By Contributing Author
Feeling great about your new car, you call a couple of co-workers out to the parking lot to check it out. Turns out, one of them also bought the exact same car, same color, same equipment — same everything — for $1,500 less than you paid.
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What did they do that you didn’t?
Let’s take a look at the basics of negotiating the purchase price of a new car to see what we can find out.
Do Your Homework First
Spend some time online to see what cars like the one in which you’re interested are selling for in your area before visiting dealerships. KBB.com, Edmnuds.com, and NADA.com do a great job of providing this information. You can also find the invoice price of the car so you’ll have an idea what the dealership paid for the car.
Once you know what others are paying for the car, it’s easier to know where to begin — and end — your negotiations, whether you plan to lease or buy a car.
Get Your Loan Pre-Approved
If you’re buying, go to your bank, credit union or an online lender to secure a loan approval for the amount you plan to spend to get the car. This accomplishes a couple of things. In addition to keeping you to your budgeted amount, you’ll have a bargaining chip to use to get a lower interest rate, which in turn can reduce your monthly payment.
Drive Before You Buy
Having settled on the vehicle you want, visit a dealership and let the salesperson know you’re still shopping and would like to drive the car before making any offers.
They’ll accommodate you, but will also be talking up the car during your drive and they’ll ask for the sale before you go. Be firm, but polite, and let them know you’ll be back if you decide to buy that model.
Communicating with Salespeople
Consumer Reports advises the following: Rather than being drawn into a discussion on the salesperson’s terms, let them know:
You have carefully researched the vehicle you want and have already taken a test-drive.
You know exactly which trim level and options you want, have researched the price for that configuration, and know approximately what the dealership paid for it.
You have already calculated what you are prepared to pay and your offer includes a fair profit.
If they can meet your target price, you’ll be ready to buy immediately; if not, you intend to visit other dealerships.
Negotiate Price Rather Than Payment
One of the first questions salespeople ask when negotiations begin is the amount of the monthly payment you feel you can comfortably afford. Tell them you’re more interested in the purchase price than the payment. Forget about your trade-in, your down payment and everything else for now.
Focus your conversation on the price out the door — with all taxes, fees and license included. You’ll be OK doing this because your pre-approved loan has already told you what the monthly payment will be on the dollar amount you want to pay.
Avoid Emotional Attachment
Auto manufacturers build hundreds of thousands of cars each year. Toyota sells somewhere around 400,000 Camrys each year. This is why it’s ridiculous when someone selling new cars says, “You’d better jump on this deal right now — these are rare. I don’t know when I’ll see another one like this anytime soon.”
Fear of missing out has duped more than a few otherwise intelligent people into making hasty decisions when it comes to buying cars. If you can’t get the deal you want on the car you want at a given dealership, another one will be happy to sell you the car at a reasonable price.
Don’t freak out and get taken.
You’ve done your homework; you know your offer is a good one. Be firm — but polite. Leave and visit a different dealership if the salesperson can’t get to where you want to be. Heading for the door will usually get them to lower their counter-offer. It might take some back and forth, but you’ll get there eventually.