Car Buying Negotiations

Car Buying Negotiations
June 27, 2016 Paul Woodruff

Most people who want to purchase a car are excited about the vehicle purchased but not about the process of navigating to the purchase. Most of us don’t consider the process of negotiation to be fun; although, admittedly I do know one individual who finds negotiating on vehicles to be exhilarating. On average, most people find it to be overwhelming. I have learned many things from my negotiation-loving colleague, and his experience helped me to be a savvier car-buyer and grow to love helping my clients become better at navigating the car buying process. Price, trade-in, and financing are easily rolled together by a trained, well-seasoned auto salesperson when in reality these should be very separate conversations. Think about it.

Price – Before going to any dealerships, do your research. Lots of research! Edmunds, Kelly Blue Book, and the National Automobile Dealers Association are good places to start. Key in the options you want in the vehicle and search for the lowest cost; I suggest printing this information. If you are planning to trade a vehicle in, you need to do the same type of research but you want to search for the highest cost; again, I suggest you print this information.

After you shop around and determine which dealership you want to purchase from, make only the overall price of the vehicle your focus at first. Do not mention trade-in or financing. Doing this helps you remain in control; when you remain in control, you are gearing yourself up for better negotiations. Do you remember the lowest price print-out from your research? Now is the time to use it. Get any pricing agreement in writing.

Trade-In – Once your price negotiations are complete, have the dealership evaluate the price of your trade-in. Remember that you have a car that they are purchasing from you as part of the car buying process; when you include it in the price negotiation, you are essentially giving your car away. If they come back with a trade-in value significantly lower than the researched value, you can show them the highest cost research print-out from above. This will help you to negotiate the value of your current vehicle.

If that doesn’t yield the results you were looking for, take your vehicle to a similar dealership to ask what they will give you as a trade-in. Don’t be afraid to use your research print-out to help pull the value of your current vehicle up. As I suggested before, make sure you get the amount in writing because you want to take the value back to your original dealership to see if they will adjust their value based on this new information. Be diligent!

Financing – Understand what options are available to you. Typically your credit union or bank will offer the best interest rates, but you should be aware of dealer-financing specials for which you qualify. Going to a dealership with a pre-approval from your financial institution is helpful in knowing exactly what you need to negotiate the price in order to finance the vehicle. Being abreast of the offers available to you helps you pay the least amount of interest over the life of the loan saving you money both monthly and in the long-run.

Using these tactics, I was able to save approximately $5,000 on the purchase price of my vehicle as well as get the lowest interest rate available to me and finance my vehicle for a shorter period of time. All of these things combined save me thousands of dollars over the life of my loan. I know that I appreciate Gary for teaching me about car-buying which gave me the confidence to successfully negotiate at the dealership; if you would like to increase your confidence before purchasing a car, Prosperity Connection’s team of Financial Coaches would be happy to help.

Happy Negotiations!

By Meghan Gardner, AFC, FFC Candidate