Do Dealerships Negotiate Prices?

April 11th, 2024 by

Most people cringe at the thought of negotiating with car dealers. The auto industry is well known for its expert negotiators, and many dealerships engage in shell games and bait-and-switch tactics that average consumers fall for without knowing.

You can still get a reasonable price at any dealership, provided you prepare before stepping on the lot. Conducting your research before speaking to a salesperson can reduce the sting of an afternoon spent at a dealership and might even save you some money. Some dealerships employ a best-price, no-haggle strategy to make the buying process easier and more comfortable for shoppers, but you can often still negotiate on certain items. Read on to learn more about how to negotiate a reasonable price when purchasing a vehicle.

Can I Negotiate Prices at a Dealership?

Auto Loan by Got Credit is licensed with CC BY 2.0 DEED

As we said, you can negotiate prices with most dealerships. Dealers need to sell cars, but they want to make money too. Since you’re likely buying your first car in years, you’re at a disadvantage compared to the dealer, who sells cars daily. They are professionals and can quickly read whether you’ve done your homework.

Research Vehicle Pricing

Preparing beforehand will help you when it’s time to negotiate. We recommend you research the prices of vehicles that interest you. Shop around online to learn what other dealers list these and similar cars for.

Many dealerships now have robust internet sales programs. Virtually all will require you to visit the dealership at some point, but many will offer you a sales price before you arrive. Understanding the vehicle’s pricing in your local area will help you negotiate, especially if you can pull out paperwork supporting your assertion.

Value Your Trade

If you’re trading in a car, research its value. Many online sources will provide valuations, instant cash offers, and details of online used car superstores that will buy immediately. A dealership might try to lowball you on your trade-in. Having information to counter their offer will help you get maximum vehicle trade value.

Check Your Credit Score and Get Preapproved Financing

Many dealerships offer in-house financing options to maximize profits. Unwary buyers who don’t know their credit score or have yet to receive a loan preapproval might find that the dealership offers loans with higher interest rates or longer terms, which make the dealer more money without increasing the car’s price.

If you shop for loans beforehand and come to the dealership armed with your financing deal, you’ll avoid falling into financing traps. The dealership might also be motivated to beat any financing deal you’ve secured since they profit from in-house financing, not your local credit union’s deal.

Find the Right Dealership

Not all dealerships operate the same. Some may employ unsavory tactics to pressure or intimidate buyers into making a deal. We recommend you research dealerships and read their customer reviews. No dealer will have a 100% satisfaction rate, but if you notice a trend of unscrupulous behavior, avoid that dealership.

How To Negotiate Properly

Negotiating the price should be the final step in your car-buying journey. We recommend you show up at a dealership after you’ve done the research listed above. This information will help you when you sit down and negotiate.

Take a Test Drive

You can start your visit by asking to see the vehicle you’re interested in. We suggest taking a test drive before talking about the price. Many buyers get behind the wheel and find the car doesn’t suit them. If this happens, politely thank the salesperson and leave. You have more research to do.

Most car salespeople will try to get you to stay if this happens. Don’t fall into this trap. You’ll give them the advantage if you haven’t researched other vehicles. If they apply extreme pressure or become rude, you’ve identified another problem. Reputable salespeople will give you their card and let you go.

Don’t Fall in Love Right Away

If the vehicle passes the test drive, you can continue. You mustn’t fall in love at this stage, at least visibly. Salespeople will use your feelings to apply subtle pressure and negotiate higher prices. You have to leave this emotion out of the transaction. Keeping this interaction business-focused will help you negotiate a better price.

Good salespeople may genuinely be friendly, but consider the relationship a business transaction. While they’re being nice, they’re asking questions. They file away any information you give them to use when negotiating, so be careful what you disclose. We suggest that you keep the conversation focused on the vehicle.

Focus on the Price

All your negotiations should focus on the vehicle price after taxes and fees. Salespeople will ask you about things such as your monthly budget, and they can easily manipulate the vehicle price and financing terms to match your financial situation. This costs you more money in the long run while they increase profits.

You can pull out your offers from other dealerships. This will show the salesperson you’ve done your homework and are serious about getting the best price. In many cases, this will push the dealership to beat the offer. They want to sell you the car, not let another dealership undercut them.

Avoid Add-On Sales

Once you agree on a price, most salespeople send you to the finance department to complete the paperwork. At this point, dealerships will pitch service plans, GAP insurance, and extended warranties. If you aren’t careful, you’ll give back all the money you just negotiated. You can purchase many of these add-ons later through third parties at much lower prices.

Be Prepared To Walk Away

After any deal, it’s likely that you’ll spend a little more and the dealer will make a little less than you both planned. That’s a successful negotiation. You must walk away if you have any hesitation about the deal. This may be the hardest thing to do, but you should be prepared to do so. We recommend you practice saying “no” in the mirror. It may sound silly, but it will prepare you for the moment.

Negotiate a Fair Deal on a New Toyota Today

At Classic Toyota in Tyler, Texas, we treat all our customers with the respect and courtesy they deserve. We don’t employ high-pressure sales or bait-and-switch tactics because we know there’s a better way. We want your car-buying experience to be one you enjoy and recommend to others. We invite you to begin researching vehicles in our virtual inventory. We’ll negotiate in good faith when you’re ready to make a deal.

Posted in Financing