If you’ve ever had to negotiate the price on an item you wanted to buy, you know that there is an art to the process. There is a certain way to handle the negotiation to ensure that the process is favorable for you. Many people dread having to buy a new or used car because the negotiation process can be mentally taxing. I understand their worries. Going back and forth with a seller on price can be like getting run over by a bus repeatedly. So how do you avoid the pitfalls of negotiating?
3 Simple Rules for Negotiating
Whatever you are negotiating for (a new car, home, or job), if you follow these three simple rules from financial guru Dave Ramsey, you will be on your way to being an expert on negotiating.
The person with the most information usually wins. That means doing your homework and becoming an expert on the kind of car you’re looking to buy. This is one of those cases where it helps to be the smartest person in the room.
The person with the most patience also wins. You can’t negotiate when you’re desperate or emotionally attached to a car—even the worst sellers will sniff that from a mile away. You’ve got to be willing to walk away from a bad deal. There are plenty of cars in the sea!
The person with the most options wins. If you’re trying to choose between two bad options, it doesn’t matter which one you choose—you’re going to end up with something that sucks. And that’s not going to cut it! The more options you have, the more likely you are to get a good deal.
Successful negotiating starts before you’re in front of the seller. In this case, the car dealership or private seller. Let’s elaborate more on the rules above to arm you with all the necessary tools you will need when buying your next car.
When it comes to buying a car, it’s always best to have researched in advance the car or cars you are considering. Read all you can read online about the particular model or models. Talk to others who own the vehicle, research forums online for each manufacturer, and see what people are saying about their experiences driving that make of car. Become as close to an expert on the vehicle as you possibly can.
If you’re looking to buy a new or used car, Kelly Blue Book is an excellent place to start to find current values for any make and model car or truck. This will help to provide you a range of prices before negotiating.
Have a few choices
Make sure to visit multiple sellers (dealerships or private sellers) before making a decision. The more options you have and the more offers, the better off you will be. Multiple options provide you power in negotiating a deal. Having a few choices provides friendly competition amongst dealerships or individual sellers that can help you achieve a price you are comfortable with.
Take your time
Do not rush into any purchase, especially a car. A vehicle is not an impulse purchase and should not be treated as such. It is also not a good idea to look for a car when you desperately need one. I know that it’s not always easy to do this, but if you know your car is on its last leg, don’t wait for it to die to start looking. If you wait until you need to buy one, you might make a rash decision that you will regret.
Cash is king!
If you can afford to walk into a car dealership with cash, do it. Dealerships are more apt to negotiate with you if you are willing to pay cash. Paying cash eliminates extra work and prevents further delays for them, such as preparing financing agreements, or waiting for checks to clear. Walking in with cash will give you a leg up on negotiations, so don’t be afraid to put a wad of cash on the table if need be and name your price.
The power is yours
My wife likes to tell the story of when she purchased her red Mercury Capri back in the day. She saw the car and loved the way it looked and in her own words, liked the way she looked behind the wheel. This is is not the way to buy a car, and she regretted her decision after many a mechanical problem. When you are purchasing a car, remember that all the power is yours. The seller is tasked with making a sale. You are not responsible for having to buy from that person. That is why you give yourself options (see above). At any point during negotiating, if you don’t like what is being said, you can “walk away.”
Buying a car is a bit like playing Texas Hold’em Poker. No matter what happens and how much you like the car DO NOT show too much enthusiasm. If you do, the seller will know they have you where they want you, and the power will shift. No matter how much you want the vehicle, you must be willing to walk away if the price isn’t right!
Silence is golden
There’s an old sales technique that says the first person who speaks loses. Make your offer and then sit back and wait and don’t say a word! If the salesperson gives you a price of $25,000 and you weren’t expecting to pay more than $23,000, let them know that the price is too high and then be quiet. I warn you that it will seem strange to have silence but wait. If they want the sale, then they will begin negotiating and reducing the price. If they are unwilling to budge, then thank them for their time and walk away. Chances are they will stop you, and the discussions will continue.
You don’t get anything in life handed to you, so ask for it. If there is something you want to be included in your vehicle, ask for it. Use this as a negotiating tactic. I’ll take the car if you throw in a year’s worth of oil changes. It becomes a win-win situation. You get the vehicle you want, and the dealer gets a sale. You won’t get what you don’t ask for.
When you consider using knowledge and a bit of patience combined with some of the other skills mentioned above, you are sure to come out on top of any car buying negotiation. Many of these tips work in life as well, in your career and with your children. Life is a constant negotiation. Be prepared at all times.
What’s your best tip when buying a car, and do you typically negotiate?