9 Tips for Success When Negotiating at the Car Dealership

Car buyers often cite “dealer negotiations” as the most dreaded part of the entire buying process. That’s probably because most buyers are unsure of what to say or how to act. Here are 9 helpful do’s and dont’s to help on your visit to the car dealership:

1) DO remove emotion from the car buying experience. When you tell the salesperson that you “love that car right there,” they’ll see dollar signs because the theory is, if you love a car, you might overvalue it in your own mind. Remove emotion from the car buying experience. That doesn’t mean to act unimpressed, but keep your feelings close to your chest. Let the dealer know you’re interested, but if you can’t get a good deal, tell them you’re obliged to keep looking around.

2) DO NOT divulge your profession. A salesman’s goal is to get you to purchase as much as you’re willing to pay. If you walk into the dealership acting like you do have a lot of money, they’re going to take advantage of that. Avoid divulging any information about your profession if a salesperson asks what you do for a living (which they probably will). A dealer probably won’t up-sell a minimum-wage worker, but they’ll have no qualms if they’re dealing with a neurosurgeon.

3) DO discuss the purchase price, DO NOT discuss monthly payments. If you have not secured financing before you visit a dealer (you always should), never say something like “I’m looking for monthly payments of no more than $XXX.” Divulging this allows the dealer to play with other terms of a transaction and you may end up unknowingly paying far more for the car then you should. Settle on a price before you enter other negotiations.

4) Only talk trade-in after you finalize the purchase price of a new vehicle. If you have a trade-in, it should be discussed after negotiating the purchase price of your new car. Buying and trading – in a car are two separate transactions and should be treated as such. If you throw your trade into the negotiation, a dealer can leverage that to confuse you on how much you’ll actually be paying for the car, and it may be difficult to get him to reduce the MSRP.

5) Watch for the good guy/bad guy routine: During the sales pitch, some salespeople might try to disarm you with humor, act like they’re on your side, offer you a great trade-in offer, or discount on the total price of the car – all while their manager angrily looks on from the back office. Lowball offers and inflated trade-ins are always squashed by the manager. Oftentimes, a verbally agreed-upon number might be “lost” or “forgotten.” If the dealer refuses to honor an agreed upon price, walk. Get everything in writing.

6) Avoid paying “extras” or “add-ons.” Always be on the watch for extras or add-ons to your purchase or financing. By adding on “extras,” dealers can increase your car payment price by saying things like, “it’s only $40 more a month.” Over a 60-month loan, that $40 will cost you an extra $2,400. All those add-ons can add up quickly. Review the financing and the sell-sheets closely so that you know which add-ons are unnecessary and which ones you should consider. Things you should never be charged for are doc preparation fees, fees for “customer service,” and hidden loan acquisition fees.

7) DO NOT be haggled. When you negotiate a price, you may get a salesperson who says they won’t make a single cent off the price you’re asking. The dealership pays a minimum wage (and usually more), and as they usually make extra through commission, a salesman never works for free. Also, no matter what a dealer sells a car for, they always get a flat fee commission, regardless of price. Your best bet isn’t to get cynical or aggressive, because that can work against you, but definitely put your foot down and don’t allow yourself to be haggled.

8) DO be prepared to walk away. While it might seem that the dealership has all of the power in the negotiation, it’s really all in your hands. You have the greatest strength, and it is to walk away from a deal that you don’t like. It’s a power that far too few shoppers take advantage of. One way salespeople try to prevent you from walking away is by having you sign the offer sheets during the negotiation process, as if your signature locks you into the deal. It doesn’t. The agreement is not final until you sign the last documents in the financing office.

It is important to walk away the right way. Don’t leave fuming angrily, leaving skid marks in your wake. Instead, say something like, “it looks like we’re still a ways apart, but please call me if you can find a way to make this deal work.” If they’re close to goal at the end of the month, you’ll get a phone call. Sometimes they’ll even chase you across the parking lot.

9) DO NOT let your emotions get the better of you. It’s worth repeating. Keep your emotions hidden, if possible, during any outing at a car dealership. Of course this is easier said than done, and it’s hard to be devoid of ALL emotion because buying a car is pretty exciting. Your best bet is to show a general lack of indifference when buying a car, and this will help you avoid being manipulated in any way.

A great way to minimize stress at the dealership is to count on NIHFCU to help you secure a great price on a vehicle, and low-rate financing before you make your visit. Check out our auto buying and loan programs.