How to Negotiate Car Prices

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For many people, the thought of negotiating with a dealership car salesperson fills them with dread. This feeling is partly because people see negotiating as confrontational, and they would prefer not to haggle. But with a change of perspective and a few simple negotiation tips, you can potentially save thousands of dollars off the sticker price when you buy your next new or used car.

Where to begin?

You’ll need to determine the market value of a vehicle before you begin to negotiate. This figure will serve as the backbone of your strategy and give you a reference point when you start getting price quotes from the dealership. Edmunds calls this the True Market Value (TMV) or Edmunds Suggested Price. The Edmunds Suggested Price is what we recommend you pay, not including taxes or fees. It is based on our analysis of millions of data points including supply, demand, incentives, options and recent nearby transactions.

Start by looking up the car on the Edmunds. Head to the Build and Price link about halfway down the page. Pay attention to the trim level and options on the car to make sure you’re making an accurate comparison. If you’re shopping for a new car, look at the Edmunds Suggested Price and see where it lies relative to the manufacturer’s suggested retail price (MSRP) and the invoice. If you’re shopping for a used car, look at what’s called the dealer retail price. Keep in mind that Edmunds suggested pricing is an average. Your goal is to get a price below it. But if it is a little higher, that’s OK too.

Things are much easier if you’re already looking at inventory. You’ll see the Edmunds Suggested Price on new cars and on used cars. There will be a price rating from fair to great, with a figure indicating how much below market the vehicle is.  

Next, we recommend calling, emailing or texting a few nearby dealers to get a range of prices. Ask for the internet sales manager and, in that discussion, verify that the vehicle is in stock and make sure it has all the options you want. You can also search Edmunds’ new or used inventory and reach out to dealerships that will give you upfront prices.

Edmunds also has a price checker tool for new vehicles, which allows you to enter the details on a quote you’ve obtained, then get a rating to let you know if it is a fair, good or great deal. 

A typical negotiation scenario

Perhaps you like to shop at the dealership in person. Here are some tips on how to negotiate effectively. When you are sitting with a salesperson, a typical conversational opener might be something like: “What monthly payment would comfortably fit into your budget?”

It’s important that you sidestep this question because it’s hard to track the price of the car when the salesperson presents it as a monthly payment. Instead, tell the salesperson you will talk about financing later and you just want to discuss the purchase price of the car for now. The salesperson will usually check with the manager and then come back with a price. You may not like that price, however, and this is where the negotiation begins.

How do you ask for a lower price?

After the salesperson presents the price, you could respond with: “We’ve done a lot of research on the market value of this vehicle, and we have a good idea of what it sells for because we’ve shopped around a bit. If you can beat this price (here’s where you present your best price quote printout from another dealership) we will have a deal.”

A response like this accomplishes a couple things. First, it lets the salesperson know that you’re an informed buyer. Your goal is to justify the drop in price rather than present an offer without context. Second, the salesperson knows there are offers to beat, so there is a good chance the salesperson is going to jump to the low end of the dealership’s pricing structure. This approach works for both new cars and used cars.

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