If there is one thing I’ve learned in life, it’s that everything is negotiable, even the price of a car. Not everyone knows how to haggle for a new car, that’s why I’ve put together this post on how to negotiate the price of a car.
I went car shopping with my little sister this past weekend. Since it was her first time buying a car, I helped out a little bit with the negotiating. We did so well that we saved 20%!!! That is huge!
Some people have a hard time negotiating, and I understand that it can be intimidating, but I don’t think it should be. Check out these tips to become a confident negotiator.
Know Your Budget
Don’t go car shopping if you don’t know how much you can spend. Look at your monthly finances and find out how much you can afford on a car payment or how much you can spend out of pocket if paying in full.
Keep in mind that there will be taxes and government fees when buying a car. Once you find a car you like, ask for an estimate of how much it will be with taxes and fees included.
If Getting a Loan, Do it Before Car Shopping
This will help you stick to your budget. If you only have a check for a certain amount, you can’t go over unless you plan to pay cash!
Do Your Research
Know the market price of the cars you like. Don’t blindly walk into a car dealership.
Dealerships and banks trust the prices on the National Automobile Dealership Association (NADA). Check out the NADA site and check out Kelly Blue Book value. Your ideal price should be somewhere in between the two.
Be Confident Talking About Your Finances
As a personal finance writer, I talk about money a lot. I’m confident discussing my own finances and for that reason I have no problem talking money with other people, including car salesmen.
In order to save the most money and negotiate well, you have to be willing to honest about what you can spend. It doesn’t matter if you are Richie Rich, if your budget for the car is only $10,000, you need to be confident saying you can only spend $10,000. You need to be willing to say, “I can’t spend more than x amount”.
Car shopping is not the time to show your peacock feathers. It’s time to get real and spend no more than you expect to spend.
Sure, you might want to start out by hard balling the sales person, but being nice goes a lot further. You can stick to your price and still be friendly. If you strike up friendly conversations and tell the finance officers a bit about yourself, you may be surprised how often they go back to get approval to lower the price.
Sit Down with the Finance Manager
There are salesman who show you the cars and there are finance managers who help crunch the prices to make it work. If you are interested in the car, let the salesman know and ask if you can sit down and crunch the numbers. This will give you a realistic idea of how low the dealership is willing to go.
Leave or Threaten to Leave
Once you are in the showroom, the sales people want to keep you. After you crunch the numbers, let them know that you might be able to get a better deal somewhere else and tell them you are going to go shop around a little more. Chances are, the price will go down even further!
If they ask you what they need to do in order to make you buy the car, let them know exactly what you need. With my little sister she could only afford to pay $1,000 that day which meant she couldn’t pay for the fees and taxes that totaled over $1,800. Turns out they were willing to go down $2,000 so she could walk out with a new car! Saving 20% on a car is a pretty big deal!
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