Car negotiation tips
When you go to a car dealership, you might notice a price displayed prominently on the cars. But is that the price you should pay?
Mostly car prices are negotiable, and you could save thousands of dollars if you know how to negotiate buying a car. Here are five car negotiation tips.
1. Get your finances in order
Before visiting a dealer you should get your finances in order. Knowing you have the cash to buy the car outright, or a good credit score that will allow you to qualify for a loan, could boost your confidence.
- You’re serious about buying a car
- You have the money
- You have your financial ducks in a row
But don’t be tempted to finance the car over a longer period to match your budget. The goal is to negotiate a lower car price.
2. Research the car you want
It’s important to choose the type of car you want before you visit a dealer. If you’re unsure, a persuasive salesperson might convince you to buy a car that’s not right for you.
Can you negotiate new car prices?
Yes. If you’re determined to buy a new car with a specific brand and model, your research would involve comparing the prices at different dealers and finding out what optional extras there are. Your negotiations could involve getting dealers to bid against each other or to sweeten their offers by including optional extras.
If you’re flexible on the car – for example, if your only criteria is you want a large family sedan – your negotiating power increases because dealers will offer you a variety of cars that match your criteria.
Once you’ve drawn up a shortlist, you can research those cars to see if they’re practical. If you don’t mind which car you end up buying, you’ll have a lot of negotiating power and could get the dealers to bid against each other to offer you the best deal.
You could also consider test driving cars ahead of time. If you test drive the car on the same day you buy it, you might be making an emotional rather than an objective decision if you love driving the car. In that case, you’d be a poor negotiator, because the dealer will know you’re unlikely to walk away.
Don’t forget to read online reviews, but take them with a grain of salt. Poor reviews can help you negotiate by letting you point out potential problems with a car or dealership and asking for a discount.
3. Learn the tricks sellers use
Sellers are skilled negotiators – so you’re up against pros. To get the upper hand, you need to learn their tricks, for example:
Listing a car at a higher price than they’ll accept
Dealers have three prices – the price they paid for the car, the selling price that maximises their profits (the sticker price) and the price they’ll accept.
Dealers probably won’t tell you what they paid for a car. You’d have to browse car sales’ websites or auction sites to get an idea of what the car cost the dealer. But keep in mind, the dealer still has to make some money from the deal, so you have to offer more than their cost price.
Dealers may pretend they’re not making any money on the sale, but that’s often a negotiating tactic. They wouldn’t be in business if they sold cars at cost.
Increasing their profits by selling you add-ons
Dealers also try to upsell you to things like special paint and fabric protection, extended warranties and optional extras. Always research which of these options are value for money and which will just add to the price.
If the dealer is giving you a free add-on, like free fabric protection, there’s a chance they’re getting it for next to nothing and that it’s probably not worth much. So consider disregarding it when comparing offers.
Being overly friendly to gain your trust
Dealers may start telling you about their family and asking you about yours. In the course of this conversation, they’re trying to find out more about you so they can adjust their sales strategy accordingly.
For example, if you just had a baby and you’re most concerned about safety, they’ll play up a car’s safety features to persuade you to buy it. You might be so swayed by the safety features you forget to enquire about the car’s fuel efficiency or maintenance costs.
So keep your distance. It’s also a good idea to have a questions list that you methodically work through. If the salesperson goes off-track, just bring them back to your list.
4. Be flexible
When you’re in a hurry to buy a particular car, you’re not in a good bargaining position. The more flexible you are, the more power you have to negotiate.
For example, if you know there are good deals at the end of the financial year (EOFY), you could indicate to the dealer you’re willing to wait for the EOFY car deals even if that’s three months away. That may sway the dealers to give you a good deal before the EOFY car sales begin.
Other times you could get a good deal include:
- End of the calendar year when a current model becomes last year’s model
- End of the month or quarter if a dealer hasn’t met their sales targets
- When a newer model of a particular car is about to be released
- New year clearance sales
Dealers may pressure you to buy a car right away because a deal is about to expire. But deals come and go, and this is a sales tactic. You must be prepared to walk away.
Even if that dealer is telling the truth and the offer expires, there will be new offers at other dealers.
5. Shop around
You should shop around not just for cars, but also for finance and insurance.
When comparing cars also compare the dealer’s:
- Registration fee
- Documentation fees
- Delivery fees
- Admin or handling fees
Other than registration and documentation fees, the fees are optional add-ons and should be negotiable.
You should be able to negotiate a discount if you’re buying the car with cash.
If you’re trading in your car, it’s especially important to shop around and get different offers. In most cases, you’d get more money by selling your car privately. The exception may be if you’re trading in the same brand of car you’re buying. Dealers may offer better trade-in rates to entice you to upgrade.
If negotiating with used car dealers scares you, take someone with you to negotiate on your behalf.
Need someone on your side? National loans can help you get both a vehicle and a car loan. Contact us at hello@nationalloans.com.au or phone 1300 786Â 859. Click the big red Quick Quote button, for a free quote.
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