Buying a car can be a very stressful experience. You have lots of cars to choose from. You have financing decisions to make. And finally, you have a purchase price to negotiate. Of course, you can pay sticker price for the car of your choice. However, there’s rarely a reason to do that. In fact, many car dealers expect you to negotiate a deal. Here’s how to negotiate a car purchase.
Don’t Buy New
Now, there are definitely things you should buy new (mattresses, swimsuits, etc.), but I don’t think a car should be one of them. I don’t know of any other item that will lose 10 percent of its value the first year you own it and every year after that.
How I admit, that new car smell is really nice, but you can get the air freshener!
How much do you have to spend, really?
Knowing before you walk through the door how much you can spend will help you stay realistic and on budget. It’s easy to be talked into a bright red Ferrari, but if you really need a Ford Focus then you want to have that in your head when you get to the dealership.
Look at what you can afford monthly in terms of car payments. Write that number on a piece of paper and put it in your wallet. When you start negotiating with the sales person, pull out that piece of paper as a reminder of your top limit. Don’t forget there will be interest on any financing and don’t buy that extended warranty.
What do you have to offer?
As a buyer you have a few things you bring to the table besides a sale. You have financing, which is generally how many dealerships make their money. You may also have a trade-in car and a down payment.
Know in advance what you have to offer. How much is your trade-in worth to that dealership? How much can you put down on a car and how does that affect your monthly payments?
Research what car you want before you head to the dealership
A great rule of thumb is to make a list of three to five cars you’re interested in buying. Make sure they’re in your price range. You can use a car payment calculator found online to help estimate your monthly car payments and base your estimates on the dealer invoice pricing you find listed online.
Once you have your list, it’s time to visit or call the dealerships. (You can begin negotiations on the phone.) Choose the top one or two cars you’re interested in and then prepare for negotiations.
Having more than one car on your wish list makes it easier for you to walk away from the negotiations if they’re not meeting your needs. You have a car you can fall back on.
Pay attention to incentives, cash back promotions and financing options
A few percentage points in your interest rate can mean hundreds, if not thousands, of dollars saved over time.
Be confident, be prepared, and be ready to walk away
Once you’ve made your offer and you know that it’s a reasonable offer, stick to it. If the dealer can’t or won’t come down in price, be ready to walk away. That single factor alone gives you much more negotiation power than you realize.
Walking away from a potential purchase is something most people aren’t willing to do. They get emotionally invested in the car. Don’t do that. You have your list of features. You know what you want and what you can afford. Stick to your guns and you’ll be a proud and satisfied new car owner in no time.