Four Tips for Negotiating a New-Car Price

Yahoo lists four tips for negotiating a new-car price as follows:

• Shop around and play dealers off of one another.
• Don't try to negotiate when the dealership is busy, like on Saturdays.
• Line up your car financing before going to the dealership so you are a cash customer and can avoid any dealer's attempt to negotiate the monthly payment.
• Be prepared to walk out if you don't get the price you want.

Three of these (#1, #2, and #4) are at the heart of the way I buy a car using the web. As for financing, I skip that and pay with cash.

I'm now entering the "research phase" of my car hunt. I've been planning to buy a new car for some time and expect to have one researched (I have a favorite, though there are still a couple other options), test driven, negotiated, and purchased by the end of October or so (maybe sooner.) We'll be using my current car all summer for our trips (two to see family and one for another vacation.)

As usual, I'll keep you up-to-date on my progress.

Comments

[Cath]

Dealers set a sales quota each month as a whole and for each individual salesperson. If they haven't met that quota by the last day of the month, you're a shoe-in for a better deal. Always go with the salesman standing in front of the dealership waiting for customers to come in -- he's the one who hasn't met his quota yet. And don't buy any extras! 15 years in the car business taught me a lot!

[Cath]

Dealers set a sales quota each month as a whole and for each individual salesperson. If they haven't met that quota by the last day of the month, you're a shoe-in for a better deal. Always go with the salesman standing in front of the dealership waiting for customers to come in -- he's the one who hasn't met his quota yet. And don't buy any extras! 15 years in the car business taught me a lot!

[KaseyD]

Visit the dealerships to help you choose, but then get online quotes from a few dealers for exactly the car you want. Take the best price and go to the dealer most convenient to you. Nine out of ten, they will better the deal. If not, you've done the research and know where to go next.

With regard to point #3. It's best to pay cash unless the dealer is offering a real low rate (say 0.0%). But always, always lock in your price first before you even mention financing. Also, I had one dealer's finance manager try a bait and switch on financing once; they quoted a very low monthly payment verbally, then had a higher payment in the paperwork. My advice is keep good notes during both price and rate negotiations.

[jeffinwesternwa]

shopping online and competing dealers this past decade have allowed me to purchase 3 cars BELOW invoice, plus got the Mfctr rebates. Car dealers are very hard up, be persistent, KNOW what you want, get an actual invoice and start about 1%~ BELOW that invoice #. Latest was a '10 Jeep Wrangler below invoice w/ several dealer added options where I paid the cost of the option and FREE installation. Always best to NOT have a trade and seperate financing OR buying cash to not confuse the issue. Shop the vehicle PRICE FIRST, THEN negotiate payments, etc., next....

[KH]

Car dealerships actually seem to try to encourage everyone to buy a car on Saturdays--because in my state, they are all closed on Sunday (state law). It's annoying, because you have to take a day off work to buy a car.

Also, I hate the whole entire process of car-buying. Scummy salespeople who will cheat you if they can, lots of psychological pressure, it takes a whole day no matter what you do and they want it that way, obscuring the terms and bait and switch that are just expected and business as usual.

It's the only "legitimate" business where these practices are the norm! Like shopping at a pawn shop except without the government reg and oversight that a pawn shop has.

Bleh. I'm looking forward to the day when I can buy my car from the manufacturer online and have it delivered, just like a computer. All car dealerships should go out of business, like yestereday.

[Nate]

Hey FMF!

I am curious. Are you considering buying a 2-4 year old vehicle, or are you set on a new one? Clearly you can afford a new one if you wish - I was just curious if you considered a 2-4 year old car (private party - or dealer) when you decided to replace the existing one. You know that a car depreciates appx. 70% in the first 4 years -- I know you know that. I was just wondering!

I would be really interested to hear your thought process on that.

I hope you and your family has a wonderful 4th :-)

[Rich Avery]

With the recent discussions here about warehouse clubs, I'd be interested to know if anyone has bought new cars through Sam's, or Costco...and if they saved more than they would have otherwise?

[FMF]

Nate --

I buy new. I've covered the reasons why before -- just can't find the link to that post. But yes, I do know the pros and cons of buying new and buying used.

Rich --

Check this out:

http://www.freemoneyfinance.com/2010/05/is-buying-a-car-through-costco-a-good-deal.html

[Rob]

I have followed FMF's advice for buying a new car twice in the last three years and both times it worked out wonderfully. We emailed about six dealerships in the area and continually played them off each other asking them if they could beat the lowest price. And we did it all from the comfort of our home. Once we knew which dealership we were going to buy from, we went straight there and drove off with the car that day.

[Rob]

I should also mention that yes we did have financing set up as the article suggests. It was through our credit union; they generally have the best rates.

Hopefully the next time we buy a car it will be with cash.

[FMF]

Rob --

Good for you. I'm about to use the same advice (again) to get another great deal on a new car.