The Best Ways to Negotiate When Buying Cars

Good negotiating skills can save you thousands of dollars when you go into the car dealership to buy a car. To have those skills you need to do your research before going to the dealer; you'll need to understand how these skills can work for car buyers.

Collect your facts

It is important to do your research before you sit down and start to negotiate on the car you want to buy. The three areas for which you need information are cost of the new car, financing options and trade-in information.

You can find the value of the car you want to buy through the Internet auto services like Kelley Blue Book, Nada Guides or Edmunds. You need the invoice cost of the car plus the optional equipment.

Call your bank or credit union and find out what the interest rate is on car loans. Have the bank calculate the monthly payment on the amount you plan on financing. The amount financed will be the cost of the new car minus the trade-in value plus any loan amount on the trade-in.

If you want to trade in a vehicle, use Internet sources to get an approximate trade-in value on your trade. Also, if there is a loan involved, find out the amount of the payoff.

Know your opponent

The car dealer's goal when selling a car is to maximize is profit on the complete purchase package. He can make money on the selling price of the car, custom upgrades, the financing, extended warranties, insurance and the trade-in. When negotiating with a buyer the dealer will often allow the buyer to be satisfied with one aspect of the purchase while making extra profits in other areas.

The goal of the car salesman and dealership is to have the buyer become emotionally excited about her new car purchase. An excited buyer is a less concerned negotiator.

During the negotiations the sales staff will focus on the monthly payment. Dealers know that for the majority of buyers the monthly payment is the most important factor in the final decision to purchase a vehicle.

At the negotiating table

Follow these guidelines when you are negotiating.

Stay calm and business-like throughout the negotiations. Even if you love the car, do not show it and act like this is just another purchase for you.

Stay focused on the selling price of the car. The important number is the difference between the price of the new car and the value put on your trade-in. You want to get the difference as close as possible to the difference between the factory invoice and the average trade-in value you calculated. Focusing on the price difference will stop the sales manager from playing games with the value of your trade-in.

Ask for the interest rate and term for all payment offers. The dealer will try to switch you to a lease or long-term purchase contract to give you a lower payment. Do not let them. Dealerships have access to lower rates than retail banks offer. In most cases they can offer you a much better finance rate than their first offer.

During the negotiation process the salesman or sales manager will ask you to make a counteroffer. They want you to focus on the down payment and monthly payment, not the price and financing terms. Your first offer should be at a price and payment lower than you calculated during your research. The offer should be at a level where the dealer loses money if they accept it but not unreasonable. They may be trying to meet a quota and sell you a car at a loss.

After your first offer, let the salesman and sales manager make a couple of counteroffers to see how close they get to your numbers. Ask them a couple of times to come back with better numbers. Your initial offer of close to a profitable car deal shows them you are a serious buyer and they do not want to let you go. Be calm and patient.

If you get to an offer where you know they are making very little profit on the car and are offering you an excellent finance package, agree to the deal. Make sure the paperwork is what you agreed to and take your new car home.

Your biggest chip in the negotiating process is the ability to get up and walk away. You must be willing to not get the car, but in doing so you may force the dealer to give you the terms you want.