Most of us still dread the experience of having to go to the car dealership to negotiate buying a new car. You want a new car for the best price you can get. The dealer wants to sell the car for the highest price they can. These conflicting goals lead to a full day skirmish of back and forth discussion until finally a deal is reached. Some of us may leave happy with our new cars, but for others, the long, exhausting battle leaves us questioning if we truly got the best deal we could have.
Salespeople are trained in the art of the deal and the dealership generally always has an advantage. But you can definitely make your next experience at the negotiation table easier by learning some inside tactics dealers use and what some key phrases can pull the deal in your favor. Learning these statements below could save you a lot of time and money when negotiating your next car purchase.
1. “I’m Just Browsing”
Any variation of this will help you at the negotiating table. ‘I’m just browsing,’ ‘I’m just looking around today,’ ‘My kid needs a car in a few months.’ By keeping your energy and excitement down, you’re showing the salesperson you might still need some convincing to purchase a car. Whether that’s true or not, that will make them more likely to be a bit more flexible to keep you at the dealership and make the sale. If you show your salesperson you’re ready to buy that second, then be prepared for a tough battle. When a salesperson comes over, odds are they’re already sizing you up, so remember to keep your cool and your best poker face.
2. “I’m Still Comparing My Options”
This is an adapted version of the above, but further exhibits disinterest by showing that not only are you not fully committed, but could still buy a competitor’s car. Again, whether true or not, a salesperson will be more likely to try harder to convince you to buy a car from him or her that day. The most likely response a salesperson will give you to this is to offer you a test drive. This is a basic 101 sales tactic to get you to be interested in a vehicle, but simultaneously, it IS a good idea to test drive a vehicle and get a feel for it before you purchase it.
If you’ve already test driven the vehicle elsewhere or already have a solid idea in your mind of what make and model you want to purchase, then the test drive shouldn’t be a major factor in your decision. Still go ahead and accept the test drive if you wish. The key here is to show the salesperson that he or she still needs to convince you (again, whether true or not) to buy the car by being flexible at the negotiation table.
Bonus Tip: If the salesperson asks what other car you’re looking at, say you’ll be looking at a different make at a specific dealership. Do a little research online first and pick a dealership that’s not part of that dealership’s network. Many local or family dealers today maintain a network of sister dealerships that sell other models, so to get them to really work for your business, name a direct competitor.
3. “I Already Know What the Car Is Worth”
Do some research online beforehand on the price of the car you’re looking to buy. Look at the Kelly Blue Book price as well as what others paid for the same vehicle. Once you’ve done your research and have a fair idea of the price of the car, print a copy and bring it with you to the dealership so you can reference it. Having a fair price you can pull out will give you leverage to negotiate a better deal. It’ll also keep you in check from being swayed by the dealer to paying more than what a fair price should be.
4. “Let’s Talk About the Final Sales Price First”
A dealer will generally ask you what your financing plans are, what your down payment amount is, and if you have a trade-in, among a series of other questions as they’re trying to warm you up for the sale. Try to keep them in the dark on these details until the very end as a dealer will adjust their sales price accordingly based on your trade-in value and financing terms so they can maximize their profits.
If they ask for this information, simply answer, “I’d like to discuss the final sales price of the car first.” Be polite but firm with your answer. If they push back on this, stand firm and tell them you’d prefer to negotiate what’s the best out the door price they can give you first. And make them feel you’re willing to walk out the door and negotiate elsewhere (see #9).
Your goal here is to get the dealer to give you a final price, itemized with all their costs and fees, written out on paper. By doing this first, you will lock them into their best price before you negotiate your trade-in value and your payment and financing options. The dealer may try to get back some of their profit after you’ve locked them in a price by offering a lower trade-in or less than optimal financing terms, but you can do yourself a favor their by bringing in printed details of a fair trade-in value and coming in with pre-approved financing, which we’ll discuss later.
5. “May I See the Invoice Price?”
Cars are shipped to dealers with a manufacturer’s invoice. The invoice is “roughly” the price the dealer paid for the car, and the difference between the car’s sticker price and invoice price is what would be the profit on the car’s sale. Obviously, a salesperson is going to be reluctant to show you an invoice, but ask for it politely and be firm in your wish to see it before making a deal. A popular car-buying strategy now is to ask to for the dealer’s invoice, then offer an “over-invoice” price, such as, “I’ll give you $500 over your invoice.” This is a faster way to move towards a deal close but… it may not necessarily give you the best price.
The reason the invoice is only “roughly” the price the dealer paid for the car, is because many manufacturers now build in a “holdback” to the invoice price. The holdback is a percentage of the sticker price or invoice price that the manufacturers pay to the dealer after the car is sold. This allows some dealers to effectively make “invisible profits” even when selling a car at invoice price. Different manufacturers have different holdbacks, but if you’re planning to buy a car that does offer their dealerships holdbacks, you could try to haggle a price that’s actually slightly lower than their invoice.
While holdbacks are a good piece of knowledge to know, it’s still just one piece of the deal and trying to negotiate for below invoice may not always work. You can still try it and may have more success with it by trying to buy a car through a dealer’s online or call center sales team who are generally more focused on volume of sales, rather than profit margin per sale.
If it doesn’t work for you, though, try this next phrase.
6. “What Incentives Do You Have Available?”
Negotiating with incentives and dealer rebates may yield you more success at getting the best price. Incentives can take many forms: cash rebates, better financing rates, special leases, etc. Some car makers even provide special incentives for first-time car buyers, college graduates, military members, and other specific target customers.
Incentives are not always advertised, so it’s a good idea to ask what incentives are available. Often times a dealer will make incentives exclusive or create some arbitrary stipulations around them. They may argue that if you get a specific type of incentive, then you have to forgo some other incentive or price. Push back on this. If you’re getting a deal one way, but have the total cost upped another way, it’s not really a great incentive then, is it? Negotiate and ask for your final price plus incentives.
7. “I’m Not Interested in Monthly Payments”
Many dealers will try to negotiate with you first in terms of monthly payments by asking, “What kind of monthly payment are you looking at?” Negotiating in terms of monthly payment is an easy way to lose track of what the sales price of the car is, how much you’ll pay in total, what the APR is, and what the length of the loan is. Instead, ask for a final total price on the car as described earlier and negotiate from there.
That isn’t to say your monthly payment isn’t important. Most of us do still need to think about how much we can afford to pay per month and how much cash flow we can safely maintain. The point here is if you only think about how much you can and can’t pay on a monthly basis, you may not be getting the best deal and end up paying a lot more for a vehicle than you should. Find a balance you’re comfortable with.
The best thing to do here is to think about what kind of reasonable price you want to target, what loan length you want, and what interest rate you can reasonably expect to get, and figure out a ballpark monthly payment before you even go to a dealer. This way you have in your mind a fair monthly payment for the price and terms you want to target. Use LendingTree’s Auto Loan Calculator to help you make these calculations before you go in.
8. “Please” and “Thank You”
No one wants to work with someone that’s difficult or abrasive. Keeping your calm and being respectful can go a long way in getting what you want. In fact, it will likely get you more of what you want faster. You’d expect respect and manners from a salesperson, and a salesperson probably doesn’t want to work with a rude customer either. Be polite and courteous throughout the negotiation, even if the process itself does wear at your patience sometimes. You’ll find that by staying calm and making the salesperson want to work with you will make the negotiations a lot more favorable and time fly much faster.
9. “I’ll Come Back Another Day”
This is one that dealers fear the most to hear. Getting a sales lead is tough in a competitive market with thinner and thinner profit margins. Generally speaking, most people who say they will come back later or another day don’t usually come back. Salespeople are trained to try to keep you at the dealership no matter what so they can close the deal. You leaving has a direct impact on their paycheck, and within some tougher dealerships out there, their job security.
Keep this phrase in the back of your mind if you feel like you can get a lower price by showing disinterest. They may poke and prod you for a reason or ask a few questions like, “What would make you change your mind” or “What would help you decide on a car today?” The salesperson may have you wait again and bring over the sales manager. Generally, the sales manager is the one with the power who can make the final pricing decisions so make your argument for a lower price with him or her.
10. “I Don’t Want the Extended Warranty”
The F&I Department (Finance and Insurance Department) is usually the last stop of your car purchase and usually where the dealer tries to sell you “extras” such as an extended warranty, paint protection, or tire insurance. Odds are you won’t need any of this stuff they’re selling you and you’ll unlikely get any serious beneficial value. These items are often highly marked up or wrapped up in the loan to help the dealer make a larger profit. When asked, just politely and firmly decline and let them know you’re happy with your purchase as is.
11. “I’m Already Pre-approved for a Loan”
The F&I Department is also where the dealer usually finalizes your credit information and provides you a quote for financing. Before you even walk into a dealership, you’ll want to compare auto loan offers from various sources. Auto financing is not a take it or leave deal. The financing rate is negotiable, especially if you have good or great credit, and auto financing is available outside of the dealership. You’ll want to shop around for options beforehand as a dealership may or may not always offer the best financing rate available based on your credit.
Bringing in a pre-approval offer from another lender you found on LendingTree, for example, can give you more leverage at the negotiating table or save you a significant amount of money on your final vehicle purchase because you found a better deal than what the dealer could offer. Pull out your offer after you’ve solidified a sales price and trade-in. Remember, the interest on the loan for a large purchase can total up to be a significant amount of money, usually thousands. So even a small difference in your rate can be a lot of savings.