Car Price Negotiations

When negotiating the price of a car, it is important to start from a position of power. That means knowing the tricks of the trade and being prepared to use them.

The first trick to know when preparing for car price negotiations is to know the starting price of the car. Initially, this means doing some research in the manufacturer’s suggested retail price of the car.

It is also important for car price negotiations to know what the car is selling for in your region. For example, several years ago, when the Toyota Prius was new to the American market, the suggested retail price of the car had nothing to do with its actual selling price.

Because the car was in high demand and low supply, dealers were able to negotiate prices much higher than the standard asking price. The smart car price negotiator will be aware of these trends and either accepts that added cost of the car or opt for a car in lower demand.

The second trick to know is that you should also have the invoice price of the car in hand when begging your car price negotiations. A smart negotiator will know that the invoice price is not what the dealer paid for it; invoices reflect the price the dealer would have paid if not for incentives, rebates and factory deals for the dealership.

This is important to know in car price negotiations because some novice negotiators will fall for the ruse that they are getting a good deal since it is close to the invoice price. Remember, the invoice price is not what he paid for it and getting him to sell you the car below invoice does not mean you are driving the dealership into bankruptcy.
The third trick smart car price negotiators need to know is that they should begin negotiations based on the theory that they will pay cash for the car and that there will be no trade-in. In an era of revolving credit, most car price negotiators do not understand that the trade-in allowance is often figured in by less scrupulous dealers and the base price of the new car is increased.

In addition, car price negotiators must be aware that some car dealers will also hide increased car prices in the financing. To avoid this, negotiators must be willing to discuss car prices as though financing is not necessary.

The person negotiating the price of the car must also be able to talk the jargon and be familiar with standard options packages. For example, a dealership might try to charge individual option costs for upgrades including automatic transmission and air conditioning and power windows even though all three are typically packaged together and sold to him at a discounted rate.

The negotiator should also clarify whether the price he is discussing with the car dealer includes all taxes and fees associated with the closing of the purchase of the car. Many first time new car buyers are surprised by the fees that are added on the car cost after the price has been discussed. Such fees usually not included in the car price negotiations include state sales taxes, license transfer fees, and freight costs.

Finally, a car price negotiator must understand the fine art of negotiation and the reality of how little negotiation actually takes place. He must be willing to discuss getting adding option without price increases and must also be willing to put his foot down when the salesman tries to increase the cost and value of the car by adding no options that the new owner neither wants or needs.