Looking to save thousands on your next car purchase?
That’s exactly what most people do when they go to a dealership. They buy unprepared and overpay by thousands of dollars. The next thing they know, they feel overwhelmed and regret their purchase.
Don’t make this mistake.
Buyers pay far too much because they don’t negotiate like the dealership does.
The good news is that there’s a way to get that best price on your new or used car. And, it’s not as hard as you might think.
If you’re ready to get the best deal on your next car purchase, this guide will teach you exactly how to do it.
Here’s what you’ll learn…
- Psychology of the Dealership
- Preparation before Negotiation
- Negotiation Tactics and Techniques
- Dealer Tricks to Watch Out for
- Closing the Deal Successfully
Psychology of the Dealership
In a recent survey of 2,000 car buyers, 68% said they thought it was “fairly easy” to negotiate the final price of their vehicle. This would appear to be great news for customers in today’s market…
But here’s the thing:
Dealerships want to make money. They have monthly quotas, inventory to sell, and bills to pay. That’s why they work so hard at getting you to pay more.
When you understand this, you know you have some real leverage when you negotiate.
The average car dealer also knows that educated customers are more likely to close a deal and leave quickly. If you are prepared with research and realistic expectations, they want to work with you.
The real power that buyers have is not realized by most people.
Dealer tricks are not new. But, what has changed is that dealerships are far more willing to negotiate than most buyers believe.
Preparation before Negotiation
Do you know the secret to effective car negotiations?
Here it is:
It all starts before you set foot on the lot.
First things first: research the actual value of the vehicle you are interested in buying. Do not focus on the sticker price (MSRP). Instead, figure out what other buyers in your area are paying for the same car, truck, or SUV.
For example, recent statistics show the average discount off MSRP on a new car in June 2024 was $1,819. In comparison, in 2022, buyers were paying $683 above MSRP.
It’s clear there is real negotiating power in the market today.
Next up, be sure you are pre-approved for financing before you shop. Car dealers make a lot of money through financing, so when you come in with it already secured, you strip that away.
Finally, research any manufacturer incentives or rebates. These discounts can be in the thousands of dollars and will come on top of the negotiated price.
Negotiation Tactics and Techniques
You’re going to love the tactics and techniques we’re about to show you.
Here’s a little tidbit to get you started: 85% of sales negotiators take 30 minutes or less to negotiate overall. Why? Because they know exactly what they are doing, and they walk in with a plan.
Start With Your Research
Start by never negotiating from the MSRP down. Instead, begin with what you know the dealer paid and go from there.
Here’s how it works:
Say the car has an MSRP of $30,000. But, through your research, you know that the dealer invoice price is $27,500. Make your first offer in the area of $27,000. This way, you have room to negotiate and the dealer can still make a profit.
Use Competing Offers
Get quotes from multiple dealerships before you start negotiating. When you show up and tell your dealer, “Dealer X offered me this,” you gain a lot of leverage right off the bat.
Most dealers will match or beat a legitimate competing offer, especially if they see you are ready to buy that day.
Focus on the Total Price
It’s easy to get caught up in monthly payments during a negotiation. Dealers know this and will focus you on this to manipulate the terms of a loan. They can structure it so you hit your target payment but pay more overall.
Don’t fall for this. You must insist on negotiating the total “out-the-door” price first. Financing is only discussed after you both agree on that price.
Dealer Tricks to Watch Out for
There are several tricks dealers use to increase their profit after you’ve negotiated the car’s price down. Let’s dive into these so you know how to counter them.
The “Four Square” Method
Some dealers will write down the vehicle price, trade-in value, down payment, and monthly payment on a four-square worksheet. They will then move the numbers around to confuse the customer and mask where their profit comes from.
Don’t fall for this. Negotiate each element separately: car price first, then trade-in value, and then finance.
Add-On Services and Warranties
After the price is agreed on, they will try and sell extended warranties, paint protection, and other add-ons with huge markups.
Do your research on these options beforehand and decide what, if any, you need. Do not let them pressure you into decisions in the moment.
The “Manager Needs to Approve This” Tactic
The salesperson will often say they have to get the offer approved by the manager. Sometimes true, but often a stall tactic to try and tire you out.
Be patient but firm. If they are taking too long, be prepared to walk away.
Advanced Negotiation Strategies
If you want to level up your negotiating skills, consider these advanced strategies.
Timing Is Key
Timing matters more than most people realize. The end of the month, quarter, and year is the best time for a deal. Dealerships have quotas to meet, and they are far more motivated to negotiate during these times.
Keep an eye out for older inventory. Cars that have been sitting on lots for a while cost dealers money, so they want to move them. For leftover 2023 models, experts recommend negotiating for at least 20% off MSRP.
The Walk-Away Strategy
This is your most powerful negotiation tool. Be genuinely willing to walk away if you can’t get to a fair deal.
Most dealers will only make their best offer when they think you are serious about walking out. If they let you walk, you just hit their bottom line.
Negotiate Everything
Do not just focus on the car price. You can negotiate on:
- Interest rates
- Trade-in values
- Documentation fees
- Extended warranty prices
- Service packages
Closing the Deal Successfully
Congratulations. You’ve now researched, negotiated like a pro, and settled on a fair price for your new vehicle. Now what?
Read Everything Carefully
Before you sign anything, read everything carefully. Make sure all the agreed-upon terms are in the paperwork, and they are not sneaking in add-ons or changing the terms at the last minute.
Double-check that all rebates or incentives are properly applied and that your trade-in value is the amount you agreed upon.
Get It in Writing
Get everything in writing. Verbal agreements are your friend until you hit a problem later down the road. At that point, they are worthless.
Taking Action on Your Next Purchase
Successful car negotiation is about being the most prepared.
Start your research early, get multiple quotes, and don’t be afraid to walk away from deals that don’t make sense. With these strategies, you’ll be equipped to negotiate confidently and save thousands on your next vehicle purchase. The car market has shifted back in favor of buyers. Inventory is higher, incentives are better, and dealers are motivated to sell. Now’s the perfect time to put these negotiation skills to work.
