How To Negotiate A Car Purchase With Cash – Senior Editor Consumer Advice and Content Strategy Ronald Montoya has worked in the automotive industry since 2008. He has written over a thousand articles related to cars and has bought and sold over 100 vehicles during his career. Ronald is a senior editor of consumer advice and content strategy at the Associated Press and has also contributed to it. He has also been featured on ABC, NBC and NPR on a number of car shopping topics. He started in the car industry by taking a part-time job at a car dealership, where he worked in the service and accounting department.
If you haven’t shopped for a new or used car in recent years, you may be in for a rude awakening. A perfect storm of a global pandemic, supply chain issues, semiconductor chip shortages and vehicle shortages have changed the car market significantly since 2020. Where there were once declines, marks have begun to appear. It’s still not uncommon to pay over MSRP, and deep discounts remain rare.
How To Negotiate A Car Purchase With Cash
According to data, the average discount off MSRP in May was $616. Compare that to the same month in 2019, when the average discount was $2,573. Today’s discount rate may not sound like much, but the good news is that things are heading in the right direction. Last year, people were paying up to $700 over MSRP.
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This seller’s market means shoppers don’t have much leverage to get the deals they once did. These days, if you don’t like the price you’re being offered, sellers know that someone else will likely pay that price.
That said, there are some brands that offer more discounts than others. In May 2023, the brands offering the biggest discounts were Alfa Romeo, Volvo, Ram, Infiniti, Buick, Audi, GMC and Mercedes-Benz.
At the other end of the spectrum, popular brands like Kia, Honda, Toyota, Dodge and luxury brands like Land Rover and Cadillac had average transactions that were over MSRP.
If you want to buy a new or used car sometime this year or possibly through 2024, you’ll need to reset your expectations of a “good deal”. A few hundred off the sticker price might be considered a good deal in the current market. Likewise, if you manage to find a dealership that sells the vehicle at MSRP while others are asking for more, you should consider it a win.
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In either case, it’s always a good idea to shop around and compare prices. Be prepared to cast your net further to see what other dealers are charging for the same vehicle. Dealer websites can only list the MSRP, which is why we recommend contacting the dealer directly to determine if there are any unnecessary dealer-added markings or accessories. If all you find in your area are lots of marked-down new cars, stay on track and know that inflated prices can be negotiable.
The article below was written when the market was much more stable and predictable. Dealers were familiar with cars and were often willing to negotiate for a bigger discount. As that is not the case at the moment, there may not be much room for much discussion. That said, the current situation is unlikely to continue indefinitely. The strategies below can still be useful for anyone shopping today.
For many people, the thought of negotiating with a car salesman fills them with dread. This feeling is partly because people consider negotiation to be confrontational, and would rather not bargain. But with a change of perspective and a few simple negotiation tips, you may be able to save thousands of dollars off the sticker price when you buy your next new or used car.
You will need to determine the market value of a vehicle before you start negotiating. This figure will be the backbone of your strategy and give you a point of reference when you start getting price quotes from the dealer. call this the Suggested Price or True Market Value (TMV). The Suggested Price is what we recommend you pay, excluding taxes and fees. It is based on our analysis of millions of data points including supply, demand, incentives, options and recent nearby transactions.
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Start by looking up the car you like on the . Go to the Build and Price link about halfway down the page. Pay attention to the trim level and options on the car to make sure you’re making an accurate comparison. If you’re shopping for a new car, look at the Suggested Price and see where it ranks compared to the manufacturer’s suggested retail price (MSRP) and the invoice. If you’re shopping for a used car, look at what’s called the “dealer retail” price. Please note that all suggested pricing is an average. Your goal is to get a price lower than that. But if it’s a bit higher, that’s fine too.
Things are much easier if you are already looking at the inventory. You will find the Suggested Price on new cars and on used cars. There will be a price rating from fair to excellent, with a figure indicating how much below market the vehicle is.
Next, we recommend calling, emailing or texting a few nearby dealers to get a range of prices. Ask for the internet sales manager and, in that discussion, check that the vehicle is in stock and make sure it has all the options you want. You can also search new or used inventory and reach out to dealerships that will give you upfront pricing. it also has a new vehicle price checker, which allows you to enter the details on a quote you’ve received and get a score to let you know if it’s a fair, good or great deal.
Once you have a few quotes in hand, you have a couple of options. The path of least resistance is to take the lowest offer and move on. Or if dealership A offers a better price but dealership B is closer to home, an easy form of negotiation is to call dealer B and ask if they can meet or better the price quoted to you by dealer A.
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If you’re inclined to push further for an even better deal, you’ll need to do some good old-fashioned negotiating, so keep reading.
Maybe you like to shop at the dealership in person. Here are some tips on how to negotiate effectively. When you’re sitting down with a salesperson, a typical conversation opener might be something like: “What monthly payment would comfortably fit into your budget?”
It is important that you avoid this question because it is difficult to track the price of the car when the seller presents it as a monthly payment. Instead, tell the seller that you’ll talk about financing later and that you want to negotiate the purchase price of the car for now. The seller will usually check with the manager and then come back with a price. You may not like that price, however, and this is where the negotiation begins.
After the seller has presented the price, you could respond with: “We have done a lot of research on the market value of this vehicle, and we have a good idea of what it is selling for because we have shop around a bit. If you can beat this price (this is where you submit your best price quote printout from another dealer) we’ll have a deal.”
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Responding like this accomplishes a couple of things. First, it lets the seller know that you are an informed buyer. Your aim is to justify the price reduction rather than presenting an offer without context. Second, the seller knows there are offers to beat, so there’s a good chance the seller will jump to the low end of the dealer’s pricing structure. This method works for both new and used cars.
If you’re shopping for a used car, where apples-to-apples comparisons aren’t possible, your goal is to make an offer that’s as low as possible but still in the ballpark. If you found the vehicle on the inventory pages, refer to the pricing section to see the range of what might be fair, good or even a great deal.
If you found the vehicle elsewhere, visit our appraisal tool and be prepared to answer a number of questions about its trim, options and condition level. Then, click on the Appraisal Report to get a rough idea of what the dealership might have paid for the vehicle. Compare that to its estimated “dealer retail” value at . Your goal is to land between those numbers. You can also search for similar used vehicles in your area to see what others are listing. It’s important to note that the mileage and options are similar – otherwise, you won’t be making an even comparison. Once you’ve done all this research, you’ll have a better idea of what a fair price would be.
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