There are some people who love negotiating and bartering. I’m not one of them.
I’ve gotten better at it over the years though, thanks to going on multiple antique shopping adventures with my mother-in-law who is a pro at negotiating with antique dealers. Thanks to her, I now feel pretty comfortable sweetly asking “Are your prices firm?” or “Is this your best price?” when antiquing or enjoying another favorite pastime of mine: shopping at Mom 2 Mom sales.
Even though negotiating prices at antique fairs and Mom 2 Mom sales may seem like baby steps, I view them as great strides in building the confidence needed for the bigger negotiations in life…like buying a new car or, you know, a house.
And while I already have the experience of buying a couple cars (and a house), I was completely inexperienced at the time (and if I’m being completely honest, totally scared) when it came to ‘negotiating’. True story: the very first car I bought on my own as an independent adult was only knocked down $250 from the sticker price and ECCU wouldn’t even finance the loan because it was over book value. I remember being so angry and embarrassed for being naïve and taken advantage of, but when I went back to the dealer and told them my credit union wouldn’t finance the loan because it was over-priced, the dealer laughed and said “Don’t worry…we’ll get you taken care of with our lender.” So you’d think I put my foot down, raged about the injustice, and demanded a huge price reduction, right? Well…(I’m cringing as I write this…) on the contrary, I wanted the car so badly that I agreed to finance it through the dealership.
Sigh. Big mistake, right? I prefer to think of it as a learning experience.
If you nodded along knowingly while reading about my ‘learning experience’, or even broke out in a sweat at the word ‘negotiation’ at the beginning of this post, take a deep breath and read on, because the following tips were compiled especially for you. You will transform from a Non-Negotiator to a Negotiating Ninja!
Do These Things First
I’m going to assume that once you’ve reached the point of negotiating for your soon-to-be new car, you’ve already lined up your financing, researched the car’s reliability and estimated insurance costs, and have a good idea of the fair market value and your sale price range. The more prepared you are, the more confident you will be.
Salesperson: So how’d you enjoy that test drive?
Negotiating Ninja: (smiling sweetly) It was excellent! I am ready to buy the car today, assuming we can agree on a price.
Salesperson: Great! What monthly payment are you looking for?
Negotiation Ninja: I’ve already secured my financing so I’m more interested in discussing the sale price.
Salesperson: Fair enough. What rate?
Negotiating Ninja: You know, I’m happy with the terms I’ve received from my credit union and am more interested in discussing the sale price.
This is why I recommend securing your financing before you are ready to buy your car. Financing through a dealership isn’t necessarily a bad thing. But keep in mind that it could turn into behind-the-scenes numbers manipulation game that might result in overpaying for a vehicle. Also, only a small group of people will qualify for the special 0% APR advertised rate. If you qualify, then by all means, go for it assuming you’re happy with all of the terms that entail. Repeat after me: the more prepared you are, the more confident you will be.
Salesperson: Alright then. Do you have a trade-in?
Negotiating Ninja: (smiling politely) I’m considering several options for the old car, but my first priority is to settle on the lowest price possible for this new car.
Salesperson: I can probably get you an even better deal if you do want to trade it in.
Negotiating Ninja: I’ve done a lot of research and might be open to a trade-in, but not until we’ve agreed on the new car’s price.
Even if you fully intend to trade-in your vehicle, your main goal is going to be establishing the sale price of your new car first. Consumers Reports reveals that salespeople may try to combine the trade-in value and new car sale price to give you a tempting price in one area while more than making up for it in another. Only after you’ve agreed on a sale price should you begin to discuss a trade-in. (source)
Ok, fellow non-negotiators, you’ve made it this far. You’re halfway there! Take a deep breath and repeat after me: “The worst they can do is say no.” No one is going to haul you off the premises kicking and screaming if they don’t accept an offer. There will not be a secret trap door that will open up beneath you if your request is unreasonable to them. They expect you to negotiate! This is where all of your research on the car’s value and fair market price will come in handy.
Salesperson: As you can see, the sticker price is $20,000. Now, there’s also a manufacturer’s rebate of $3,500, so you’re essentially getting the car for $16,500. Because the rebate is so big, there’s really not a lot of wiggle room in price because it’s only available if you pay the full sticker price.
Negotiating Ninja: (calmly and respectfully) That’s a great rebate! But due to the research I’ve done, I know that rebates are reimbursed directly by the manufacturer regardless of the sale price. (innocent smile) So, what’s your best price today?
Salesperson: Well, I know my sales manager won’t let me go much lower, regardless. Why don’t you tell me what your price range is and I’ll see if he’ll go for it.
Negotiating Ninja: I have a good idea what you paid for this car based on my research and when I add in an estimated 4% markup, I think a fair price would be closer to $15,000.
Salesperson: I’m not sure where you got those numbers, but there is no way we can make that happen! I’m not even going to go in there to present to my manager because I’ll be the laughing stock of the office!
Negotiating Ninja (pull out your phone or printout from your research): Let me show you the numbers. You’ll see here that the retail price of this car matches your window sticker, so that leads me to believe that I’m really not that far off in my numbers. Look, I don’t want to waste your time or mine. I’m ready to buy today and prefer to square things away sooner rather than later, but I really need the price to be fair for both of us. What can you do to help make that happen?
Wrapping It Up
At this point, hopefully the salesperson recognizes that you are a smart and confident buyer and one of two things will happen. He will make a counteroffer, and if it’s still not in your pre-determined price range, you will counter his offer, and so on until you both can agree on a sales price.
Or, the salesperson will simply say that is their final offer and refuse to budge. Your reply should be something like, “Ok, well thank you for your time. Here’s my contact information, please call me if anything changes and you’d like to discuss the sale further.”
Being polite and calm will really go a long way. And remember: the more prepared you are, the more confident you will be.
There are several resources out there for negotiating the price of your next car, and these resonated with me the most. Coming from a (former) non-negotiator, that should say a lot! The last one is a little bit out-of-the-box and may not work for everyone, but they are interesting points to consider nonetheless.
GreenPath Debt Solutions: The Car Buying Process
Consumer Reports: How To Negotiate Effectively
AutoTempest: 6 Things to Remember When Negotiating A Car Purchase
Forbes.com: A Former Car Salesperson’s Short List Of Negotiation Tactics
Are You Livin’ The Dream?
When you’re ready to buy, keep in mind that ECCU has auto loan rates as low as 1.49% APR. Stop dreaming and start driving!
What tips resonated with you the most? What would you add? Please share your comments below!