Buying a car - negotiations?

1.  Set a budget, and stick to it.   DO NOT BUDGET ACCORDING TO YOUR MONTHLY PAYMENT.  Figure out the total amount of money you're willing to spend.   Make sure you have financing available from a bank before you set foot on the lot.

2. Figure out the car you want, with the options you want, and see if it fits your budget.  Use edmunds.com to figure out EXACTLY how much that will cost.

3. Go to the lot and drive the car you're interested in.  Since you've got a baby on the way, figure out what stroller/car seat you're going to get, and get them.  Take them with you to make sure they'll fit in the car comfortably.  (allow me to recommend the Britax Marathon or similar seat.  We had 2 of them that survived our 3 kids, and we've since passed them on to friends and family and they are still serving after 8 years.)

4. Once you've decided the car fits your life, show the salesman a paper with the amount you're willing to pay.   Basically, if they say anything other than "OK, we can do that, let's go draw up the paperwork" ... it's time to walk.  You need to be confident.  If the salesman sees that you're standing your ground, they're likely to not mess around with trying to bargain you up a few bucks.

5.  You've got to be prepared to walk if you're not getting the price that fits your budget.  The financing or sales guy might try to shift the discussion to monthly payments in an attempt to divert your attention from "total cost"   This almost always entails financing the vehicle for a longer period of time.  Don't fall for it.

Good luck.   If you find a good dealer and a good salesman, it can be a really painless process.  If not, walk.  There's lots of places to buy a car.

My husband has a pretty fool proof way of doing this. Research the cars you want. Take them for a test drive and get a quote from that dealer. Call all dealerships with the make/model you want within 'X' miles of your home (usually, no more than 50).  Call all of those dealerships to ask what they will offer for the vehicle(s) you are looking for. Do not reveal what others have offered the car for.

Once you get the lowest deal, go back to your local dealer and tell them what the lowest dealership is willing to offer you and negotiate to that point. If they are unwilling, take your business to the other dealership. It's likely that your local dealership will give the price as they'd rather have your business than not.

Take the time to read this!!!

It's written by a journalist that went undercover as a car salesman.  He does a great job of breaking down the entire process from the Dealership's end.  It's eye-opening and and you'll walk into the transaction with an entirely different prospective...

One thing I did was quit buying new. never again. I love my used Toyota Sienna. I bought it for 10000 a year ago, and have had absolutely no issues with it, other than replacing tires. It's still worth about what I paid for it.

After 5 years  the (average), new car depreciates by about 17 thousand dollars. 

My dad though, buys a new car every year with cash. It's just what he does. And I respect that. 

Usually a good deal on financing means a bit less room for negotiation on car pricing. 

Good luck with everything. 

My wife and I have a fun tactic we use.  We agree to the most we're willing to pay before we go in. No exceptions.

When we arrive the salesman inevitable addresses me and essentially ignores her.  I do all the talking, asking facts about the car (things I already know the answer to to see if he's trying to BS me).  I do the test drive (if it's for her she also drives it).  She sits back and says little the entire time.

When we walk into the room to talk $ the salesman again looks at me and ignores my wife.  When he puts a number in front of us she grabs the paper and says "No.  We're not going to pay this.  This is our offer."

I TOTALLY throws them off guard.  Last time the guy looked at me and said "Um..er..OK.  What do you think sir?"  My answer "Talk to her, not me.." If they come back with a # higher she gets up and tells him we're leaving.  He again looks at me and I tell him that he's negotiating with her.

It's soooo much fun to see them squirm. We've done this 3x and every time we've gotten the car for at or less than we set our limit.

Of course my wife is comfortable doing this and we have pre-agreed to all the #s so there no stress on our end.  In the end it's just fun to throw them for a loop.

This may not be the popular route and it can take a bit of work but I have always been able to find great cars at great deals with private parties. I have bought 4 vehicles and 2 motorcycles using craigslist and autotrader. You get a much better idea of the history of the car, the prices are usually more reasonable and easier to negotiate. 

You have to do some searching and you might have to sift through a few pieces of junk to find something good but they are definitely out there. In fact my wife and are are currently looking at some really nice Cadillac's on CL, one has $74k miles is showroom condition and is only $11k, two owner car and a really nice couple owns it currently. 

Might be worth a shot. Everytime I go to a dealer to look at a car I feel like I need more Vaseline and so far have always ended up walking away.  

ETA: I would never buy a new car, too much depreciation and if you do your homework buying used the lack of warranty is not an issue. 

I've been undercover as a car salesman for the last 10 years!

Sadly I'm not a journalist... actually I guess I am not really undercover at all...

Awesome tips.  Keep 'em coming!

Will read everything through.  I do know logically buying used is the financially smarter route but we are going to go with new.  Mostly for our comfort - get the warranty, no other owners mean ideally no appreciable hidden damage or collisions.  We don't actually require a car for commuting to work so i am guessing if we buy a decent car now we can hold on to it for a good long while.

We did test drive our preferred models last weekend and got the basics last weekend on the pricing and financing.

I love the husband/wife tactic - except that I am a TERRIBLE negotiator - i will just agree and that's bad! I know that we don't have to go for what they say.

Do NOT get the after market warranty.  There have been countless studies that show with modern cars that statistically speaking you will never get the $ back you spent on the warranty.

If you really want to go new try to find a left over from last year or even a one year lease return. Will save you on the purchase price and you will still have plenty of warranty left.

This, EXACTLY

I have always done all my negotiating over email.  It takes the emotion out of it and it's pretty black and white.

Like someone else suggested, test drive the model you want, learn about the car, then walk away and do more research about options, prices (edmunds, traderonline, etc) and see what they are going for.  I almost always end up dealing with the fleet dealer at dealerships after emailing them.  Some dealers have an "internet" guy/girl for the emails they get.  I lay out what I want and the price I'm willing to pay.

I also put down that I REFUSE to pay anything extra for tire insurance (wtf?), undercoating, protection package, 3M scotchguarding, or pay a paperwork fee or $250 for somebody filling out the paperwork and filing for registration and title...I can do that myself for $15 and $5 gas to get to MVD.

After reaching a deal, I just consistently roll with my no-nonsense approach and set a time to pick it up, drop off the cash/check/financing/whatever, and give them the expectation that I have 45 minutes to pick up the car, sign crap, and get on my busy day's way.

It's never failed me from Hondas for my mom to BMWs for us...straight up business, and know there's always a dealer just down the road that will take the exact offer you've offered and are willing to pay. 

The only downside is that you might have to wait a few weeks or drive a tad further to get the car than you originally planned. 

I used to sell cars, so I have a bit of experience. New cars are super-easy-- you just negotiate off of invoice, not sticker. $100-$500 over invoice will get you a car deal on almost anything--except rare and super-in-demand models. Insist on seeing the invoice, they'll try to show you a copy of the sticker--that's not the invoice.

Just let them know that's how you'll be negotiating and that you'll take your business to the next dealership if they won't play.

Also be aware of rebates, if there is a rebate you still negotiate the same but the rebate is taken off the final price. They must disclose any rebate.

Used cars a bit tougher, because you don't know exactly what they're in the car. Use blue book as a starting point.

I ask for options/ colors I know they don't have from and online inventory search and negotiate lower on what they have on the lot.

Going in at end of month is supposed to help as they have sales goals to meet. 

Sometimes new works out ok / better, depending on what you're doing.

a) if you're going to be taking a loan for a used vehicle, the % rate will be higher than on a new one.

b) if you have a significant trade-in and your state has sales tax, then you only pay tax on the difference in price (since you're basically getting credit for your trade in).  This can be significant - consider sales tax in my state is about 9.5%

c) if you really want a warranty, it costs quite a bit to get an extended one on a used vehicle - enough that it may be better to just get the new one.

d) research your vehicles carefully and note which ones hold their value and which ones don't.  You don't want to buy a new vehicle that's typically used for fleet operations like a Taurus.

The best thing to remember when negotiating is that there's nothing special about a vehicle.  There's always another one around the corner.  Take your time, stay within your budget and don't rush.

i used to buy only used cars, until i got burned from big dealer in houston on a year-old used car that was a service loaner (it was wrecked...long story) so i'll never buy used again.  i don't worry about depreciation becuase i keep vehicles for a long time and i'll never spend more on a car than i'm comfortable saying is worth paying for driving a car for 7+years.  depreciation only matters to me for those that finance a car for 5yrs and only keep it for 2.

anyway...like someone said, you mostly deal off of invoice price, not sticker.  the two trucks we've owned we paid 500 over invoice (and please confirm the VIN number on the invoice matches the vehicle), but the new vehicle i'm taking delivery on next week i paid full asking price and only managed to get some after-market stuff and window tint included.  it totally depends on the car.  don't expect to get the same deal for a bmw m6 as you would for a chev malibue.  it's not only demand, limited supply will affect your negotiations as well.

good luck, and enjoy the new car smell!!!!

We did that with my husband's car, and saved about 10 thousand dollars. We got a new car warranty, everything.

It's funny how a car knows it's about to go out of warranty. Something always breaks about 2 weeks out. 

If you are a Costco Member, you can get a prenegotiated price on new and used cars. Go to the Costco.com site and there is a tab that discusses the process.

If not Costco, go to local Credit Union and get prequalified prior to ever stepping on a Dealer lot if your credit is ok. Most dealers will bump your rate without you knowing it as this is how they make money. It is called holding points.

Skip all the add-ons the dealership Finance person is offering - Insurance, Paint protection, Extended Warranty, maintenance plans etc.

Extended warranties are available online - AAA has them available as an example

Research and understand what is important to your family in regards to a vehicle - Safety, Performance, Appearance, Comfort and Economy.

Anything that a dealership promises, get it in writing on what is called a "We Owe". It then becomes a contract.

Kbb.com, Edmonds.com and NADA.com are good reference sites for vehicle pricing.

I sold new and used cars for a several years. If you have any questions, please feel free to send me a message.

Yes - my local credit union was 2-3% lower on interest rates (for good credit folks). 

Also don't give permission for the dealership to run your credit. If you're not financing through them (see local credit union!) they have no reason to.

I let them run my credit before I decided on a finance option and they ran it like 3 times in a row, for no reason. Looks bad when you go to re-fi the house a few months later