Research the invoice price. This the price the auto dealership likely paid for the car. If you know the dealer's cost to purchase the car, then you know your base amount for negotiations.
Research your competition, which is any car in a similar class that is manufactured and sold by a competing dealer. Knowing the price of competing cars will help you get a fair price on your car.
Bring cash to the dealership. A simple cash transaction reduces the dealer's administrative and processing costs, which means the dealer can sell the car for a lower price while still making an equivalent amount of profit.
Obtain financing approval before you talk to a salesperson. If you don't have enough cash to pay for the car without a loan, having prearranged financing is a close second. That is because the dealer does not have to spend money on administrative fees to help you obtain financing.
Negotiate the price down by showing the dealer you are educated on the dealer's invoice price, and the price of competing cars. The negotiations will likely involve several counteroffers. Start with an offer near the dealer's invoice price.
Call a competing dealership selling the same car. One of the best tools for negotiating a lower price on a new car is to get two dealers competing against each other. For example, if you are purchasing a Ford from one dealership, call another Ford dealership and ask them to beat your negotiated price on the car.