Negotiating Price

How to Negotiate a New Car’s Price

Many car shoppers feel anxious or uncomfortable when visiting car dealerships. Their fears are legitimate—from stressing over comparing prices and completing paperwork to fearing being ripped off by salespeople.

How to Negotiate a New Car’s Price

Save $1,000s of dollars with these tips for negotiating the price of a new car—from the experts at Car Digest.

According to Autotrader, some of the top five car-shopper activities conducted online include:

  • Researching car prices.
  • Comparing different models.
  • Finding cars listed for sale.
  • Discovering how much a car is.
  • Locating a dealer.

With the outbreak of COVID-19, most car buyers now prefer doing online research. Having a head start on how to negotiate a new car’s price will improve confidence and lessen the anxiety of the buying experience.

Most car buyers are open to considering multiple vehicle options when they first begin to shop, spending an average of three hours on the car-shopping process. Buying a car involves positive and negative experiences. Completing paperwork is considered a negative experience, while conducting a test drive is a positive one.

Additionally, some car shoppers do their homework first by researching online before visiting a car dealership. You can get excited about buying a car and pay more than necessary or practice self-restraint and get a better deal. 

Here are some concrete steps that can help you negotiate a car’s price and leverage your overall car shopping experience.

Research The Market Value For The Car You Want

Before going to the dealership, research the market value of your car. Usually, a vehicle’s market value depends on some or all the following factors:

  • Mileage and Condition. Higher mileage usually means the car has more wear and tear, indicating that some parts may need to be repaired or replaced. Cars with torn leather seats, non-working signals, or scratches and dents will most likely be resold at a lower value. For some vehicles, location and colour will also affect resale value.  
  • Make and Model. Older cars may have a lower market value, while a car with a rare make and model may have a higher market value. Older makes and models usually have significant problems—100k miles on the odometer is considered a used-up car that can’t be resold. More modern cars are more reliable—a modern car with a high mileage of 200k miles may still be resold. However, modern cars are more costly and difficult to use.
  • Shifting consumer preferences. Car designs are changing. In the 1980s, hard lines like the ones found in Range Rovers were all the rage. In the following decade, fluid curves and contours were more evident, as seen in the Mazda Miata or Porsche 911. As cars became more modern, more emphasis was placed on safety and colours than on form. This was noticeable in the 2000s, when muted and elegant hues of silver, white, black, and gray became more popular. 
  • Economic situation. Car prices vary according to different economic conditions. Some factors to consider when car shopping are rising costs, supply surpluses or shortages, inflation, increasing or decreasing demand, mobility of people, and research and development. During the COVID-19 pandemic, car sales have experienced a sharp decline. Hence, choosing an efficient and easy-to-disinfect vehicle is now preferred over pricier vehicles. 

Having a car is a practical solution, particularly if you live in a place where transportation is difficult. However, rising costs are one factor that can make people do a double take on what car to buy, making fuel-efficient vehicles an easy choice for most car shoppers.  

Search for dealers near you who can offer an “out the door” price close to the average transaction price or market value of your desired car. 

Go to websites like or to get an idea of the car’s value on the open market before you visit a dealership.

Pick Your Time Of Year To Buy—wisely 

The best time to buy a car is during October, November, and December. In these months, car dealerships must meet three sales quotas (monthly, quarterly, and annually). Among these three months, December has the highest discounts from the manufacturer’s suggested retail price (MSRP). 

To meet the sales quota, most car dealerships are willing to sell with minimum profit. 

Talk Price, Not Payment

Want to negotiate a great rate on a car loan? Many salesmen will focus on monthly payments, instead trying to win you over with a lower monthly rate and a longer term of repayment—and a subsequent higher APR. That said, a lower monthly rate isn’t inherently bad—but discussion shouldn’t be limited to it. Instead, you should be negotiating the  total cost of the car. Often, a lower monthly is just the result of a longer term—and that simply doesn’t save you any money. So start by negotiating the total cost of the actual car. If you negotiate a lower overall price, your monthly payments will subsequently be lower, too!

Don’t Be In A Hurry

Ideally, good car decisions are built through these three elements:

  1. Adequate time to assess all effects (positives and negatives).
  2. Incentives for all parties in moving forward.
  3. Trust between all parties.

In buying a car, go to a dealer who’s reliable and comfortable to talk to. If you’re unsure about your dealer, find another one. Don’t be in a hurry; the unpleasant signals, verbal and nonverbal, from a salesperson may be signs that the dealer you’re talking to isn’t trustworthy. 

If something in the back of your mind is nagging you, sleep on it for a few days until you can make an objective decision. You may just be too excited and not see the overall picture.

Remember, dealers are not there to rip you off. Most dealerships are legit businesses, and they’re there to make a profit. After all, they do have operating expenses and employee salaries to pay. Also, dealerships want return customers, and having a bad reputation will not help their business, especially in the long term.

Get Pre-approved For An Auto Loan 

If you’re pre-approved for an auto loan by an online lender or your local credit union, you may get a lower loan interest rate. Traditional banks and auto lenders may also help you get pre-approval. Most lenders recommend a credit score of 620. If you have a higher credit score, you may qualify for better mortgage rates. 

If you’re pre-qualified, it’s easier to get pre-approved. An auto loan pre-approval is usually valid for 60 days. Remember to take your time in negotiating a new car’s price. Be 100% sure on the amount (rebate and discount included), or you may have regrets later.

Next, gather your Social Security number, bank and investment account information, current address, other loan details, employment details, and proof of income. If you’re self-employed, you need to provide income tax returns of at least two years. 

Get Prices From Multiple Dealers

With so many options from multiple dealers, you can get the market value of the car that you like, plus the best price a dealer can offer. 

MSRP varies per vehicle, dealer, location, sales, competition, the month of the year, incentives, and the negotiating skills of the buyer. Among these, the last one is something that the consumer can control. As often mentioned, dealers sell the car, but you decide. 

Look for promotional incentives, financing options, inventory, reviews, and a dealership you can trust. For financing options, look at auto dealership websites. 

Most used- and new-car dealership websites have an inventory and reviews you can check. It’s recommended to ask around for feedback on the car dealer’s services. Ask for promotional incentives too from your trusted dealer. 

Don’t Be Afraid To Walk Away

Contact different dealers in your area through email or on the phone and get a quote before visiting in person. Ask for good deals or possible discounts from each financing option. Car buyers should be prepared with adequate information before they visit dealerships. Take note, though, that competition among car dealerships is stiff, and most dealers are likely to start with the fairest pricing. 

After arming yourself with car details, set a realistic goal of how much you are willing to pay. Ask for a figure lower than the market value and then slowly increase your price. Most dealers are willing to haggle with you, and if you feel like you’re going in circles, make a final offer. If they can’t provide the desired offer, walk away.

While negotiating with your dealer, be cool, calm, and polite. Establish a rapport by smiling, using the car salesperson’s name, and talking about other topics aside from the car you’re interested in. 

Be alert, though, as most dealerships are seasoned in selling cars. If you feel like the price is verging on an unrealistic amount, be firm. And if the dealer can’t meet your price, remember to walk away and visit another dealership. Take note that most dealerships would let you go if they can’t meet your target price.

Frequently Asked Questions

How to negotiate a car price when paying cash?

Your dealer is going to ask if you’re paying with cash, but never say you are. Remember, dealers are used to getting the most out of a sale. They may inform you of deals if you pay with cash, but you may not notice that the price is higher.

What you can say is that you’re unsure of what payment method (cash or financing) to use. Ask about deals for each method and check if the discounts or deals from financing may also work for cash payments.

The secret is that dealerships make plenty of money on financing. If you tell a dealership you’re paying cash before you’ve settled on the price, they are likely to jack up the price of the car to make up for the difference in profit (in financing).

Ask for a discount. You may be eligible for a sizable discount if you pay with cash. Some dealerships prefer not to deal with monthly payments and appreciate receiving the payment in cash up front.

What does a “no-haggle price” mean?

No-haggle car buying means you pay for the listed price. What you see is what you get. This program means you save around $3,300 MSRP. You may get a lower price than listed and get more deals but remember that you are negotiating with sales officers who are experts in marketing. They’re not going to sell cars for just a small profit. 

“No-haggle” programs espouse fairness, honesty, and transparency. Also, removing the unnecessary time, cost, and effort spent in negotiating a lower price means less frustration, a lower net cost, a flexible return policy, and a better buying experience. 

How do I get the best deal on a new car?

Research when auto dealerships give the best deals. You can also email or call the dealership for an “out-the-door” price before you close the deal. To save on costs, bring a check for the exact amount to prevent spending more than you intended at the dealership. 

Another way of getting quotes from multiple dealers is to visit your manufacturer’s website and request quotes from all the dealers near you.

Take note that when you’re paying thousands of dollars, a few hundred may seem small. However, these hundreds of dollars are often unnecessary expenses and bad decisions. 

“Buying a car used to be an experience so soul-scorching, so confidence-splattering, so existentially rattling that an entire car company was based on the promise that you wouldn’t have to come in contact with it.” – Susan Orlean

Don’t hurry when buying a car. Thousands of dollars is a significant amount of money, cash, or credit. If you negotiate for a higher price, there are no renegotiations once you start a monthly payment. You’re the one letting go of your hard-earned cash. Again, your dealer may have the cars, but you make the decision. 

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