How to Negotiate a New-Car Price Effectively

Start the negotiations with your precalculated low offer. You should base it on the average transaction price for the model and trim level(s) you’re considering. CR focuses on the actual transaction prices rather than the invoice because we think it’s far more useful. It sets a target for what others are paying for the vehicle in your area. The invoice price has become far less meaningful and doesn’t reflect the impact of supply and demand—a big consideration in the current market. Aim for the low end of the transaction price spectrum, available on CR’s car model pages, knowing that you have a fair deal if you match the average transaction price.

After you declare your starting offer, there is usually a back-and-forth process while the salesperson submits your bids to the sales manager and returns with counteroffers. Be prepared for the offers to be far higher than your target price, and be prepared to wait several minutes at each step.

One gambit you can use is to mention that you have competitive bids in hand from other dealers without disclosing what they are. Explain that you’re looking for the lowest markup over your bottom price.

As an alternative, ask whether the salesperson is willing to beat a price you got from a legitimate buying service. If so, tell the salesperson what it is, or better yet, show them a printout.

Try not to be argumentative. Keep working from your lower figure, raising it a little at a time rather than taking the dealer’s counteroffer and hammering it down. If you use the average transaction price as a starting point, you’ll probably have a quick negotiation process. If you start with a lower number, you’ll likely spend more time coming to an agreement.

From the outset, you want to stay on course and prevent the negotiation from veering off-track. If the salesperson asks about a trade-in, for instance, insist on locking down the new car price first.

As for financing, explain that you’re preapproved for a loan and prepared to pay in cash. However, make it known that you may be willing to consider financing through the dealership, provided the offer is competitive. But make it known that coming to terms on the purchase price is the primary focus.

Reassure the salesperson that if you can both agree to terms you find to be fair, they can look forward to making a quick sale. If not, you’ll move on.

You may be shunted to a more senior sales associate or manager. If that happens, simply repeat the same ground rules to that person. But no matter who ends up sitting across the desk from you, a clear explanation of what you’re looking for will help counteract the common diversionary tactics you may come across.