Financial Wellness Center
Know what to expect when negotiating the best deal.
In this topic, you'll learn:
If someone offered you a job that paid $1,000 per hour, chances are you’d take it. But when buying a car, too many people blindly accept the pricing they are given, never call other dealerships for competing quotes, and pay hundreds of dollars for dealer add-ons and fees - and still feel like they got a "good deal."
Negotiating the price of your car doesn't have to be an uncomfortable experience. After all, you are trying to give the dealer thousands of dollars and take a depreciating asset off their hands. It could be said that you’re actually doing the dealer a favor for buying a car – so no need to be nervous.
Taking it Slow
One way to short-circuit the pressure and confusion that many people experience when negotiating the purchase of a car is to simply slow down. And when you make slow, deliberate decisions, it’s much more likely that you’ll end up with a choice that you don’t regret later.
The slow approach is the opposite of what most car dealers would prefer. Their job is to sell you a car. Now. The big idea behind slow car buying is that you probably don’t need a car today. Your car may be older than you’d like or your lease may be expiring soon, but unless a tree just fell on your car, there’s likely no rush. And when you’re not in a hurry, you gain complete control of the process.
And when you finally start to visit dealers and test drive cars, the slow approach means that you’ll know in advance that 1) you won’t be buying a car that day and 2) you’re going to explore multiple car and dealer options before making a final decision. Again, you’re in complete control of the process.
Getting the Best Price
Once you’ve determined the target price for the car you want and found a car you like, it's time to find the best deal. The best way to make sure you get the best price is to avoid making on-the-spot decisions under pressure. It’s also a great idea to call multiple dealers to compare prices on comparable cars. When you call, salespeople know you’re looking for the best price and may offer a lower price than you’d receive in person.
When talking with a salesperson, keep in mind that they’re gathering information on you and your attitudes about purchasing the car at the same time. For example, they may ask if you need financing or if you plan to pay cash. If they think you are financing, they may ask what your target monthly payment would be - information they can use to eventually sell you the car at a higher price than you would normally pay by offering a long-term financing package.
Some people want to be agreeable and have a hard time saying no. Others don't want to hurt a salesperson's feelings and feel responsible to the salesperson if they don't buy the car. Any many people are uncomfortable with the negotiation process. Don't let a salesperson talk you into making a decision that is uncomfortable to you.
Armed with your target price, you have more knowledge than many consumers. When you agree to a deal, you are giving up on the possibility of finding a better deal elsewhere, so make absolutely sure you are absolutely sure before signing anything. Don't be afraid of disappointing the salesperson by asking for the details in writing for you to review at home or with a friend. Plus, if a salesperson is not willing to provide the deal in writing, you should probably look elsewhere anyway.
Once you agree on a price, keep in mind that you may need to make more decisions that will affect your bottom line. When signing the paperwork, you may be offered extended warranties, pre-paid service agreements, and other options. Make sure you only buy what you truly want.
And Remember…
Car shoppers didn't invent the way cars are sold. Your task in negotiating is to pay the lowest price. If you're not comfortable with negotiating, there may be auto buying services in your area that can assist you. Simply shopping with a trusted friend or family member can also reduce sales pressure and help you make the best decisions.
