Negotiating and Buying a New Car

Some tips can help you get the upper hand when negotiating a car purchase.
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Perhaps there are things you find more enjoyable than going through the process of buying a new car, like inserting your finger into an electrical outlet. You can make the process a little less painful and maybe even save yourself some money by following a few negotiating and buying tips. A key to success is to take some time to prepare.

Finance First

If you need to finance your vehicle, be sure to arrange for your loan ahead of time. This lets you negotiate from a position of strength, as the dealer will know you mean business and want to close a deal quickly, without a lot of haggling. By shopping around for the best loan rates, you won't be wrangled into taking the dealer financing, which may feature a much higher interest rate.

Take a Friend

Take a financially savvy friend with you to the dealership. Having an informed friend's opinion can help you counter any negotiating points made by the salesperson. It also can give the salesperson the feeling of being "ganged up on," which can weaken her resolve. A salesperson who realizes that someone else is listening to her claims may be less likely to try to mislead you or make untruthful statements.

Don't Get Hung Up on Payments

Try not to get locked in on monthly payments. If you tell the dealer that you want to make a specific monthly payment, they will gladly accommodate you by stretching out your loan term. You'll end up paying more in interest over the life of the loan, which also puts more money in the dealer's pocket. If you need to stretch the payments out just so you can afford the vehicle, you're probably better off buying a less expensive car.

Use the Internet

If you find the process of face-to-face haggling distasteful or intimidating, use the Internet to do much of your leg work. Many car dealerships now have Internet sales departments, where you can do all of your negotiating from the comfort of your home or office. This also gives you the advantage of written correspondence, which prevents the salesperson from being able to renege on his promises. The Internet also allows you to seek deals from a wide array of dealerships.

Follow the "Five-Percent Rule"

The salesperson may use the "we're not making any money on this deal" tactic as a way to low-ball you on price. However, if the sticker price is more than five percent over the dealer cost (see Resources), there should be room to haggle. If the salesperson won't budge, it's probably time to seek out another dealership that is more willing to negotiate.

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