Outside of buying a house, buying a car is often one of the most stressful and expensive investments most people ever make. Having said that, knowing when and how to haggle the price of a car can save you thousands of dollars and help you avoid making a mistake on this big purchase.
The best way to have a power position when buying a car is to have cash to pay. When you don’t need to deal with financing or banks, you can often walk away with a much better deal.
Get Financing before Shopping
If you do need financing, always get it from your bank or credit union before going to the dealerships. You’ll get a much better deal if you do it this way. You can still let them run financing options for you based on the loan you already have to see if they can do better, but you’re in the power position when you have that taken care of already.
Know the Kelly Blue Book Value
If you know the type of vehicle you want before you go looking, it’ll also be a lot simpler to haggle. Know the values according to the Kelly Blue Book for that type of vehicle in that type of condition. You can also check as you look using your phone, but it helps to know going in.
Check Consumer Reports
Once you know the make of the vehicle you want, checking Consumer Reports for what they say about that type of car - including selling prices, rebates, and other information that’s hard to find – will help you negotiate the amount from the standpoint of knowledge.
Understand How Mileage Affects Value
One thing that really affects the value of the car, sometimes more than the year or the model, is how much mileage is on the engine. Ideally, you want a used car with low mileage so that you can get more use out of it. But, 50K miles on one vehicle may not be a bad thing when you're comparing it with another.
Understand the Seller’s Profit Margin
One way to negotiate prices is to know what the dealership paid for the vehicle. When you are haggling based on what they’re going to make from the sale, you usually have better footing for haggling. Consumer Reports can provide a lot of this information in their online monthly version.
Deal with Managers Only at Dealerships
If possible, don’t deal with salespeople at the dealership unless they have negotiating power. The salesperson will spend a lot of time going back and forth with deals to the manager, which can really harm negotiations.
Be Ready to Walk Away
If you know you’re being reasonable with your offers, don’t be afraid to walk away. There are too many places to buy vehicles to have to deal with someone who won’t negotiate at all.
Get a Price before Asking for Rebates
One tactic that you can use is to keep the information about the rebates you know the dealer will get (from your Consumer Reports subscription) to yourself until after you get a price. Then tell them you want to split that rebate they’re going to get so that you can cut the cost more.
One way that sellers encourage buying is to make you scared of missing out on the purchase. To be fair, a good car will sell fast at the right price, so they’re not lying if it is a reasonable price. However, if it’s not a good price and not in your budget, don’t be afraid to walk away until something better comes along.