What to Do When Negotiating Car Prices

The auto industry is still plagued with supply chain disruptions, low inventories and high prices. While prices have cooled slightly, the majority of buyers still pay more than before.

Even though you won’t find many deals on the market today, you should still know how to bargain car prices in order to get the best price and remain within your budget.

Negotiating can be challenging, regardless of whether you are shopping in a good or bad economy. This is especially true if it’s your first time negotiating with seasoned salespeople. Even those car buyers who dislike haggling can benefit from these five tips.

Before you start looking for a vehicle, decide how much money you have to spend.

Joseph Yoon is a consumer insight analyst for automotive research company Edmunds. He says as a purchaser, “you should know what you can really afford, and the specifics of any deal you are going to offer to the dealership.”

Budgeting involves knowing how much money you have to pay upfront and what you are able to afford in terms of monthly payments. If you’re able to, put down at least 10% for used cars and up to 20% for new ones. If you can, your monthly payment should not exceed 10% of your gross income, while your total car costs (gas, insurance, repair) shouldn’t be more than 15% or 20%.

A budget will help you determine the target price for the vehicle and the amount you are willing to negotiate. This can give you more leverage during the negotiation.

Yoon suggests that you research key numbers, such as the market value of the vehicle you are interested in to guide you during the negotiation.

He says that if you know the ballpark figure based on your comfort level, you will be in a much better position to accept or reject the offer.

If you are negotiating for a SUV, and the salesperson claims it is worth $27,500 but you have done your research, the price today is actually $24,500. You will be able recognize that they’re trying to charge too much.

Researching before negotiating can depersonalize negotiations because the price is determined by data, not just opinion.

Before contacting any dealer, you need to know some key figures:

• You can find out the current value of a new or used vehicle you are interested in buying by visiting online inventories or sites such as Edmunds and Kelley Blue Book. Consider using a calculator to estimate the cost of a vehicle you are interested in.

• 
  You may be eligible for incentives such as cashback or financing at low interest rates.
  

• 
  Taxes and fees estimated.
  

Yoon says that contacting the car dealer is a crucial first step to negotiating a price. You can do this by phone, email or online.

He says that the best way to get a good deal is to call dealers before going to a lot.

You can then contact other dealerships to find out if the one you’ve been quoted can be matched. Dealers test the prices of their competitors to know how much they will have to charge to get the deal.

You can do most of the negotiation from your home, especially if you have already tested the vehicle. You don’t even have to leave the dealer if you aren’t happy with the price or the way you are being treated. You can say goodbye over the phone, or stop all email and text communication.

According to Cox Automotive, more Americans buy their vehicles online. With the rise of apps and platforms for car buying, consumers can now avoid the dealership and complete the entire process online.

Platforms like Carvana do not allow for price negotiation, but they let shoppers complete their entire purchase — from research vehicles to getting a vehicle delivered — all without ever having to enter a dealership.

To learn how to negotiate the price of a vehicle, it’s important to verify that offers seeming to be attractive are actually as appealing as they may appear. Ask for the breakdown of the fees before you sign any contract. Dealerships may try to increase the paperwork fee or add phony charges to make a profit. If the price is still reasonable, then you are a good negotiator.