally attached to a particular car or deal, and try not to allow the salesperson to manipulate your emotions.

   • Salespeople know how to appeal to your emotions. Make sure you keep yourself grounded and level-headed as you test drive vehicles, and don't let the salesperson talk you into falling in love with a certain car or deal.
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   Stand your ground. You have your budget and what you want in mind, so don't let a salesperson talk you out of it or convince you to pay more. Be firm about your budget and what you are willing to pay for the car you want.

   • It might be difficult to stand your ground when you know that budging even a little could get you the car you want. But, if you overcommit in terms of payments and price, you will regret it.
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   Don't get stressed out. Buying a car can easily become a stressful experience. Instead of getting overwhelmed, take a step back if you need to. Take your time and remind yourself that you don't need to rush.

   • If a salesperson is pressuring you and making you feel rushed or uncomfortable, politely leave the situation. Let them know you aren't ready to make a purchase just yet.
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Expert Q&A

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• Question

  How do you negotiate a car lease?

  

  Hovanes Margarian
  Attorney

  Hovanes Margarian is the Founder and the Lead Attorney at The Margarian Law Firm, a boutique automotive litigation law firm in Los Angeles, California. Hovanes specializes in automobile dealer fraud, automobile defects (aka Lemon Law), and consumer class action cases. He holds a BS in Biology from the University of Southern California (USC). Hovanes obtained his Juris Doctor degree from the USC Gould School of Law, where he concentrated his studies in business and corporate law, real estate law, property law, and California civil procedure. Concurrently with attending law school, Hovanes founded a nationwide automobile sales and leasing brokerage which gave him insights into the automotive industry. Hovanes Margarian legal achievements include successful recoveries against almost all automobile manufacturers, major dealerships, and other corporate giants.

  

  Hovanes Margarian

  Attorney

  Expert Answer

  With a car lease, you've got the price of the car, the MSRP (manufacturer's suggested retail price), and the price at which you will end up "buying" the car. You need to negotiate that last price and you also need to negotiate the money factor. The money factor is the equivalent of the interest rate in a lease structure. There's a residual value in every lease through lease calculation. That's the price that the finance company presumes the car will be worth at the end of the lease. So the higher the residual, the better off you are when you're leasing.

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Tips

• If you're shopping for a used car, avoid buying a high-end one. It will likely have more miles and problems than a lower-end, more reliable car that's the same price.
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• Stay relaxed. Don't go into the process feeling anxious.
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• Use the internet to research dealerships and cars before you go shopping.
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