How to effectively negotiate the price of a new car

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Begin negotiations with your precalculated low offer. You should base your bid on the average transaction price of the model and trim level (s) you wish to purchase. The CR focuses on the actual transaction prices, rather than the invoice, as we believe this is much more useful. It sets a goal for what others pay for the vehicle in your area. The price charged has become much less significant and does not reflect the impact of supply / demand, an important consideration in today’s market. Aim for the lower end of the transaction price range, available on the template pages at cr.org/cars, knowing that you get a fair deal if you match the average transaction price.

What usually happens after you declare your starting offer is a back and forth as the seller submits your offers to the sales manager and comes back with counterbids. Be prepared for the bids to be much higher than your target price. And be prepared to wait several minutes at each step.

One bet you can use is to mention that you have competitive offers on hand from other dealers, without disclosing what they are. Explain that you are looking for the lowest mark-up over your lowest price.

As an alternative, ask if the seller is willing to beat a price you got from a legitimate shopping service. If so, tell him what it is, or better yet, show him a printed copy.

Try not to be argumentative. Keep working from your lower figure, lifting it bit by bit, rather than taking the dealer’s counter offer and hammering it. If you use the average transaction price as a starting point, you will likely have a quick negotiation process. If you start with a lower number, you will probably spend more time coming to an agreement.

From the outset, you want to stay the course and prevent the negotiations from getting out of hand. If the seller asks about a trade-in, for example, insist on locking in the price of the new car first.

Regarding financing, explain that you are pre-approved for a loan and ready to pay in cash, but you might be willing to consider financing through the dealership as long as the offer is competitive. But let it be known that agreeing on the purchase price is the primary goal.

Reassure the seller that if you both can agree to terms that you know are fair, you can expect a quick sale. Otherwise, you will move on.

You may be referred to a more experienced sales associate or manager. If this happens, just repeat the same basic rules to that person. But no matter who ends up sitting across from you, a clear explanation of what you’re looking for will help thwart common diversionary tactics you might come across.


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