My family wheels are pushing 200K miles and lights are starting to come on, noises are starting to come out, and I want to investigate a newer car before I sink money into repairing mine.

What are some tips when purchasing a new car?

I am going to get pre-approved for a loan from a bank or credit union, but I will still let the car dealer see if they can beat my existing offer.

I more than likely won't buy a new car, and whatever I do buy I expect to be able to pay off in cash in less than six months. (I hope to save up enough to do a cash deal and get myself a 2005+ model; but I am planning in case my current car up and dies sooner than later).

Any thoughts on negotiating over email with a dealership?


4 Answers 4


I read a really good tract that my credit union gave me years ago written by a former car salesman about negotiation tactics with car dealers. Wish I could find it again, but I remember a few of the main points.

1) Never negotiate based on the monthly payment amount.
Car salesmen love to get you into thinking about the monthly loan payment and often start out by asking what you can afford for a payment. They know that they can essentially charge you whatever they want for the car and make the payments hit your budget by tweaking the loan terms (length, down payment, etc.)

2) (New cars only) Don't negotiate on the price directly.
It is extremely hard to compare prices between dealerships because it is very hard to find exactly the same combination of options. Instead negotiate the markup amount over dealer invoice.

  • For common cars that they have a lot of competition on or too many of them on the lot, you might be able to get away with as little as $100 over invoice.
  • In most situations you will pay between $300-$1000 markup over invoice.
  • For high-demand or special order cars you might have to pay several thousand over invoice.
  • Ask to see the actual dealer invoice for the car before closing the deal. Sometimes they will claim they don't have it or can't show it to you. This is a lie. Walk away if they insist that it isn't available to show you. Something crooked is afoot.
  • Don't listen to sob stories about how much it costs to market and sell the car. The car dealership will 90% of the time make more money on the deal than the difference between the dealer invoice and the purchase price. The manufacturers have "holdbacks" which are extra bonuses for selling the cars, also they make money on the financing and other aspects of the deal.
  • This tactic requires you have a reasonably good idea of the invoice price walking into the deal so you aren't negotiating blind. Luckily this information is available in numerous places like NADA and Edmunds.com
  • This tactic also basically requires you to pretty much know what car you want when you walk into the dealership, or at least that you narrowed it down to a few. If you are still making up your mind, do not buy the car that day. You are at too much of an information disadvantage. Decide what you want; go home and research it on the Internet; then go back and buy it.

3) Negotiate one thing at a time
A favorite shell game of car dealers is to get you to negotiate the car price, trade-in price, and financing all at one time. Unless you are a rain-man mathematical genius, don't do it. Doing this makes it easy for them to make concessions on one thing and take them right back somewhere else. (Minus $500 on the new car, plus $200 through an extra half point on financing, etc).

  • To keep them from trying to mix the financing in the deal, just tell them you already have your financing worked out or are paying cash, even if you don't. It isn't like they are going to complain if you change your mind after agreeing on a price for the car to go with them for financing.
    Update: This may backfire, with the hyper-competitive information rich environment, dealers are increasingly relying on the financing to earn their profits on the deal. Car dealers might be less willing to negotiate on the car price if they know you are a cash buyer.

  • Don't let them re-open the negotiations on other items when discussing the trade-in, new car price, or financing terms.

  • See handling the trade-in below

4) Handling the Trade-In

  • Before you even look at a new car, get a firm written quote for your trade-in.
  • Alternately, you can do the same trick as the financing and claim you aren't trading in a car until you have completed negotiation on the new car price.
  • It is a good idea to bring with you quotes on your trade-in from other dealers to help your negotiating power.
  • Most car dealers will buy your trade-in even if you don't buy a car from them. They will argue that you will save on sales taxes by doing both transactions at the same time (reducing the purchase price by the trade-in amount). It is true that you will save money, but when you do the math the amount is trivial.
  • They want your trade more than they want to sell a new car, they make a much higher profit on turning around used cars than new ones.

5) 99.9999% of the time the "I forgot to mention" extra items are a ripoff
They make huge bonuses for selling this extremely overpriced junk you don't need.

  • Scotch-guard you can buy for less than $20 a can at a auto-parts store and spray on the seats yourself. You are a sucker to pay for it.
  • Rust proofing - Often just an overpriced wax job. If you read carefully the factory warranty usually protects you against rust for a number of years anyway.
  • Pin striping - Usually just a decal applied to the car, also very cheap to have done elsewhere.
  • Extended warranty - Usually a rip-off, but not as frequently as the other items mentioned. If it is 3rd party , not from the manufacturer, it is always a rip off.
  • Financing "Insurance" - For a few dollars more a month, they will give you insurance to make your car payment in case you become disabled or unable to make your payment for some other prescribed reason. Think about it, YOU are paying for insurance to prevent the LOAN COMPANY from losing money in the event you get into trouble. Not worth the money.

6) Scrutinize everything on the sticker price
I've seen car dealers have the balls to add a line item for "Marketing Costs" at around $500, then claim with a straight face that unlike OTHER dealers they are just being upfront about their expenses instead of hiding them in the price of the car. Pure bunk. If you negotiate based on an offset from the invoice instead of sticker price it helps you avoid all this nonsense since the manufacturer most assuredly did not include "Marketing costs" on the dealer invoice.

7) Call Around before closing the deal
Car dealers can be a little cranky about this, but they often have an "Internet sales person" assigned to handle this type of deal. Once you know what you want, but before you buy, get the model number and all the codes for the options then call 2-3 dealers and try to get a quote over the phone or e-mail on that exact car. Again, get the quote in terms of markup from dealer invoice price, not sticker price. Going through the Internet sales guy doesn't at all mean you have to buy on the Internet, I still suggest going down to the dealership with the best price and test driving the car in person. The Internet guy is just a sales guy like all the rest of them and will be happy to meet with you and talk through the deal in-person.

Update: After recently going through this process again and talking to a bunch of dealers, I have a few things to add:
7a) The price posted on the Internet is often the dealer's bottom line number. Because of sites like AutoTrader and other car marketplaces that let you shop the car across dealerships, they have a lot of incentive to put their rock-bottom prices online where they know people aggressively comparison shop.
7b) Get the price of the car using the stock number from multiple sources (Autotrader, dealer web site, eBay Motors, etc.) and find the lowest price advertised. Then either print or take a screenshot of that price. Dealers sometimes change their prices (up or down) between the time you see it online and when you get to the dealership. I just bought a car where the price went up $1,000 overnight. The sales guy brought up the website and tried to convince me that I was confused. I just pulled up the screenshot on my iPhone and he stopped arguing. I'm not certain, but I got the feeling that there is some kind of bait-switch law that says if you can prove they posted a price they have to honor it. In at least two dealerships they got very contrite and backed away slowly from their bargaining position when I offered proof that they had posted the car at a lower price.

8) The sales guy has ultimate authority on the deal and doesn't need approval
Inevitably they will leave the room to "run the deal by my boss/financing guy/mom" This is just a game and negotiating trick to serve two purposes:
- To keep you in the dealership longer not shopping at competitors.
- So they can good-cop/bad-cop you in the negotiations on price. That is, insult your offer without making you upset at the guy in front of you.
- To make it harder for you to walk out of the negotiation and compromise more readily.

Let me clarify that last point. They are using a psychological sales trick to make you feel like an ass for wasting the guy's time if you walk out on the deal after sitting in his office all afternoon, especially since he gave you free coffee and sodas. Also, if you have personally invested a lot of time in the deal so far, it makes you feel like you wasted your own time if you don't cross the goal line. As soon as one side of a negotiation forfeits the option to walk away from the deal, the power shifts significantly to the other side.

Bottom line: Don't feel guilty about walking out if you can't get the deal you want. Remember, the sales guy is the one that dragged this thing out by playing hide-and-seek with you all day. He wasted your time, not the reverse.

  • 2
    Great answer for new cars but I'd really like more info for used/certified cars! Commented Aug 20, 2010 at 3:05
  • 7
    Also, Edmunds sent a journalist undercover for an expose on car sales tactics. Fantastic (if long) read: edmunds.com/advice/buying/articles/42962/article.html
    – awshepard
    Commented Aug 24, 2010 at 12:51
  • 7
    @Casebash - Here's the new link edmunds.com/car-buying/confessions-of-a-car-salesman.html
    – JohnFx
    Commented Mar 15, 2012 at 14:35
  • 1
    The only thing here I'd quibble over is "Negotiate one thing at a time". I've seen that used as a trick against the consumer - if they get you to agree the trade-in price for your old car first, even making you sign an agreement for that price, then you feel irreversibly committed to the whole deal when you start to negotiate the price on the new car, giving them more freedom to keep the price higher. So I would say - if they're not budging on one part of the negotiation, feel free to re-open earlier parts of the discussion.
    – Vicky
    Commented Feb 4, 2013 at 11:20
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    "Think about it, YOU are paying for insurance to prevent the LOAN COMPANY from losing money in the event you get into trouble. Not worth the money." If you are no longer able to make payments, you will also lose the car, right? I'm not sure your logic is accurate on this point (not saying that kind of insurance is a good deal, just that your reasoning is a bit incomplete here).
    – msouth
    Commented Mar 30, 2014 at 3:16

I love John's answer, but I just can't help myself from adding my 2 cents, even though it's over 5 years later. I sold cars for a while in the late 90s, and I mostly agree with John's answer. Where I disagree though, is that where I worked, the salesperson did not have ANY authority to make a sale. A sales manager was required to sign off on every sale. That doesn't mean that the manager had to interact with the buyer, that could all be handled behind the scenes, but the pricing and even much of the negotiating strategies were dictated by the sales managers. Some of the seasoned salespeople would estimate numbers on their own, but occasionally you'd hear the managers still chew them out with "I wish you wouldn't have said that". Of course, every dealership is different.

Additional purchase advice:

  1. There is a strategy that can work well for the buyer, but only in scenarios where the salesperson is trying to prevent you from leaving. They may start interrupting you as you are packing up, or blocking your path to the door, or even begging. If this happens, they are obviously desperate for whatever reason. In this case, if you came prepared with research on a good price that you are comfortable with, then shoot lower and hold firm to the point of near exhaustion. Not so low that that they realize you're too far away- they will let you leave at that point. It needs to be within a reasonable amount, perhaps at most 1-2% of the purchase price. Once you detect the salesperson is desperate, you finally move up to your goal number or possibly a little lower. Typically the salesperson will be so happy to have gotten you to move at all that they'll accept. And if the managers are fed up too (like 45 minutes after close), they'll accept too. I saw this happen multiple times in a high pressure scenario. I also used it once myself as a buyer.

  2. If you are planning to purchase options that can be added at the dealer rather than from the factory, keep them up your sleeve at first. Get your negotiations down to where you are a little further apart than the invoice price of the option, then make your move. For example, suppose the option you want retails for $350 with an invoice of $300. Get within about $400 of the dealer. Then offer to pay their price, but only if they throw in the option you want. This will throw them completely off guard because they didn't expect it and all of their calculations were based on without it. If they say yes, you effectively moved $100 and they moved $300. It's much more likely that they'll agree to this than taking $300 off the price of the car. (I'm guessing the reason for this is partially due to how their accounting works with sticker price vs aftermarket price, and partially psychological.) Note, this works best with new cars, and make sure you only do this if it's for items they can add after the fact. Even if they don't have the part in stock it's ok, they can give you an IOU. But if the option requires a car change to something they don't have on the lot, it will probably just make them mad.


One point I don't see above: Consumer's Union (the nonprofit which publishes Consumer Reports) has a service where, for a small fee, they'll send you information about how much the car and each option cost the dealer, how much the dealer is getting back in incentive money from the manufacturer, and some advice about which features are worthwhile, which aren't, and which you should purchase somewhere other than the dealer.

Armed with that info, you can discuss the price on an equal footing, negotiating the dealer's necessary profit rather than hiding it behind bogus pricing schemes.

Last time I bought a new car, I got this data, walked into the dealer with it visible on my clipboard, offered them $500 over their cost, and basically had the purchase nailed down immediately. It helped that I as willing to accept last year's model and a non-preferred color; that helped him clear inventory and encouraged him to accept the offer.

($500 for 10 minutes' work selling to me, or more after an hour of playing games with someone else plus waiting for that person to walk in the door -- a good salesman will recognize that I'm offering them a good deal. These days I might need to adjust that fair-profit number up a bit; this was about 20 years ago on an $8000 car... but I'm sure CU's paperwork suggests a current starting number.)

It isn't quite shelf pricing. But at least it means any haggling is based on near-equal knowledge, so it's much closer to being a fair game.


JohnFX and TTT provide excellent answers. Researching prices others have paid, being up front that you'll go buy a junker car to hold you over if they won't meet your price, and playing a few dealerships off of each other are all great tactics. In addition, I've got a few points about timing your purchase. If you're not desperate for a car, these can really help give you the upper hand in negotiations:

  • Wait until the end of the month. Dealerships and individual salespeople usually have quotas that they're trying to clear, and the month is usually the standard cutoff. The last time I bought a car, the salesman made the mistake of mentioning, "I don't usually work Thursdays, but I'll be in this Thursday." Thursday was the 31st - I inferred from this information that he hadn't made his quota for the month yet. So I came back on the 31st to negotiate, and managed to hammer out a pretty good deal.

  • Wait until about an hour before the dealership closes to show up and shop. This gives you enough time to not be obvious about the tactic, but you'll definitely be holding them past their normal quitting time if you do much negotiating. The salesman will be a little more inclined to make a deal so he can get home and have dinner. Bonus points if you can wait until a month that ends on a Friday!

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