dealership negotiation

Buying A New Car? The Pros And Cons Of Dealership Negotiation

If you plan to buy a new car, one of the most important things you can do to get a good deal is to practice dealership negotiation. Even though there’s a listed price on the car, you don’t necessarily have to pay that price to buy it. Dealerships expect you to negotiate, and they have some “wiggle room” in their pricing structure so they can reach a deal that works for them and for you.

But how do you handle negotiating at a car dealership? What kinds of pros and cons do you need to look into? Here’s what to consider before you head out to buy a new vehicle, so you can be prepared to negotiate. This will give you the best chance of getting a great deal, and can also help reduce your stress levels if you’re not used to asking for a better price or working with a car dealer to come to a mutual agreement.

Remember That Knowledge Is Power

Understanding what you’re really getting and the total costs of ownership is vital to making a good choice at the dealership. It’s also one of the most important money management tips when you’re on a budget. While you might be able to afford the payments the dealer is offering, being able to make the payment doesn’t necessarily mean you can afford the car. 

What if something in your financial situation changes, or you have an unexpected expense? If you’re buying a used car, what if something breaks down? New cars have warranties, but they can also have costly insurance premiums. By doing your research beforehand, you know not just what the car you want to buy is really worth, but how much it will cost you to own it. 

Even something like whether the car requires premium gasoline or how much standard oil changes and other maintenance visits cost matters when negotiating. If the dealer really wants to sell you the car you may be able to get an extra perk, such as free oil changes for life. Don’t be afraid to ask for extras and discounts. The worst that will happen is the dealership will say no.

Knowledge is more than just information about the car and its cost, though. Check your credit score before you head to the dealership, and make sure you have any information you might potentially need, such as paycheck stubs, tax returns (common if you’re self-employed) and other important paperwork. Then if you decide to make a deal, you’ll be prepared. 

But keep those things in a folder or pocket, and don’t let the dealer know about them. The more you show that you have everything lined up, the more the dealer will see that you’re ready to buy. If you seem overeager, the dealership will see you as someone they can manipulate into paying more money. Don’t seem too excited to buy a vehicle, so you have more negotiating power.

It’s Business, No Matter How Nice The Salesperson Is

Don’t forget that you’re involved in a business transaction. You might think the salesperson is the nicest person you’ve ever met. Maybe they’re very attractive, or you share a hobby you’re both passionate about. Those things can be great, but keep in mind that salespeople work hard to be charismatic and connect with potential customers. It helps them make sales.

One of the biggest cons of dealership negotiation is having to work with people who are really good at selling cars. It can be harder to say no, and it’s easy to get into a conversation and not realize that you’re making concessions you might not really want to make. In other words, don’t let the looks or personality of the salesperson distract you from your objective.

Many salespeople will try to make you feel guilty for asking for a deal, or they’ll give you a “reason” they can’t bring down the price. A lot of the time, these are just dealership negotiation tactics that salespeople are automatically trained to use. In reality, there’s no reason for you to feel guilty. You’re not hurting their feelings. This is strictly business, and they know that.

Additionally, there are a lot of negotiation points that a dealership can work with, even if they originally say they can’t. You can accept “no” for an answer, but you don’t have to. Instead, you can press them on the point, or you can choose a different point. For example, they might not want to come down on the MSRP, but they might agree to remove dealer and prep fees.

Know What’s Open To Negotiation

Because there are many pros and cons to dealership negotiation when you’re buying a new car, one of the best ways to get a good deal is to know what you can negotiate and what you can’t. That keeps you from wasting time on areas where the dealer really can’t make changes, so you can spend more time focused on areas that might actually bring you a better deal, overall.

The MSRP is definitely a negotiating point. It’s the “suggested” retail price, and the dealership can actually sell the car for any price they choose to, as long as someone will purchase it for that price. If it’s a high-demand car in a tight market, you might actually have to pay more than the MSRP (commonly called the sticker price) to get the car. 

Most of the time, though, you can pay less than the sticker price for a vehicle, especially if you know how to negotiate with a car dealership. But even if the dealership won’t budge on the MSRP of the car, there are plenty of other areas where you can negotiate. You can ask for more for your trade-in, for example, or you can ask the dealership to give you add-ons for free.

You don’t have to buy credit insurance (sometimes called credit life), and you don’t have to buy gap insurance. You can purchase these items if you want to, but make sure that they’re not just being added on without your knowledge. If the dealer says they’re required, they’re not giving you accurate information. It’s okay to tell them that, and even walk away if they push the issue.

If they see that you’re about to walk away from a deal, and that you know your rights and legal requirements, the vast majority of dealerships will back down. If they still try to push you, is that really a dealership you want to negotiate with anyway? Even if you really like the car, it’s not worth getting into a bad deal with a lot of added expenses you don’t need or can’t afford.

You can’t negotiate taxes or registration fees, because the dealership doesn’t have any control over those things. Additionally, they won’t negotiate the destination charge seen on the sticker. Make sure the dealership doesn’t stick another freight charge on the paperwork, though. If they do, you can often get it reduced or eliminated. There’s no need for it other than extra profit.

There Is More Than One Dealership To Buy From

At the end of the day, remember that the dealership you’re negotiating with isn’t the only one around. There are a lot of other dealers to purchase a car from, and being willing to go to another dealership can help you get a car that’s a much better deal. Even if you live in a more rural area and have to drive a little further, sometimes going to a new dealership can make the difference.

Every dealership and every negotiation will have pros and cons, though, so make sure you’re walking away from the first dealership with a clear conscience if you decide to look elsewhere. You want a dealership you can trust to be fair and honest with you, and most big dealerships will be. They have a reputation in the community, and don’t want to damage it and lose business.

Unless you’re completely committed to purchasing a very specific make or model of car, shopping around can almost always get you a better deal. You might find something you like even better by being willing to look around and negotiate your options. With so much information about cars available online, you can find several you like and then go see them in person.

You can make a list of pros and cons for each car, and also for the dealership. Be prepared with a list of questions, know what to look for on the paperwork if you’re about to sign a contract, and don’t focus on how much the payments will be. Look at the bigger picture, and remember that buying a car is a business transaction. 

You want to get what you like, of course, but ultimately you need to get a good deal, too. Most people can’t afford to buy cars on a whim, and getting a quality vehicle at the right price matters. With some negotiation know-how, you can get the car you like at a price you can afford.

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