How to Negotiate a Car Price at a Dealership

When you head to a car dealership, the advertised “price” rarely ends up being the final price you pay. That can be incredibly frustrating as a consumer, especially if you feel like the salesperson always has you at a disadvantage. Learning how to negotiate a car price at a dealership can level the playing field. 

Understanding how to negotiate at a dealership and knowing some car price negotiation tips can increase your odds of getting a great deal. While there may be some instances where you simply need to walk away, these strategies can give you an edge next time you are vehicle shopping. 

How to negotiate a car price at a dealership

Get yourself in the right mindset before you set foot on a dealer’s vehicle lot. Dealerships expect you to negotiate. You aren’t being difficult by haggling over price and perks. You’re being smart and protecting yourself financially. 

Separate emotion from the transaction. This is a business deal. The salesperson may be friendly, but that’s part of their job and the image they want to present. Your goal is to secure the best possible price. The salesperson has two goals. They want to make as much money as possible and get the deal done. 

When you negotiate, focus on facts like market value and comparable listings. Be real about your budget. There’s no point in bluffing about your budget, as that truth will come out at the financing table. While you don’t need to be rude, the interaction doesn’t have to be completely comfortable and friendly either. Stand up for yourself. 

Do your research before you go

Showing up well-prepared is your biggest advantage. Before you step onto a lot, you  should already know:

• The fair market value of the car
• Typical dealer markups
• Available incentives or rebates
• Pricing at a few competing dealers

Use online tools to compare prices and check listings in your area. You may also want to call ahead and ask a salesperson if the dealership adds any additional fees or markups to the transaction. 

Unfortunately, some salespeople will lie just to get you in the door. If you show up and find out you were lied to, that’s enough reason to end the deal and walk away. 

Get preapproved for financing before you negotiate

Apply for an auto loan with your local credit union or preferred lender before you head to the dealer. 

You can always explore dealer financing options to compare rates and offers. However, showing up with a pre-approval for a loan amount that fits your budget shows salespeople that you are serious and helps you avoid a lot of the frustrating back-and-forth haggling. 

You have a grace period after applying for financing to compare options. You can apply for an auto loan with multiple lenders and only experience one credit check hit on your profile. Take advantage of this window. 

What to say when negotiating

It’s helpful to keep some car price negotiation tips in mind.

Start below your target price

If you have a target price in mind, don’t start there. If a fair price for a vehicle is $40,000 and the dealer has it listed for $44,000, start by asking for a price a few thousand dollars below your target, such as $37,000. The back-and-forth countering can be frustrating, but it’s part of negotiations.

Make sure the price you are aiming for is realistic based on market rates. While a dealer may be able to cut you a deal, it can be tough to sell vehicles below market value. 

Focus on the total price, not the monthly payment

The salesperson may push to find out how much you want to pay per month. However, they can manipulate that figure by adding months to the loan term. 

While it’s important to make sure you can afford the monthly payment, focus on the total price first. Then, make adjustments on the financing side to get the monthly payments to the right dollar amount. 

Know when to walk away

Sometimes, a deal just doesn’t make sense. It could be due to add-on dealer fees that make the vehicle too expensive or a misunderstanding of the market. Regardless of the reason, don’t be afraid to walk away when necessary. 

Mistakes to avoid when negotiating

Even if you are well-prepared, there are common mistakes that could cost you money, such as:

• Negotiating based on monthly payment
• Skipping your research
• Revealing your max budget too early (or bluffing about it)
• Allowing the dealer to tack on add-ons, like tire protection
• Getting emotional

You have to be willing to walk away from a deal if it doesn’t make financial sense. A salesperson may try to woo you with the vehicle’s features or a monthly payment that sits close to your target. Don’t let them shift your focus. 

Conclusion

The reality is that no amount of car price negotiation tips will work if you don’t have the credit score and financial profile to qualify for a competitive rate. That’s where tools like Kikoff level the playing field. 

Kikoff is a credit-building platform that includes a variety of free and optional paid tools to strengthen your credit profile. Features include:

• Free verified rent reporting
• Free dispute letter generation
• Invite-only credit builder loans
• Secure credit card
• Free debt negotiation 
• Bill negotiation 
• Privacy and identity protection 

Are you ready to strengthen your score before you go vehicle shopping? Start building a positive credit history with Kikoff.