How to Get The Best Price On a New Car

Negotiate with the dealer for the best possible car price.

It's no big secret that purchasing a new car should be a negotiation rather than a simple purchase transaction. Auto dealers list cars for sale at a certain price, but generally expect to sell the cars for a much lower price. Educated buyers will never pay the full sticker price on a new car. Educated buyers negotiate their way into a better price by following some tried-and-true basic steps.

Step 1

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.

Step 2

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.

Step 3

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.

Step 4

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.

Step 5

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.

Step 6

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.

Tip

Never fear walking away from the dealership. You must be willing to stand your ground if you want to negotiate the lowest possible price. In fact, one of the best ways to dramatically reduce the price is to negotiate a price, walk away, and then call a competing dealership. Additionally, when you leave the lot the dealer will try harder to work out a price that will result in a sales transaction.

Warning

Negotiating the best possible price on a new car is not for the faint of heart. Tough negotiation requires sticking to your ground, being stubborn, and being educated before you set foot on the dealer's property. Experienced car salespeople can instantly spot those who are bluffing and those who know what they are doing. Be prepared to combat the pressure to give in on a higher price than you want to pay.

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