Due to the Covid-19 pandemic and disruptions in supply chains, auto prices have shot up. It is essential to negotiate a lower price.
Prices for used and new cars will remain high for 2022 before normalcy returns. But not everyone can wait for the prices to drop before purchasing a vehicle.
There are still ways to negotiate for a lower price if you have to purchase a car in high-priced areas. We will show you how to negotiate a lower price.
5 Tips to Negotiate a Car’s Price
If you’re looking to save money on your next car purchase, follow these simple tips on how to negotiate car price like a pro:
Do your research first.
Do your research before you go to the auto dealer. Many trusted online resources, such as Autotrader or Kelly Blue Book, will give you the suggested retail price from the manufacturer. This is the recommended price to sell the vehicle. This can give you an idea about the price that you may be able to negotiate with a dealer versus a private seller.
To find out what incentives dealers may offer, research them in your local area. These may include cashback, price discounts on specific models, zero percent financing deals, or leasing deals.
Find out what you can afford.
Doing your research is essential to establish your budget. Your negotiating power will be determined if you plan to use cash. If you plan to buy a car with an auto loan, you will likely have a bigger budget, more options for buying a car, and more negotiation room.
You might be required to make a down payment if you use an auto loan. This will lower the closing costs and reduce the total loan amount. Consider how much extra cash you are comfortable putting down.
Profit from the dealer’s cost
You can also find information online through sites like Autotrader and Kelly Blue Book about the dealer’s price or invoice price for your vehicle. If the car is used, search for its book value. This is the original cost, less depreciation. This information can be used as a foundation for negotiations.
Instead of negotiating on the manufacturer’s suggested Retail Price (MSRP), focus your bid on the dealer’s invoice cost or the car’s actual book value. The price of the vehicle on the lot and what the dealer paid is usually your wiggle room.
Know your trade-in value
You can use the resources mentioned above to determine the value of your car before you go to the dealership. To determine the market value of your car, you can also look through similar vehicles’ sales ads (make, year, model).
You can negotiate with dealers if your car is in good shape and a highly-sought model. This is especially true in today’s environment, where dealers might be interested in making a profit by selling your car.
You should take advantage of any trade-in offers that are attractive. You can either sell your car to make more money or take it to a dealer specializing only in used vehicles for competing quotes.
It’s okay to walk away.
You should be prepared for the possibility of you leaving without your vehicle. You will do better for your bank account and mental health if you resist the temptation to sign a bad contract.
If you have a list of potential dealers and private sellers, it will be easier to walk away.
- Related article: What is a good price for a first car?
After you have completed negotiations, read the paperwork.
Now you have done all the work: researched, negotiated, and settled on a price. It is now time to sign the paperwork and complete the purchase. Be careful before you sign the paperwork. Also, make sure to read the fine print of the sales contract for hidden fees. Dealers may try to add extras, which are often unnecessary add-ons.
It is expensive to purchase a car. You don’t want to pay more for extras that you don’t use.
Ask lots of questions to ensure the dealership does not add unnecessary extras.
Negotiating Paperwork Fees
Ask questions about the dealers’ fees for destination, documentation, title, and registration. These fees are a cost that the dealer has to pass on to the customer. You may be able to negotiate with others or compare dealers to determine which ones charge reasonable fees.
It is okay to ask questions and negotiate unreasonable fees.
Negotiating Used Vs. NEW Cars
No matter if a car is new or used, there’s one rule that can be applied to both: Negotiating the purchase price is a great way to save a lot of cash.
You can negotiate a lower retail price, but that is the main difference.
- New cars. You can ask for 5% off the invoice price and then negotiate. Depending on the outcome of negotiations, you may end up paying between sticker price and invoice price.
- You can get used cards. Used cars offer more flexibility. You can request a lower price and negotiate from there.
It doesn’t matter what; you should shop around and be ready to walk away if the deal you are looking for isn’t right for you. While the dealer may try to lure you with the attractiveness and value of the package, the final factor that will affect your bottom line is the price of the car. Walk away if the price isn’t right. You will probably have another chance to purchase a vehicle in the future.
