Negotiating your car purchase doesn't have to be difficult or confrontational. Following a few basic rules will keep you in control of the deal.
1. Negotiate only if you're ready to spend money.
You will not be given the attention or respect you want if you aren't completely prepared to part with your money.
If you're financing your purchase, get pre-approved for a loan before you walk into a dealership or meet with a seller. Sometimes dealer rates can be higher than from other sources. If you're paying cash, bring a cashier's check for the amount you want to pay and, when the time is right, be sure the seller sees it.
2. Know what you should pay for the car you want.
According to the Federal Citizen Information Center, almost all cars are sold below the manufacturer's suggested retail price (MSRP), and some cars are sold below the dealer's invoice price . The invoice price can be found on many auto web sites and is a good target in your negotiations. Getting a price lower than invoice can be very difficult. It helps if you can find out real dealer cost, which may be lower than the invoice price because of things like secret factory-to-dealer incentives, customer rebates and holdbacks (a payment made by the manufacturer to the dealership if it sells the car within 90 days of arrival on the lot -- a guaranteed profit even if the vehicle is sold to you at cost).
For used cars, don't discuss price until you know exactly what kind of repairs the vehicle needs. Needed repairs may give you a bargaining chip.
3. Stay focused and tune out dealer tactics.
Dealers are trained to distract you from the central task of negotiating the best car price. Avoid conversations about trade-in values before you agree on a firm price for your car purchase. Resist last-minute attempts to add options or packages that you don't want, don't need, and never agreed to. Recognize dealer tactics designed to intimidate you, such as:
4. Speak only to decision makers.
Countless hours have been wasted at dealerships where salespeople scurry between manager and customer. This practice is designed to wear you down and frustrate you. Tell the dealership up front that you want the manager in on the discussions because you don't want to waste time. Leave (politely) if they won't agree.
5. Be businesslike.
Few things are more vexing to car sales personnel than a customer who is level-headed, well-informed, friendly and calm. Never raise your voice, but don't hesitate to repeat yourself as often as necessary to get your point across. Keep your interest in a vehicle free of enthusiasm. Remarks like "This is my dream car!" undermine your credibility and put the seller in a position of power.
6. Know when to bend.
You may prefer to have a burgundy Honda with cream leather seats, but if a dealer has just matched your price for a blue one with gray leather, this may not be the best time to be rigid. Some flexibility is necessary for successful negotiation. Make small concessions wherever you can -- it will appease the seller and allow you to stay focused on what's really important.
7. Put everything in writing.
Take notes about who said what throughout the negotiation process. Make people wait as you write. You'll be glad you have a record of promises and figures as negotiations continue.
Once an agreement is reached, get it in writing. Don't sign anything you don't fully comprehend or have no record of discussing. Should the dealer try to raise the price on you later, point to the agreement as a reminder of the original deal. Take it slowly -- there is no three-day cooling off period or right to cancel a car purchase contract.
8. Know when to walk away.
Not happy with the way things are going? Feeling a little queasy? Not certain how to proceed? Just walk out. The alternatives include saying something you'll regret, agreeing to something you don't want, or getting emotional. Be polite and express your thanks, but don't hesitate to leave and take your business elsewhere.