Negotiating a Car Price
Tips for making your next negotiation a success
You’ve done a ton of homework and you’re ready to buy your next vehicle. Or, perhaps it was love at first sight. You saw the car and decided it had to be yours.
Whatever path you’ve taken when choosing your new car, you’re now ready for one of the most important parts of the process, negotiating a car price. We’ve pulled together some tips and tricks to help you make your negotiation successful.
Speak the Language
Invoice price. Base price. MSRP. Dealer’s sticker price.
Negotiating a car price involves speaking a car buyer’s language and differentiating between the different types of pricing. Among the key definitions:
- Invoice price — This is the amount the vehicle’s manufacturer charges the dealer for the vehicle. (The dealer may not pay this full price.)
- Base price — The base price is the price you would pay for the vehicle if it were sold as a basic model, with no upgrades, add-ons or additional warranties. Standard equipment and warranties are included in a base price.
- MSRP — Commonly called the ‘sticker price’ the Manufacturers’ Suggested Retail Price is the vehicle price recommended by the manufacturer for the specific vehicle you are looking at. This is different from the base price because it takes into account the specific equipment on the vehicle.
- Dealer’s sticker price — Generally, the dealer’s sticker price will include additional equipment, warranty coverage, coatings or undercoatings added by the dealer.
By knowing the difference between the invoice price and base price, MSRP and dealer’s sticker price, you can be sure your negotiation gets off to a good start.
Know the Numbers
Whether you are buying a new vehicle or a vehicle that’s new to you, it’s important to know how the vehicle you are buying is typically priced. You can gather that information by scouring manufacturer websites, dealer websites or other sources like Consumer Reports.
Determine Your Trade-in Value
Using an online research tool like Kelley Blue Book, the National Auto Dealers Association website or Consumer Reports to find median pricing for your existing vehicle. Knowing the value of your car can be helpful if you are negotiating a car price and want to include your vehicle’s trade-in value.
Before you begin negotiating, ask your bank or credit union about loan rates. Compare the loan rates they provide with those at other lenders in your community or online. Be sure to ask what your monthly payment will be at several price points, so you can determine the vehicle price you want to negotiate.
In addition to getting financing information from your bank or credit union, research financing options from vehicle manufacturers. Sometimes a special interest rate promotion will make dealer financing attractive. Call the dealership in advance to be sure you qualify. Some low-interest rates are available only to those with high credit scores.
When you begin a negotiation with financing in mind, you avoid a situation where you successfully negotiate a car price, but then pay more for financing.
A Focus on Price
When you begin negotiating a car price, stay focused on the price alone. You can discuss a trade-in or financing later. Ask the dealer to give you a competitive price. It sometimes helps to negotiate with several dealers at a time. This serves two purposes. It allows you to see the price differences that are available from dealer to dealer. And, it lets you find a salesperson you enjoy.
If one dealer has given you a lower price, but you’d prefer to work with someone else, ask them to match the lower price. Know your limits. Go into every negotiation with a maximum number. That makes it easier to stick within your price range as the negotiation unfolds.
Seal the Deal
Once you’ve negotiated a price, you can mention trade-in information or financing. Finalize the details. Sign the paperwork. And, enjoy your new vehicle.