How to negotiate the best price on a car

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Buying a new car is exciting, but negotiating a lower price may not be as fun.

Haggling with a car salesperson can be intimidating, but if you go into the process prepared, you can walk out with a new car for a great price. Follow these tips to negotiate the best price on a car.

Find your car and line up financing

The first step in the car-buying process should be to think about what kind of car you want. If you don’t already have the exact car picked out, consider your needs.What’s your budget? Do you need a family car? Do you want a sports car? Think about all these factors so you have an idea of what you’ll be spending.

The next thing you need to do is look into financing. Even though a car dealership can help you with financing, do your homework before you step foot on the lot. You also might be able to find a better deal on financing outside the dealership, so compare offers at your local bank or credit union. You can also compare auto loan rates online.

Research the car and the buying process

Next, research on the car or cars you’ve selected. If you’ve singled out an exact car at a specific dealership, this is when you can run a report on the car’s history. If you know the make and model of the car, do some research into any reports done on that car and check performance ratings.

If you’ve settled on a make and model but not a dealership, start looking around for a dealership that might have the car you want so you can familiarize yourself with what the buying process might look like. See what the dealerships in your area have in inventory, or whether a dealership can order a car for you if they don’t have it.

Get preapproved for financing

Though you can fully take care of a car loan through a dealership, research financing options at home. Research current auto loan rates and understand how your credit score impacts the rate you get. Keep in mind that if your credit score is on the low side, your interest rate will probably be fairly high. However, there are loans designed especially for people with low credit scores so you can still get a car. Also use an auto loan calculator to see what monthly payments may be like at different rates and loan terms.

Strongly consider getting preapproved for financing before going to a dealership to buy a car. This will give you an idea of what loan amount you qualify for, helping you compare other loan offers.

Shop at multiple car dealerships

Unless you know exactly what car you want, down to the make, model and VIN, shop around. Check out a few dealerships in your area over the course of many days. Get a feel for what cars are available and speak with a few different salespeople. It’s easier to overpay for a car if you try to buy something too quickly.

If you’re shopping with an open mind, you also might find a car you never knew you wanted, and it might even be a better deal. So set aside a chunk of time to shop around and take notes of what prices look like and if any dealerships have any deals running.

Negotiate the price

When it comes to negotiating your car price, it’s important to know that car salespeople expect you to negotiate. Don’t feel bad asking, but do make sure you have a plan.

Here’s how you can prepare for negotiations:

  • If you can’t figure out how to negotiate a used car price (or new car price), do your homework. If you’ve done your research and know what a fair price on a car is or know another dealership is offering a different deal, share that information.
  • Come prepared with price reports or comparison sheets.
  • If you know you have good credit, use that as part of your negotiation, as well. Car dealerships want to sell to people who have a good reputation for payments.
  • Be firm with your discussion. Even if you’re nervous about asking for a better deal, try not to show it. Be confident and tell them the price you’re looking to pay.

Be prepared to walk away

If you can’t get to the price you want, don’t be afraid to walk away.

This could go two ways: You walk out, and the salesperson stops you and offers you a better price, or you walk out and you find a car elsewhere. Either you find another car and a different deal somewhere else, or you go back to the dealership another day and try to negotiate again.

If you still can’t get to the price you want, it’s possible what you’re asking for isn’t realistic and the dealership has actually offered you a good deal. But if you know you’re owed a better deal, leave and buy your car elsewhere.

Close the deal

If you’ve haggled with a dealership and agreed on a price, congratulations! Buying a car takes some effort, but when you’re spending that much money, you want to be sure to get the car you want at the price you want. If you’ve already been preapproved for financing, you’ll be prepared to head to the dealership, negotiate and then sign the papers for your car.