You've set your budget. You've done your research and you've found a used car that you're interested in buying. Now what? It's time to negotiate. Make a deal. Some may even call it haggling. But angling for the best price on your next car doesn't have to make for an uncomfortable, combative car-buying experience. Making a strong case for the number you have in mind is your best chance of getting it.
How to Negotiate a Car Price
Research
Strategies for Negotiation
Closing the Deal
Research
If you were negotiating the price of a home or your salary, you wouldn't expect the person on the other side of the table to just smile and agree to your number without research to back it up. When it comes to purchasing a used vehicle, the same rules apply.
Before you head to car dealerships, seek out pricing guidance online from a reputable third party for the specific vehicle you want to buy—CarGurus estimates an Instant Market Value (IMV) for almost every listing. Bring your research to the dealer and, if necessary, ask why the asking price is so much higher than the IMV. Don’t be surprised or argue if the dealership's sales manager tells you that car buyers always spend more than the values found online. Just point out a few similar cars in your area priced closer to the number you have in mind.
Invest in a pre-purchase inspection done by an independent mechanic. Remember the home-buying analogy? It applies here, too. When you make an offer on a house, it's usually contingent upon an inspection conducted by an impartial third-party professional. Why should car shopping be any different?
Just like a walk-through isn't sufficient to assess a house, a test drive will only get you so far in evaluating your potential new car. To ensure the used car you're considering is all that it's listed to be and that you're getting a fair price for the condition, hire an independent mechanic to do an inspection, get a vehicle history report using the car’s vehicle identification number (VIN). Some inspectors even offer mobile, on-site support which can come in handy during your negotiation.
Hiring a mechanic will let you know if anything needs to be fixed, and also how much it will cost. To increase the likelihood that the numbers are accurate, try to find a mechanic you know and trust or someone recommended by a friend. Depending on the estimated price of the repairs, the dealer may or may not be willing to give you a dollar-for-dollar discount for the work required. It certainly can't hurt to ask.
If the dealer won't budge at all, or if the inspection reveals that the condition of the vehicle is well below the condition stated on the listing, be prepared to move on.
Strategies for Negotiation
If the car checks out, it’s time to start negotiating. This can be one of the most stressful parts of the car-buying process, in part because you have to juggle a few different things. In addition to the purchase price, you may need to negotiate a trade-in car’s value, a down payment, and monthly payments, as well as financing.
While many car dealers offer in-house financing, it’s not your only option—or even the best one. Before heading to the dealership, it’s best to shop around for financing with banks, credit unions, online lenders, or other loan providers and get pre-approved. Comparing multiple offers allows you to get the best auto-loan deal for your credit situation, and it saves time at the dealership. From term lengths to interest rates, car loan offerings can vary significantly depending on your credit score and down payment. Be sure to understand your financing options before you go to the dealer.
Lining up a car loan in advance simplifies negotiations at the dealership a bit, but the value of your trade in and the price a car salesperson is willing to accept may still involve some haggling.
When it comes to your trade-in, the next tip should sound familiar. Don't just do your research—show it to the salesperson, too. Use the CarGurus Car Values tool to estimate the fair market trade-in value for your vehicle based on its make, model, year and mileage compared to other similar vehicles in your area. If the number the dealer offers you is lower than the value on CarGurus, don't hesitate to ask for an explanation. Keep in mind that getting a better price on your trade-in could also reduce your sales tax burden, so the impact goes beyond the invoice price.
Dealerships may also try to offer add-ons, like an extended warranty or some fancy floor mats, to increase the dealership’s profit margin on a vehicle without jacking up car payments. If the dealer can't quite reach your target price, but you really want the car, asking for add-ons at no extra cost such as an extended warranty, undercoating, a free oil-change and tuneup or all-weather rubber floor mats can be an effective negotiating tactic.
Throughout the negotiation process, it’s important to be reasonable and maintain perspective. When supply is short, many dealerships may offer to sell a vehicle at or above the manufacturer’s suggested retail price (MSRP). Ideally, aim for a lower price, but don’t start off with an unrealistically low number. If the salesperson quotes a price that’s too high, don't be afraid to come back with a counteroffer. And if the numbers come close, it might be worth shaking hands and sealing the deal rather than pushing the negotiations further.
Note that car salespeople often prefer to negotiate the sale price of the car you want to buy and your trade-in price at the same time. This can get confusing for shoppers. To make sure that you don’t save on one side of the deal only to lose on the other, tell the dealer you want to keep it simple and discuss your purchase independently from your trade-in.
Most importantly, be prepared to walk away at any time. If negotiations stall, stepping away can help get things on track. And if the deal simply isn’t going to happen, it’s best to move on. It’s not worth the frustration.
Closing the Deal
It's okay—even expected—for you to haggle in the process of making a car purchase. The car salesman you work with knows you want to get a good price, just like you know the dealer needs to charge some markup to run a profitable business. Sharing the purchase price you're hoping for upfront gives the dealer the chance to counteroffer—or they may agree to the lower price you suggest. Either way, it's all part of the standard car shopping process, and a little back and forth is worth it so you can feel confident that you got the lowest price you could on your new vehicle.
After agreeing on terms, it’s time to close the deal on your car purchase. Get everything in writing to ensure the purchase price, trade-in value, and any other parts of the deal are locked in. Then it’s time to make your down payment, sign the paperwork, and get the keys to your new car!
