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Everyone needs to find a reliable way to get around; and, quite often, that means getting a car. Perhaps you found a new job whose commute isn’t accommodated by public transit. Maybe your old vehicle broke down or you were in an accident. Anything from a new addition to the family to increased travel for work is a reason to get a new vehicle. 

The need for a new vehicle does not, however, mean that it is an easy process. There are countless factors you need to consider. From the type of vehicle to price to insurance, it can be challenging to find the right vehicle. Then, once you finally know what you want, comes the worst part: negotiating a car price with the salesperson. To get the best deal, it’s important to plan ahead and know what to expect.

The Scenario 

Here’s what a typical experience looks like. You’ve done your research and have a few vehicles in mind. You visit the dealership and a salesperson tracks you down as you’re checking out vehicles. The two of you discuss the vehicle you want, your needs, and your budget. The first trick is right around the corner. The salesperson will ask you what your monthly payment budget is. Unfortunately, this is a common pitfall for car buyers since it doesn’t accurately represent the price of the vehicle.  

Monthly payments rarely reflect the price of the car itself. The monthly fee for a $20,000 and a $30,000 car can be the same, only you’ll end up paying more in the long run. Car loans are about more than periodic payments. Though it can be tempting to look only at the value of a low monthly cost, it could result in you paying far more than your ultimate budget for the car. 

Making monthly payments attractive is a sneaky way to make a car outside of your budget seem affordable. The salesperson is trained in getting buyers to pay the highest price possible, meaning they will always give you a higher quote than what you want to pay for your car. So long as you keep your wits about you, this is the beginning of your negotiation. 

New vs. Used Cars

Persuading Your Salesperson to Offer a Lower Price 

Is it always possible to persuade a salesperson to lower the price of a car? No. But, you can equip yourself with the information you need to give yourself the best chance.

Research, Research, Research

The first is researching the specific car, in detail. Learn how much it’s worth, factoring in the cost of any add-on features. Ensure that you have this information in print and on hand. These real numbers give you a better leg to stand on in terms of negotiation. It shows the salesperson that you are an informed consumer; that you know the worth of the vehicle. It puts them in a position where they need to beat that price. 

Be Aware of The MSRP Trap

Whether as a comeback to your printed price or as a go-to tactic, salespeople will typically offer you the Manufacturer’s Suggested Retail Price (MSRP). This is the retail cost for the vehicle suggested by the producer. When you negotiate, it’s essential to work up from your lowest price as opposed to negotiating down from the MSRP. It will result in a better price just about every time.

If you approach the negotiation from a higher starting price, chances are you are already quite far from your ideal budget. Conversely, if you work your way upwards from the lower end of your budgetary parameters, there is more room to negotiate. You can stay within your budget and still navigate better terms. 

Get Preapproved 

Another step to take that can facilitate your negotiation is to get pre approved for a loan, and be able to prove it. This offers a quick glance at your financial situation and shows that you are serious about making a purchase. Sellers are far more likely to negotiate when they understand that you actually plan to buy a car. Time is money, and when you make it clear that you will be purchasing a car and it is just a matter of price, the dealership is more likely to negotiate.

The other side to this is the opportunity financing poses for the dealership to profit from your purchase. So long as you highlight that, while you have approval for financing you would still be willing to finance the vehicle through the dealership, it can work as an incentive. When you finance through the dealership directly, the business makes more profit over the long term. When the salesperson can see the long-term profit, you have a better chance of receiving a lower price on the car. 

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How Do You Negotiate the Best Deal on a New Car? 

Of course, preparation is only half the battle. The next step is taking that information and using it to leverage your way into a better deal. The key is knowing what the car is worth, both the MSRP and competitive prices from other dealers. Get actual quotes from a range of dealers, ensuring that you don’t get pressured into a purchase along the way. As you continue to get quotes, proceed by getting the subsequent dealerships to try and beat the best number you got so far.

Ideally, this leaves you with a series of quotes that get better as you move forward. While the process can take a lot of time and effort, it’s important to put in the work. By understanding the value of the vehicle, you can stand your ground when different retailers are giving you quotes. While it can be tempting to make a purchase early on, it is essential to know when to walk away. Salespeople are professionally trained to encourage you to make a purchase. They have both soft and hard closing techniques, and often these can be intimidating. Be sure not to let the salesperson pressure you into a deal that isn’t in your budget. 

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Salespeople often lead you to believe that rebates and financing at a low cost are only when you pay the sticker price. This is not true. Rebates come directly from the manufacturer, regardless of the price agreed upon at the dealership. Even if you pay less than the sticker price, this doesn’t impact your eligibility for rebates or low-cost financing. Understand all the financial options available to you, there is less likelihood of you getting pressured into a subpar agreement. Be clear, concise, and straightforward with the sales representative. It shows that you are informed and confident, a better position to be in during a negotiation. 

At the same time as staying strong is important, it’s essential to know when to accept a deal. Remember that the goal of negotiation is to find an amenable agreement. So, when the price is reasonable, it’s important to be willing to accept. Sure, you could continue using quotes to get yourself slightly better deals and interest rates. However, be sure that you consider the time investment, and who you ultimately want to do business with. When you find an agreeable offer, it’s often best to take it instead of continuing forward on the off-chance of slightly better savings. Figure out the terms you want. When a dealer is able to meet the criteria, it is wise to take that option. 

Auto Financing 101

Additional Negotiation Tips 

In addition to making sure you are an informed buyer and being confident when you speak with sales representatives, here area few additional negotiation tips to keep in mind when purchasing a new car. 

Call at The End of The Week

A lot of it comes down to timing. Sales representative work based on quotas. Make your calls before a cutoff date, like at the end of the week. Agents might be more amenable to lowering their prices if there is pressure to make the sale before the end of the week. 

Call at The End of The Month

The same is true of monthly quotas if you are able to wait that long. By doing your research and contacting a dealership toward the end of the month, you have a better chance of a good deal. 

Diversify Your Approach

Work with more than just one dealer. By staying consistent in your approach and using the same terms each time, you improve your odds. In sales, this is often referred to as the law of averages. When you persevere and approach multiple retailers, you are very likely to have someone accept your terms. 

Final Thoughts

Negotiations are an artform. Everyone has slightly different techniques, though the most successful approaches have several things in common. The key is confidence, backed by information. So long as you do your research ahead of time and come prepared when you approach salespeople, you put yourself in a better position. It’s a matter of time and patience. Gather all the information possible about the car you want. From there, as long as you ensure that you stick to the budgetary parameters you have set, you can get a great price. 


Add-OnsAny features or services that are applied on top of the base price of a car are considered add-ons. These can include things such as tinted windows, heated seats, leather seats, alarms, and wheel locks, to name a few.
Base PriceThe base price of a car is the cost of the vehicle without any upgrades or added features that can be added after the car is ordered from a dealership. Only standard equipment and the manufacturer’s warranty are included in the base price, but any other fees will be added afterward.
Certified Pre-Owned (CPO)CPO cars refer to used cars that have been certified, either by the dealership selling the car or the manufacturer of the vehicle. This gives consumers confidence knowing they are buying a used vehicle that is in good condition. When a used car is obtained by a dealership, it is inspected by a certified mechanic. The car is then repaired if it meets the required standards and is then ready to be sold as a CPO vehicle.
Clear TitleA clear title means that the owner of the car has a free and clear title and no longer carries a balance owing on a car loan. There are no liens of the title or levies from creditors.
DealershipAuto dealerships are businesses that are authorized to sell new or used automobiles to consumers and serve as a direct dealer for automakers
Dealership FinancingConsumers can obtain dealer financing to help fund the purchase of a vehicle. A contract is signed with a dealership that requires a consumer to pay for a specific amount plus interest and funding fees over a certain period of time. Dealers will send the details of the consumer’s financials to various lenders to find one that will approve the loan.
DepreciationDepreciation refers to the decline in the value of a vehicle. Immediately after purchase, a vehicle will become less valuable as soon as it is used. Put another way, depreciation is the rate at which an automobile loses its value over time
Extended WarrantyVehicles come with a manufacturer’s warranty when purchased, but buyers can choose to purchase an extended warranty. This serves as a form of insurance policy on the vehicle to cover the cost of potential repairs in the future. An extended warranty is usually good for a certain period of time and/or mileage.
LeaseA contract that allows an individual the right to use or occupy a property for a specified period of time in exchange for a monthly payment. Leases are common for a property like apartments and vehicles. The individual on the lease does not own the asset at the end of the lease’s term, it is strictly for rental purposes.
MSRP (Manufacturer’s Suggested Retail Price)Car manufacturers will offer recommendations on how much a car should be priced at the retail level, known as the manufacturer’s suggested retail price, or MSRP. The purpose of the MSRP is to standardize pricing in the automobile industry so that there is not a lot of fluctuation in price from one dealership to another.
Title LoanA title loan uses the vehicle title as a form of collateral to secure a loan. Borrowers must own their vehicles free and clear and no longer owe any amount on a car loan. A lender will place a lien on the car title in exchange for funds. If the borrower defaults on the loan, the lender can take possession of the vehicle and sell it to cover any losses.
Trade-in AllowanceA trade-in allowance is the amount that a car dealer will reduce the cost of a new car purchase by after the consumer’s old vehicle has been traded in. It is somewhat like being given credit from the sale of an existing vehicle that is then applied to the purchase of a new vehicle.
Trade-in ValueA trade-in value is the amount that dealerships offer consumers for their vehicle and is typically applied toward the purchase price of another vehicle. Dealerships will assess the value of the vehicle and will base the amount that can be applied to a new car purchase. The consumer will then trade in the old vehicle and the assessed value amount will be deducted from the price of another vehicle. Trade-in value is often different than what the vehicle may be worth when sold in the open market.
Vehicle Identification Number (VIN)Every vehicle will have its own unique vehicle identification number, which is used to identify a specific vehicle. No two vehicles will have the same VIN, making them easily identifiable with this unique 17-character code.
Corrina Murdoch avatar on Loans Canada
Corrina Murdoch

Corrina Murdoch has been a dedicated freelance writer and editor for several years. With an academic background in the sciences and a penchant for mathematics, she seeks to provide readers with accurate, reliable information on important topics. Working as a print journalist for several years, Corrina expanded her reach into the digital sphere to help more people gain insight into the realm of finances. When she's not writing, you can find Corrina swimming and spending time with family.

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