There are very few people who fall in the gray area when it comes to car negotiation. There are those that are so confident in their negotiation skills, they thrive on the experience. Then there are those who would rather be thrown into a pit of hungry alligators. With some mental elbow grease and preparation, though, the latter camp can become part of the former. After all, there is an art to it. If you’re about to head to the car lot and need some advice, we can help—especially if it’s your first time buying a car. Read on for tips on how to master the car negotiation process.
There is no bigger nemesis to a car salesperson than a potential buyer that’s come armed with information. And with the wide amount of it on the internet these days, there is no excuse not to be ready with your facts. Say, for example, you’re looking for a certified Audi in Orlando. Be sure to research the invoice price and manufacturer costs of this vehicle, as well as current prices on similarly used models in the Florida market. All of this information will give you leverage during the negotiation process. Whether you’re hunting for the safest cars or the top American muscle cars, local research is everything.
There is also something to be said for being mentally prepared. You don’t have to listen to “Eye of the Tiger” on repeat (but if that helps, go for it), but make sure you’ve gotten rest, eaten a good meal, and have your head in the game. This is a marathon—not a sprint.
Pick Your Negotiation Poison:
You can either negotiate the traditional way, which is in person with a salesperson, or you can put out a request for internet bids. As this article on car buying negotiation put out by Harvard University notes, “One key factor in this decision is how well you know what you want. If you’ve picked out a car down to the very last option, then, by all means, let the internet do the haggling for you.” The warning that comes along with this is that some dealers may try to renegotiate once you’re there in person. If you’re confident in your ability to recognize a lowball offer, you should be fine.
Don’t Pay the MSRP:
In order to negotiate in the first place, you have to understand that the sticker price, or MSRP, is not the bottom line price. As this CompetingCarPrices.com article puts it, “Sticker prices are what the dealer hopes to get so they can profit the most from a vehicle. These prices are negotiable though.” This is when the information you’ve acquired online will come in handy, as you will know what the more appropriate price will be.
Be Ready to Walk Away:
Everyone knows that this is a legitimate negotiation technique when it comes to car buying, but you should go in prepared with a number range in mind that is what you would need to walk away from the table. You can try threatening to walk away but, ultimately, you need to be ready to actually do so.
This Huffington Post article goes into the importance of BATNA—a term coined by Harvard’s William Ury and Roger Fisher that refers to the Best Alternative to the Negotiated Agreement:
“It’s your last-ditch effort to save the negotiation before needed to walk away,” the article notes. “When purchasing a car, your BATNA is to simply go to another dealership if negotiations go south.”
The BATNA shouldn’t be a hard and fast number but, instead, should be a value range. In addition to price, you should also have other car features (or lack thereof) that you would consider to be deal breakers. Alternatively, hold firm by refusing to add car features that you know you don’t want or need.
Don’t show your BATNA hand too early, however, as this detracts from the power you have in the car-buying scenario.
As the HuffPo article notes, even if you do walk away, do so in a courteous manner. Don’t burn bridges, as you could ultimately return if you discover that what they offered is workable after all…
Once you’ve mastered the art of negotiation, you’ll likely offer to help your friends make their car purchases. By using these steps and being prepared, it can actually be a thrilling experience.