New & Used Car Dealer

How much can you expect a dealer to come down on a used car?

A Typical Negotiation Scenario

When you are sitting with a salesperson, a typical conversational opener might be something like: “What monthly payment would comfortably fit into your budget?”

It’s important that you sidestep this question because it’s hard to track the price of the car when the salesperson presents it as a monthly payment. Instead, tell the salesperson you will talk about financing later and you just want to discuss the purchase price of the car for now. The salesperson will usually check with the manager then come back with a price. You may not like that price, however, and this is where the negotiation begins.

How Do You Ask for a Lower Price?

After the salesperson presents the price, you could respond with: “We’ve done a lot of research on the market value of this vehicle, and we have a good idea of what it sells for because we’ve shopped around a bit. If you can beat this price (here’s where you present your best price quote printout from another dealership) we will have a deal.”

A response like this accomplishes a couple things. First, it lets the salesperson know that you’re an informed buyer. Your goal is to justify the drop in price, rather than present an offer without context. Second, the salesperson knows there are offers to beat. So there is a good chance the salesperson is going to jump to the low end of the dealership’s pricing structure, which works for both new cars and used cars.

How Much Can I Haggle? Isn’t the Price on the Car the Actual Price?

No, it’s not. Purchasing a new vehicle is not just a big expense, but an investment, and it is definitely a negotiable endeavor.

Certain purchases are non-negotiable. Like when you walk into Walmart, you can’t walk up to the guy and say, “Hey, I know that TV has a $2,000 price tag, but I’ll give you $1,500 for it.” They will simply say “No.” and let you walk. Same thing at the supermarket, and so on. They know someone will be along in the next minute paying the posted price.

But when you’re spending tens of thousands of dollars on something, you better believe you should be negotiating, and they do not want to let you walk.

Tips on How to Negotiate the Price on a Used Car

If you are shopping for a used car, where apples-to-apples comparisons aren’t possible, your goal is to make an offer that is as low as possible but still in the ballpark. Use the vehicle’s TMV trade-in value as a guidepost for what the dealership might have paid for the vehicle.

If you’re the first to make the offer, give yourself room for the dealership to make a counter-offer. You should know ahead of time what your opening offer will be, how you will counter the dealer’s offer, and what your highest price will be. Then when you’re in the heat of the moment, you won’t get flustered. You will negotiate like a pro.

Many car buyers seem reluctant to make a low offer. Often people say they are afraid the car salesman or saleswoman will laugh at them or become angry or act insulted. And yet if you think about it, the salesperson is really doing the same thing with you, but starting with a higher offer and working down. Knowing that you’ve done some research should give you a bit more confidence in recognizing a good price and knowing when to counter.

Here are a few additional tactics to help you get a good deal on your next car:

  • Don’t buy a car in a hurry (unless you have no choice). And don’t go into the car dealership unprepared. The salesperson may draw you into offer-counteroffer negotiations before you are ready.
  • Check all the numbers and ask for the out-the-door price.
  • Read online reviews of the dealership before you begin negotiating. Start with a dealership that has good customer reviews.
  • Plan to spend a chunk of time at the dealership. With the test drive, a possible trade-in, the negotiating and the financing process, you might be there for four hours or more. Eat before you go: You want to be able to think clearly. You can speed things up by being prepared for all the car-buying paperwork. Shopping midweek rather than on the weekend will cut down on the time you spend at the dealership.
  • While it is easy to focus on the negotiation of the MSRP (also called sticker price), don’t forget you can also negotiate your interest rate, trade-in and the other products that are available for sale, such as undercoating or an extended warranty. 
  • If you’re planning on financing, getting preapproved from a bank or credit union before visiting car dealers is a smart move.

But Don’t Show Your Hand

  • Don’t get swept away right off. Supposing he shows you the vehicle of your dreams. It’s perfect, it’s amazing. You think, “I NEED IT!” But what should you say? Something like, “OK, I see it comes with leather seats . . . that’s pretty nice. The color is okay, not the exact color I was thinking. Not bad.” Do yourself a favor and do NOT gush over the vehicle and beg to drive it. Wait for the salesman to offer the test-drive. You want to appear logical, calculating, and in control the whole time. Someone who is emotional is more inclined to throw logic to the winds. And they know this, and feed off of it.
  • Be ready for this question, which they will definitely ask: “So what are you looking to spend?” Here, you have the advantage, because you know the answer. You know what you can spend, and you know what you want to spend. And they have nothing; that’s why they’re asking the question. So don’t give up all you have unnecessarily.. If you can spend $25,000 to $30,000—the former being what you’d like to spend, and the latter pretty much breaking the bank—tell the salesman something like this. “Well, I really like this model, and this year, but this [other] model has this option that I really like. And you know, I’d like to come in right around twenty-two or twenty-three, depending on options and availability.”

Be Upfront About Some Things

They will play psychological games with you. They’re sizing you up, trying to figure you out, and trying to get you emotional about your purchase. Stay cooperative and down-to-earth. Let them know your intentions, and be honest about some facts. Tell them your name, and what you’re looking for, and answer any general questions they might have.

  • For example, “I am going to buy a Toyota Camry today,” is an honest statement. It clearly shows your intentions, and answers an unspoken question the salesman has: Is this person buying, or just shopping? Think about it. If a salesman is trying to make a profit, and he thinks he is getting shopped, are is he going to offer his best discounts? Probably not. He offers his best deals when he knows a purchase is going to happen.
  • “I’m working with several dealers right now, and I just want to be upfront about that. And, so far, I’m enjoying working with you.” The first half of this statement had better be true, or I’m going to be very disappointed in you. If the second half of this statement is not true, do not buy from this dealership!