How to Negotiate the Lowest Car Price - A Step-by-Step Guide to Help You Pay Less for Your Next Car Purchase

If you are ready to trade in your current car for a different model, or you are purchasing your first car, make sure you are prepared to negotiate!! You are not required to pay the amount that is listed on the window sticker of the car at the dealerships. Also, do not let the salesperson determine the price you will pay for your new car, whether it be brand new or pre-owned. There is a way to determine a reasonable price for the car that fits your budget, and you will be glad you took my advice.  If you have bought a car in the past and paid the sticker price please read this carefully so you never pay sticker price again in the future!!

Kelly Blue Book

Visit this website to find the value of the car you are trading in and/or purchasing. Just remember prices are not exact it is just to give you an approximate value.

www.kbb.com

Be Prepared!!

If you are shopping for a new car or a used car be prepared to haggle. By taking a little bit of time to do some research you will be able to save yourself a few thousand of dollars when you finally purchase the car. The most important thing to remember is to be 100% prepared, because your salesperson is 100% prepared to negotiate with you.

Here are a few tips to help you obtain some valuable information that can save you money:

  1. Compare prices at a few different dealerships, and take note of any current or upcoming sales events. Be sure to check prices at larger dealerships as well as smaller ones. (The larger company doesn't always give the lowest price.)
  2. If you will be trading in an existing car on the purchase of the new car be sure to do your research. You can easily check what you car is worth by using the Kelly Blue Book online. All you have to do is enter basic information about your car: year, make, and model, then the mileage, any extras it may have, and last the overall condition which could be; excellent, good, or poor. After all information is entered it will supply you with estimated prices for the Trade-In Value, Private Party Value, and the Suggested Retail Value. If you are buying a pre-owned car I would also check the Kelly Blue Book so you have an idea of what the car is approximately worth. (make sure you know the details, especially the mileage)
  3. When you have gathered all of the pricing information that you can take a close look at your budget. You need to figure out a price range that you can afford to purchase the car. For example: The car you would like to purchase is $25,000, but you can not afford to pay $20,000 total, you would aim for a range of cost to be from $17,000 to $19.000, with the secret knowledge of being able to afford $20,000. NEVER TELL THE SALESPERSON THE EXACT AMOUNT YOU CAN AFFORD!!!! Also do not discuss any numbers until you are sitting down to purchase the car!!!

How to put your research to use

After you have followed the steps I described above you can head out to the dealership feeling prepared. When you arrive on the car lot do not appear to eager to make a purchase. You want to stay cool and collected, as if it wouldn't bother you if you left without the car. (Even though deep down it would.)

 Be sure to take the car for a test drive.  If the salesperson goes along with you remember to not discuss any pricing numbers with him.  It is also a good idea to make sure everything in the car works properly.  Be sure to check the interior for any rips, stains, or other damages, and also check the exterior for scratches, dents, etc.  Look under the hood for leaks as well as the ground for signs of leaking.  If you are satisfied with the car and its condition now is the time to sit down with the salesperson and negotiate your price.  Let the salesperson give you his details first, pay close attention to cost of car, amount offered for trade-in, and anything else affecting the total.  The price given will always be inflated.  Now it is your turn to throw your number back, start towards you lowest number so you have more room to negotiate within your range.

You can negotiate the trade-in value amount if you feel it is too far below the KBB trade-in value.  You can also negotiate the total cost of the car, new or used.  When negotiating a used car be sure to use the information you found regarding the Suggested Retail Value, check and see if the dealer is pricing the car higher than that amount.  All this information you gathered will give you an accurate way to lower the cost within reasonable limits.  You don't want to go in there saying you want to pay $6000 for a $25,000 brand new car because you will not be taken seriously.  By going in and saying you want to pay $18,000 gives you a decent chance on negotiating down the price.

In the event the salesman meets you with a price within your range you can decide to purchase the car.  If you can not get the price down to an amount you can afford you will have to walk away.  But do not let them know you can not afford their asking price.  Just politely tell them that you do not want to pay that price and you will look elsewhere for a vehicle.  Most of the time the salesman will call you with another offer that matches yours or pretty close to it.  The choice is then yours to accept or decline.  Even though it will drive you crazy to walk away without the car, DO IT!!!  It puts the ball in your court and makes the salesman have to fight to win your purchase!!

Negotiate more than just the price

 Once you and the salesperson agree on the price you will pay for the car start negotiating for extras.  You can ask for a full tank of gas, free lifetime inspections, free oil changes or other servicing options, new car mats, or what ever else you think they could throw in.  You may end up only getting one of the items you ask for or more than just one.  You have to ask for it, to stand a chance at getting it.  Worse case scenario is that you would get nothing, but most of the time you should get something!!!

Example of Conversation

New Car Purchase (You can afford to spend about $21,000)

Dealer - The car you want to buy is $25,000, I will give you $500 for your trade-in, so your total will be $24,500 plus the cost of tax and tags.

You - I was thinking more along the lines of $18,000...

Dealer- Hold on, let me check with my supervisor....Ok, we can do $23,150 plus tax and tags for the total cost.

You - The trade-in value of my car is $2000, I want at least $1700 for that, and your price is still to high...ABC Dealer down the road can sell me the same car for $22,000 without my trade.

Dealer- Let me see what I can do...Ok, We will sell you the car at $21,500, minus $1500 for your trade, bringing the total cost to $20,000 plus tax and tags.

You - Make is $20,000 out the door (meaning tax and tags included in the total price) and it's a deal.

Dealer - Yes or No.. The dealer can agree or disagree it all depends. The choice is yours to take the car or walk away depending on what he comes back with.

If you buy the car out the door for $20,000 you came in under your budget amount. Depending on the cost of tax and tags will determine if you go over or stay under your budget if you must pay them.

Pre-Owned/Used Car Purchase (You can afford to spend $4500 and you have it in cash)

Dealer - The cost of the car is $6000, I will give you $250 for your trade, so you are looking at $5750 plus tax and tags.

You - I was thinking something along the lines of $3500

Dealer - The best I can do is $5500 plus tax and tags

You - The Suggested Retail Value on that car is $4000, my cars trade-in value is $1000. The car you are selling me is going to need new tires very soon, and there are scratches on the front and a dent in the fender. So my final offer is $3800 out the door.

Dealer - Let me see what I can do.... I can sell you the car for $4900, I will give you $750 for your trade, and I will take off an addition $300 for the tires and damage. So you are looking at $3850 plus tax and tags.

You - $3800 out the door and I will pay you cash right now.

The dealer will most likely take your offer. If not, you can still afford to take the dealer's final offer. If you do not get a reasonable price just walk away and wait for the call.

*This is just a basic example, so please do not expect it to go exactly as described...numbers are made up for the purpose of the example.*

Always Stand Your Ground

When you buy your next car or buy your first car put these tips to use.  Remember to always stand your ground because you do not have to pay the price on the sticker.  You can always get it cheaper.  If you have to walk away from the dealership because the price is still not in the range you want it to be in, just politely walk away.  DO NOT EVER TELL THEM WHAT YOU CAN AFFORD!!!!  If you do, chances are that is what you will pay.  By not telling them to much, you can try to get it slightly lower than your affordable amount, which will save you even more money in the long run. 

Salespeople can be intimidating, especially at car lots, but by having yourself prepared to negotiate you will be able to stand your ground and stay in control.  It is your financial situation, so don't let a salesperson map it out for you!!!

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Comments 7 comments

akirchner profile image

akirchner 5 years ago from Central Oregon

Cool layout and I liked the "conversation" - what a neat idea!


JillKostow profile image

JillKostow 5 years ago from Pennsylvania Author

akirchner - Thanks, my fiancé thought the "conversation" was crazy and deep...I know from experience with purchasing cars that you need to be one step ahead of the salesperson. Now everyone who reads this will have an idea how to haggle with them a little more easily.


SummerSurf profile image

SummerSurf 5 years ago

Very detailed and informative! Great tips. I find it difficult haggling especially being a woman visiting a car dealer. Being prepared would definitely help. Il have to refer back in the future as I've just bought a new car.


JillKostow profile image

JillKostow 5 years ago from Pennsylvania Author

SummerSurf - Thanks, I am glad you found my hub useful. I know from experience that it is very intimidating haggling as a woman but it is possible. Good luck with your next car purchase!!


Lanny Poffo profile image

Lanny Poffo 2 years ago from Cedar Rapids, Iowa

Great stuff, thanks for this article. Many people overpay and are stuck thinking about this horrible ordeal for the life of their car.


THANKS! 2 years ago

This was just the prep I needed.


Doug 2 years ago

The key to getting a good deal is to compute a good price before talking to a dealer.

Take the invoice price, reduce the invoice price by all incentives both customer and dealer. Reduce the computed amount by dealer holdback. Now you have a price goal. Invoice, incentives and holdback are explained on sites like Edmunds.

Contact dealers, as many as you want, via the internet. Ask for a quote. Do not believe the quotes they give you are the lowest price the will sell. They are not. Counter the low offers with the amount you computed above. You may add 2-3 percent for dealer profit. Remember once you give a price to the dealer you have set the floor for negotiation. The dealer will try to increase that floor.

Do no be concerned showing them how you computed your price. They already know, they do it every day. Do not be afraid to work with several dealers. You goal is to get as close to your price as you can.

Once you get a price which is acceptable, typically your price plus 3-5 percent at most, you know you got a good price. At that point you need to ask yourself whether spending additional time to save a small amount is worthwhile.

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