When shopping for a used car from a private party, you pretty much expect to get to haggle on the price. In the past, dealers also expected you to negotiate on pricing with new models, which is why they had a higher sticker price than what they knew the car would sell for. With low supply and high demand for new and used vehicles, is the art of negotiation still relevant today?
Understand the market
Before you think about negotiating the price on a vehicle with a dealer, you need to understand the current market. Right now, dealerships have limited inventory and auto manufacturers can’t build the vehicles fast enough to keep up with consumer demand. Even used vehicles are commanding top prices because they are the only models available.
When you recognize the current climate for car buying, you realize that prices are increasing because supply is limited. It’s a seller’s market because there are more people wanting to buy than vehicles for sale. Does this mean you have no negotiation power? No, but it does mean you need to be shrewd in how you negotiate.
Know the values of vehicles
Before you start haggling prices with a salesperson, you need to know the value of the vehicle. Start with the manufacturer’s suggested retail price or the MSRP. While most vehicles haven’t sold for their MSRP in the past, it is a good starting reference point. And with high demand, more models are getting closer to this price today.
With a used vehicle, you can check the Kelley Blue Book for the value of a model you’re interested in. You’ll need to consider whether the vehicle is in excellent, good, or fair condition to know where it ranks in the price range.
Get approved for financing
You have more power to negotiate if you have already been pre-approved for financing. The dealer knows you’re serious about buying a vehicle. They also know you have the means to pay for it with a car loan.
What you might not want to share with the dealer is how much you were approved for, especially if you’re hoping to lower the price. You can also avoid extra fees and other add-ons with financing in place.
Mastering the art of negotiation
Once you’re armed with financing and the information you need, you need to do some final research. Compare pricing with different dealerships and find out about any special discounts or deals being offered.
Don’t forget to take time to figure your budget. It doesn’t matter how low a price is if it’s out of reach for you. Once you have an idea of the best price you’re willing to pay, you should decide on a “walk-away” price. This means that if the dealer doesn’t come down to that price, you’ll walk away.
Set a starting price for negotiations. Keep it low, so you have room to work up to meet the salesperson halfway. And most importantly, be professional. Don’t let the salesperson know how much you want that fancy sports car. And if things don’t go your way, politely thank them for their time and leave. You never know when they might call you later and say they are willing to accept your deal.