I’m in no way an expert on this subject, but I recently spent some time at various dealerships talking the talk and attempting to negotiate. My favorite site by far for car research is Edmunds.com and one of my favorite articles about the business is Confessions of a Car Salesmen in which a reporter went behind the scenes to give the inside scoop.
10. Do your research. Try to know what car you want or narrow it down to a car make/model before negotiating on price. The best and easiest time to walk away is right after a test drive before they get you back inside.
9. On the other hand, try not to let them know that you really want a specific car. If they sense this, they will probably not be able to go any lower on the price.
8. Don’t offer a trade. If you must trade, tell them this after the price of the car has been negotiated.
7. Don’t give them the keys to your trade in at first. One dealership decided to hold onto my keys to make it harder to leave.
6. Run invoice and true market value reports from Edmunds.com and other sites. This should be used as a baseline for negotiating. This should also be done for your trade in if applicable.
5. If the model/options you want are rare, do not negotiate on a car that a dealership could potentially find for a deposit (one that is not in their possession on the lot). There’s a chance that they are just trying to get you to agree on a price, go look at other dealerships and eventually come back to them. At this point they will finally admit they couldn’t find the specific car you wanted or the price is no longer valid. It’s a tactic just to get you back in the door.
4. Stay calm. They like to make you sit and wait. It gets your nerves up and causes irrational/quick decisions.
3. The “e-price” on Autotrader.com or dealer specific sites is almost always the price without freight or destination charges. Try to negotiate on the true price of the car. A couple dealers were really reluctant to tell me this and tried to add it on after the first round of negotiating. I do not understand how this is legal as the charges are almost always included in the MSRP on the sticker. It is like they are saying the (insert_some_important_part_here) is not included in the MSRP, we have to add that in at the end.
2. Never be afraid to walk away. It is easier to think logically later on.
1. Negotiate on the total price of the car, not how much payments will be! It’s harder to comprehend the total price than an easy per month payment. It is good to have calculated a few numbers and know how much the car is going to cost with interest, tax, title, etc. That is why I created this Multiple Car Cost Calculation Spreadsheet.
On another note, I do have to give CarMax some credit as they have developed a unique “low pressure” model for car shopping. No price negotiating allowed and very little pressure to actually buy a car. Every salesmen was nice and allowed me to test drive car after car. They even let me drive a Shelby Mustang GT 500 Convertible for an experience of a lifetime! The dealership is still not a 100% “no pressure” model as they follow you around the car lot as you’re looking. They will also attempt to sell you more expensive cars or a new car if they have a dealers license for those at the specific location. Not being able to negotiate might leave you feeling like a better deal could be had elsewhere. The rules above do not really apply to this dealership.