How to Negotiate a Car Deal in 2023
Last Updated: January 15, 2023
After making all the calculations and being prepared to buy a new car, you must understand how to correctly negotiate a car’s price. Follow these new car negotiation tips to buy a car cheaper.
How to Negotiate a Car Price: Psychological Tips
- Remember that salespeople are regular humans. They are just doing their job using negotiation techniques to get the best deal. You can use your negotiation tactics to get the best deal for you. While negotiating, there’s no point in being rude or emotionally involved because you can walk away if the deal doesn’t suit you.
- The dealership is not a prison. This tip continues the previous one. You can walk away and go home at any time. Some people would recommend you put the responsibility on someone else (saying something like “I’m not the one to decide. My wife makes the decision.” or “My partner will kill me if I buy this car.”) when you refuse to accept the deal. However, we don’t recommend following this advice. The best way is to show sales associates that the decision-maker is you. So, if the purchase price suits you, you will buy that car.
Practical advice: If you’re trading in your car, a dealership salesperson will probably take your keys and registration. Before you start negotiating, ask for them back. So, you can leave whenever you want and look for a better offer.
- Take a notebook with you. You’ll need a notebook to remember your price range for buying the car and selling your own and what kind of financing your bank gives you. Another reason is to write down the offers, as the car sellers won’t give you anything in writing.
- Have a lot of time and be well-fed. One of the dealer’s negotiation tricks is to tire people out by prolonging the negotiating time. Some car dealers are paid more for making you wait for every step of the process. So you get what’s called the escalation to commitment. The more time you invest in the deal, the more likely you are to finish this deal. Psychologically you feel that you’ve spent so much time negotiating, and that’s why you are likely to make the deal and don’t want to go through this process again.
You should have a lot of time and be well-fed to counteract this. You also need to understand that the escalation to commitment goes both ways: the more time they spend with you, the more eager they are to make some concessions to let the deal happen.
- Stay level-headed. Buying a car can be emotional, especially if you love cars. Don’t get too excited when you see the vehicle of your dreams or the seller says this is the best deal ever. The dealer might show you the MSRP, the Invoice Price, and other things to demonstrate what kind of discount you’ll get. These numbers shouldn’t mean anything to you. Please ignore them because you’ve researched beforehand; you know the numbers and should stick with them. Even if everything they say is right, be level-headed, and trust yourself.
Before Going to the Car Dealer
- Do your homework. You must do your homework and understand in a calm non-emotional environment what your buy-in price and walk-away range are. If the amount you’re getting is not within your content, walk away! You’ve prepared beforehand in the right environment, so trust yourself. It would be best if you also researched all the incentives from the manufacturer because your car seller may tell you they are giving you a considerable discount. If this is a manufacturer’s discount, you can get it anywhere (for example, loyalty bonuses or employee pricing).
- Know the advertising laws. Understand what the advertised price includes. If the car salesman is pretending to give you a discount by not adding the delivery charge or the bogus admin fee to the advertised price, remind them that the advertised price already includes those. For example, all car prices must be announced in Ontario with all-in fees and a sales tax.
- Understand seasonality. You should know the best time to go to the car dealer. New-model-year cars start to come out in August and September, and you will be able to buy a 2023 car soon. This means that now it’s possible to buy last year’s car at a good discount. At the same time, you’re unlikely to get a great deal on 2023 vehicles. The end of the month and the end of the year are possibly good periods for car buying because dealers are trying to make their quota to receive manufacturer bonuses. Sometimes it works, and sometimes it doesn’t. In any case, you should be aware of this.
- Understand three transactions: sell, buy, and finance. If you are trading in your car and getting financing from the dealer, you are doing three transactions: selling the car, buying a new one, and obtaining funding.
Financing. One of the easiest things to do is to separate the funding from purchasing. You do this by going to your bank or credit union, where you will likely have better rates. Sometimes car dealers have a back door to the bank and can get you a better rate than you’ll get. This means you still have to do your homework and know what the banks offer you and the sellers provide.
Buying and selling the car. There are two options:
Option 1: You negotiate both separately, so you know what goes into your transaction.
Option 2: You say to the dealer: here’s my car, and here’s [x] amount of money (either cash or financed), and it’s up to you to decide if you want to reduce the new car’s price or give me more for the trade-in.
Both ways are valid.
Essential advice: If you trade in your car, you get the sales tax benefit because you subtract the value of your old vehicle from the new one and pay less tax. You must understand if the dealer’s price includes the sales tax benefit.
- Research the dealership. Remember! The dealer that moves a lot of cars gets extra bonuses from the manufacturer and can reduce the price more substantially than other car salespeople.
Look at their online reviews. Pay more attention to the negative ones, as some positive reviews are fake, especially if the dealer has 1,200 5-star reviews. That is not realistic. Look at the red flags in the negative reviews. For example, one of the dealers in Toronto is advertising super low prices, but when you go there, you understand that the price is valid only if you get financing through them. That is very expensive.
You need to ensure they have the car you want to buy. Sometimes car sellers advertise a super low deal on the website to get you to the door and persuade you to buy another vehicle. However, you may come there, but they don’t have that car. To avoid this, call beforehand or email them.
Dealership Visit: Car Negotiation Tips
- Fundamental rule: DON’T negotiate the monthly payment. There is no point in negotiating your price, as so many things can be hidden behind it, and it doesn’t reflect the actual cost of owning the car. For example, your monthly lease payment may be far less than your payment with an auto loan. However, you may overpay in the end. What you need is to negotiate the car price.
- Show them that you are serious. A salesperson will try to determine what kind of prospect you are and how much money you have. They want to make sure they are not wasting time. They will ask you such questions as What kind of car do you want? Are you ready to make the decision today? Will you buy the car today if your payment is [x]? They want to hear “Yes.” You need to show that you’re serious and ready to buy the car IF THE PRICE IS RIGHT FOR YOU.
- The first offer. A dealer will then ask you about the price you want. However, they will never accept your offer. You’ll have to agree to a lower price than your desired amount. Once you name the price, you don’t have to justify it; the best way is to be quiet and wait for the counteroffer.
- Counteroffer. They will leave for 15 minutes to “talk” to their manager. In most cases, they will bring you a monthly or bi-weekly payment. Your job here is to remind them that you’re not interested in costs and want to look at the final price. You will need to state your total price again and stay quiet.
- Talk to the manager. The manager will likely come out and tell you your price is unrealistic. They will use various tricks to persuade you of that. For example, they may show you the invoice price and say that they don’t make money on this car; if you leave, the deal will disappear, and so on. It would be best to remember that you don’t care about any of those things. You know your numbers; you need to stick with them. The manager is likely to give you a discount right away. You are to make the decision.
- Agree or walk away. You can agree to the deal if the price is within your buy-in range or still walk away. Dealers will likely call you back with a better deal, but it could be marginal. So it is up to you to decide how far you want to squeeze it and how much you have. If you are leaning towards acceptance, you can make last-minute demands like free oil changes or merchandise to sweeten the deal.
- Review the offer. Whether you accept it on the same day or return it later, they will put a bill of sale in front of you. The bill will say “no verbal promises” and “all sales are final.” This means that all previous negotiations don’t matter if they are not written down.
You need to look at: 1) The out-the-door price and ensure that it matches what you have agreed on, as some dealerships will add freight and admin fees afterward. 2)Read the whole thing. For example, if the dealer agrees on three free oil changes but is not in a contract, ask them to put it in.
Make sure you get everything in writing!!!
After the Agreement
- Confirm the numbers. Your transaction is not complete yet. If you are getting financing, your job here is to confirm the interest rate and total costs, ensure they match up with your numbers, and say “no” to anything else.
- Don’t accept extras. A business manager is going to try to sell you a few extras. For example, an extended warranty. This can be good, depending on the manufacturer. However, it would be best if you decided and researched beforehand. If this costs an extra $7 a month, you can agree. You can always get an extended warranty afterward if your car is under the original one, so you can check out how the service works before you commit.
Rustproof. There’s no point in this service. All new cars usually have at least a 5-year rust warranty. The warranty that a dealer sells you doesn’t cover anything, as the maximum payout is often around $2500.
Paint protection and add-ons. You can get this aftermarket for less than the dealer charges.
Know your numbers and do your homework. Keep level-headed, and make sure you stick to your guns. You can’t get a car for free, but you can always try to negotiate a price and get the best deal possible with these car negotiation tips.
My main principle is no to give them any information about how I’ll be paying. They will ask over and over what I can afford per month. It’s important no to go down that road until the very end, when they’ve given me a real price.
That’s a good rule. Another option I’ve heard is to ask them if they will drop the price if you take financing, get the financing and pay it off right away.
Agree about being level headed. Don’t be afraid to walk away if they pull any tricks. If you get emotionally involved, and they know you want THAT car they have the advantage and they know it
Thank you for watching Vance, yeah the less you show the easier it is to negotiate that best deal for your car.
Seasonality really plays an important role. I have found that if you go in near the end of the month (and near the end of their day) they don’t fight as long or hard. They want to make their quota and get home.
Yes, for sure I covered this in the video. I think especially towards the end of the year, coupled with an old model year on the lot you can get a good deal on a new car.
Prebuy inspections by a reputable mechanic can catch multiple minor (or major) issues and help you negotiate their repair cost off the price.
Negotiating-wise, there are lots of good books on the subject, but generally private sale offers the best deals. Don’t be afraid to offer less… Potentially upwards of 30% off asking.
That’s interesting, I didn’t know you can prepay the car inspection. For sure it is a good tip to have a mechanic put a car on a hoist and inspect it.
My tip is to buy directly from someone, not a dealer. There’s always good deals for me locally.
For sure a good tip, especially if you take your time and try to find a good deal in an affluent neighbourhood. Unfortunately, it comes with its own set of complications and that is why a lot of people are staying away from used car buying this way.
Good tips! Our experience – we figure out what exactly we want then use motominer within 500 miles and get everything negotiated by email up front, sometimes pit dealers against eachother. We have saved thousands on our last 2 cars over shopping locally. Florida and DC area seem to have the best prices on the East Coast. We fly in on a one way ticket, they pick us up, and we drive the car home.
Good tactic. The location makes a huge difference when buying the car. Especially if you look for a car that might not be as popular in that location. For example a convertible in Chicago in the winter might sell for better than the one in Florida.
What works for me is to do the research through Kelly Blue Book, Edmonds, Consumer Reports, etc. Have proof/information about dealer costs for the car and the extras and know what is reasonable for the dealership fees. I always have substantiation handy in case needed(screen shots or photos of pages from reputable sites with pricing info).
I think doing your homework before buying the car is the key to negotiation. I don’t really show dealers anything, I just want to know if what they are giving me is actually a good deal for the car or they are just pretending.
All of the above and I usually try to get some extras added: remote car starter, new tires etc. I will be this if you add….
That’s a good tactic especially if you throw in the end, when the dealer wants to make the deal just as badly as you are.
Ignore Kbb. It’s a guideline that doesn’t take into account your local market fluctuations. Find comparable vehicles within a 200 mile radius, similar size, glass and options package, for example you might price a nicely optioned Ford Fiesta, Chevy spark or Dodge Dart (my favorite best value car. Had an aero trim loved loved loved it) keep in mind the average profit margin for cars is around 3 percent and the car sales are a loss leader to get you into the financial and service department
Yeah Kelly blue book doesn’t take into account manufacturer’s rebate or market conditions like we have right now. With so much supplies of cars and very little demand
One more advice – have a very similar vehicle in mind at another dealership, even it is rather far away. Tell the dealer(s) it is one of several you are considering.
If it is being sold at the dealer of the same brand they either can sell it as “certified pre-owned” or with the remainder of the original factory warranty. Ask for both prices.
Good thing. If they have the option to sell it with just the remaining of the original warranty it may be a better deal. The “CPO” warranty is a cost to the dealer. If the vehicle has good reliability you may not need it…
If they vehicle has a remainder of factory warranty, you can just buy a CPO warranty afterwards if you need it. Some brands like BMW are really good with their CPO warranty though extending it by 2 years.
I’d recommend working with dealers by chat or email, that takes out a lot of emotion, and you can keep a copy of things you were told.
I refuse to talk payments, as they don’t know how I’m planning to pay. I just want to know the price.
Yeah whatever makes it easier for you. I do find that sometimes saying that you will finance a new vehicle gets you a better deal. You can then close up the loan in the first month
See if it’s got any warranty tied to it without extra money. Decide on a walk away number and stick to it. Ultimately if you like the car and happy with the deal, enjoy the purchase. You can beat yourself over trying to finnagle a better deal but if you’re happy, it’s a win
Agreed, at the end of the day it’s about being happy. Getting a good deal on the car that you really want – can make you feel that way!
Get financing through bank or credit union is a good idea. Dont finance through the dealer.
But be prepared, if you have either decent credit or lousy credit, for the dealer to have better rates. The way they work with lenders is to let folks with “meh” credit use their own, but for folks at either end they offset each other.
It’s a good strategy.
Yeah that is my preferred strategy if I need financing. I did find two things though: 1) Sometimes dealers can get a better financing rate than my own bank 2) Dealers might give a better price when Financing through them. You can use it and then close the loan with your other financing. A bit of a run around, but you will get the best price for a new car
As for seasonality I would argue not to buy until feb/March, yll get the max discounts as cumming to the end of financial year, also, certain modules carry 0% finance, you maybe able to get a new one, also I wangled a lifetime warenty, long term better value, also look into the partnership schemes, depending on we’re you work
Feb/Marc is pretty good for last year models. September/Oct are good for outgoing models. I think with the pandemic and people not driving as much, this cycle can change
I went to a local garage that is a dealership for Peugeot and Hyundai with the intention of getting a car 18 months old. I’d saved a substantial deposit, but needed to borrow 7k. Bank loan was dearer than the finance at the garage. Interest on 7k was charged higher if I was to purchase 18 month old car, than buying a brand new one! Trade in was book price on second hand vehicle, but scrappage deal gave me 4k! It worked out cheaper to buy brand new as I still borrowed 7k regardless of what car I had. Brand… Read more »
Agreed, when you know your total cost of ownership you can end up with a better car, rather than paying more in interest throughout the years.