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Top 7 tips for negotiating with a car dealer

Want to know how to negotiate with a car dealer? Check out these tips.

So, you’ve decided that you want a new or used car. The rust bucket you’ve been driving since you were 16 is getting too expensive and buying a new or used car is cheaper, or at least that’s what your partner tells you. No matter how much you try and put it off, it’s what you’ve both set out to do this weekend.

However, before you get too excited by the balloons and the flashy “sale” stickers pasted on the windscreens of the cars you’re looking at, check out these 7 tips to get the best deal for your new vehicle.

1. Do your homework

Before you attempt to negotiate with a car dealer you need to do your research so you know exactly what make and model of car you want, and how much it costs. Being clear on this point is important, as it means you won’t be swayed by the dealer offering you a range of different options, typically at a higher price.

Also knowing the features of the car, especially optional extras, can put you in a strong bargaining position. If the car in stock doesn’t have a certain feature, then you can use this as a reason to negotiate a lower price.

2. Factor in other costs

As part of your research, you should factor in the car’s on-road costs; including insurance, maintenance, WOF, registration, so you know exactly how much budget you have to play with.

A pre-purchase inspection is also another cost you should factor in before finalising the price. If there are issues or repair work needed, this can be a strong bargaining tool. It can also give you a good reason to walk away, if you’re not happy with the car’s condition.

3. Follow the three-dealership rule

The three-dealership rule is something you might not have heard of, but it is a pretty good rule to stick to when shopping for a new car. Do a quick Google search and find the closest three dealerships near your house. Pick a weekend that works best for you and make the time to go to all three of them.

It sounds like a waste of time, but once you’ve gone to all three dealerships, you’ll have a good idea of which one has the best deal on the car you’ve already rigorously researched online.

It’s important to make sure that you go to the dealership that’s farther away from you and work your way closer to home. That way if there is a better deal down the road, you’re aware of it and can take your hard-earned cash there instead. Whatever discount you can get at the dealerships you go to means more savings for you.

4. Shop in the middle of the month

If you car shop at least 10 to 12 days before the end of the month, this ensures that the salespeople at the dealership you decide to go to haven’t hit their targets just yet. You know what that means, right?

They want to hit that target so badly that they’re sometimes willing to play ball and lower the price! Lucky you!

However, if you decide to go later in the month, you run the risk of the salespeople having already hit those targets. If this happens, they may delay your sale until the next month so it counts for that one instead of this one, or you may not be able to negotiate as good a deal.

Also, if you can wait, shop around for a new car towards the end of the financial year. Car dealerships will have stock that they need to get rid of and will lower the price of the vehicle to do this.

5. Get your loan from a lender instead of the car dealership

You’re willing to admit that you’ve been distracted by the pretty balloons and found the car of your dreams. The only issue is that it is slightly over the budget that you had planned for your new or used car. Before you sign up with dealership finance so you can drive away with your new car right there and then, take the time to compare your options. You may be able to get a better deal from a bank or other car lender.

Dealership finance can be quite competitive but can cause other things to happen in the sale. For example, you may not get as good a price on the car because you got a good deal on the interest rate.

Getting pre-approved car finance from a lender before you buy the car can put you in a better position to negotiate, as you know how much you have to spend on the car.

6. Be polite to the person who’s trying to sell you something

As a general rule, you should be polite to everyone you talk to. When you’re shopping for anything, especially cars, this rule comes into play as well. Although it can be frustrating when people don’t take no for an answer, take the time to think about how emotionally draining their day as a salesperson must be.

It’s not an easy job to talk to strangers and get them to feel at ease, but that’s what salespeople have to do. As with any business transaction, do not threaten the person who’s trying to sell you something to “take it or leave it” as this is an aggressive approach that will not work out in your favour.

While it’s important to be strong when negotiating, people are more likely to do something nice for someone who has been nice to them. Keep this in mind while shopping around for your new car and you might just find a salesperson who loves being treated with kindness and will sell you the car for lower than the advertised price.

7. Don’t be afraid to walk away

It can be tough when the dealership closest to you is offering window tint and a free automatic upgrade on a car that you thought only came in manual. However, it’s important to remember that these people are not your friends and that they just want to make a sale, no matter how friendly or polite they are to you.

If the car is not exactly what you want and you know you can get it cheaper due to the three-dealership rule, feel free to leave your contact details and walk away. Ask them to contact you if they change their mind, and explain if you will be looking elsewhere for alternative choices. It’s a total power move and might just make the salesperson lower their offer price.

Walking away from a salesperson can be tough, but if you’re sure that the deal they’re trying to sell you just isn’t right for you, walking away is the best option for you and your wallet. If you think that there’s a better deal out there, there probably is. You’ve just got to walk away and find it.

Bottom line

Follow these 7 tips for dealing with a car dealership and their salespeople, and you might just find that the next new or used car you buy will be a bargain! Good luck!

Car finance you can compare today

Name Product Interest Rate (p.a.) Loan Amount Loan Term Establishment Fee Requirements Table description
Simplify Secured Car Loan
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MTF Finance Secured Car Loan
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Lending Crowd Secured Car Loan
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$5,050 - $200,000
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Nectar Unsecured Car Loan
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Requirements: NZ citizen/permanent resident or have a work visa, income of $400/week (after tax), stable credit history.
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CarFinance2U Car Loan
8.95% - 23.95%
$5,000 - No max.
1 - 5 years
Requirements: NZ citizen/permanent resident.
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Picture: Shutterstock

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