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Negotiating a Car Deal

Getting a new set of wheels can mean freedom on the road, but the process of buying a car inspires a less exciting image. The tricky car salesperson, the lightning-fast dealership sales, and the complicated negotiation process can be a less than thrilling, and even downright stressful, experience for the average buyer.

The good news is the stereotypes and misconceptions of negotiating a car sale can be easily dispelled. With a little bit of prep work, some determination, and a relaxed attitude, you can be a negotiation pro at the dealership.
Read on for some car-buying tips.

Before the Negotiation

Being a know-it-all at the car dealership has its perks. Don’t let the first time you look at car pricing be the first time you enter the dealership. Instead, put in some time beforehand to research your best options. The more information you can bring to the negotiation, the easier it’ll be for you.

Get to Know Your (Potential) Car

There’s so much you can learn about the car you want to buy without even seeing it in person. Research the sticker price , also known as the manufacturer’s suggested retail price (MSRP). With some investigating, you may also be able to find the invoice price, or what the dealership paid for the car. Knowing these numbers can help indicate if a car salesperson is offering you a good deal on the floor.

Also, take time to look up market analysis on your car. This can give you a better idea of what other buyers in your area might have paid for the same vehicle. That’s a great indicator of how flexible dealerships are regarding the sticker price.

It will also help to have an idea of what add-ons you do or don’t want before seeing the car in person. Add-ons are often thrown on in the negotiation process and can add substantial cost to your car. Think about trims, colors, or special features you need, and the ones you can live without.

Still not sure what car you want to buy? Take time to compare different models and makes. If you are confident about what you want, then you’re likely to be more focused during the negotiation.

Get to Know Your Dealership(s)

A quick online search of your area can bring up a multitude of car dealerships, for both new and used vehicles. You can even search for the exact make and model you are looking for, to see if dealerships in your area have it on the lot. Knowing what’s on the lot will give you more power at the bargaining table.

While you’re at it, check out Yelp or other consumer reviews for each dealership. This might give you a better idea of the type of negotiation you’re walking into. Everyone has a different opinion of what time is best to visit a dealership, but many agree that weekday evenings, closer to the end of the month , if possible, can tip the negotiation in favor of the buyer.

Know Your Finances

When you head to the dealership you can expect the car salesperson to throw out a ton of figures when it comes to financing and monthly payments. In the moment, this can be really overwhelming and could lead to you overextending your finances. When thinking about how much you can afford, consider the following:

•  How long do you plan to keep the car?

•  How much do you plan to drive?

•  How much can you budget for maintenance and repairs?

•  How much will your monthly payments and insurance be?

Do some research on average car payments and calculate what you can afford to pay each month. Think about spending 10-35% of your income on a car. Consider how much you’ll be able to put down, as well as if you’ll need a personal loan at the time of the sale.

Car dealers will try to roll financing into the deal, but you can also compare rates beforehand to see if you’re getting a good deal.

During the Negotiation

Shop Around

Don’t feel tied to a single dealership when you start shopping for a car. In fact, you can use multiple dealerships as leverage in the negotiation process. If you visit one dealership and get an offer, you can go to other dealerships with that number, and ask for a match, or even a lower offer.

Don’t be afraid to let the salesperson know you’ve been shopping around—sometimes that can lead to a more compelling offer.

The more dealerships you visit, the more knowledge you’ll have about offers on the table. While it’s not the most exciting way to spend an evening or weekend, shopping around will give you a better idea of the competition and a more extensive array of offers.

If there aren’t many dealerships in your immediate area, widen the net. Some dealerships offer online chatting features, or you can call the online sales department to check on stock. Depending on the savings, it might be worth the drive.

Focus on the Big Picture

When you start discussing the price of a car with dealers, they’ll often try to get you to focus on the monthly payment instead of the overall price of the car. Try to avoid this pitfall.

A lower monthly payment might mean a much longer term for the loan, leading to higher interest rates and, ultimately, more money. While you need to have an idea of what monthly payment you can afford, talking big-picture payment ensures you and the dealer are looking at the same terms. Continue to bring the conversation back to the total cost and avoid lengthening the term of the loan, if you can.

If you’re considering a trade-in, don’t bundle the two transactions. Research the value of the trade-in beforehand. Selling it to another person or a used car supercenter may fetch you a higher offer.

Never Be Afraid to Walk Away

Once you start a negotiation, it may feel like you can’t walk away without risking the entire deal. When emotions and stress run high, the process starts to feel personal. In those moments, relax, take a step back, and remember you can always walk away from a deal, especially when you’re not seeing eye to eye with the salesperson.

If you feel like your negotiation isn’t going anywhere, it’s okay to put your cards on the table and say something like, “I feel like we’re too far apart in price to come to an agreement.” Leave your information with the salesperson and you might end up with a deal at a later date.

It’s also worth knowing your absolute threshold for the cost of the car before beginning the discussion. What number will you not exceed? If you can’t get to that number or below, you know it’s time to walk away.

Sometimes, leaving negotiations can pay off in the end. But, even if it doesn’t, you should always be open to walking away, whether it’s in favor of a lower offer or just for your peace of mind.

After the Negotiation

So you’ve reached that magic price point on which both the dealer and you can agree. Congratulations! But, the work’s not over yet. Take care to pay attention to the last few details to avoid any hidden costs or misunderstandings.

Don’t Stress About Add-Ons

Your salesperson might talk about throwing in add-ons to your sale, such as extended warranties or extra features. Typically, they’ll talk about these features only adding a few more bucks to your car’s monthly payment. Don’t forget to think big picture! A few dollars a month can add up to big expenses over time, and if you didn’t plan for these add-ons in your research, chances are you don’t need them now.

Don’t Just Sign Anything

You’re probably a little worn down by the negotiation process at this point, but take extra care and ask any questions you might have before signing documents.

Keep an eye out for any errors in the paperwork, and ask for them to be corrected before you sign. This will alleviate any future headaches that might come up with lousy paperwork. It’s tedious, but understanding and getting everything right upfront will lead to a smoother process down the line.

Double-Check That It’s a Done Deal

Double- or even triple-check that the deal is done before driving your new (or new-to-you) car off the lot. If it’s the weekend, it might not be possible for your financing to be fully approved, or certain documents might take more time to go through.

While your salesperson might tell you, “You’re free to go with the car,” there’s always the small chance that your financing doesn’t work out as planned. You might have to come back later and work through a whole new set of negotiations.

Instead, triple-check that all paperwork has gone through, and consider bringing your own pre-approved financing to the bargaining table to avoid the conversation altogether.

Saving for a New Car

Trying to save for a new car? With a SoFi Checking and Savings® checking and savings account you can set up different vaults within your main account to save for specific savings goals, like buying a car. With SoFi Checking and Savings you can spend, save, and earn all in one place.

Learn more about SoFi Checking and Savings.

Learn More

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC .


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