Some people enjoy negotiating the price of a new car. Really, they do.
Studies show that most car shoppers dread the experience.
No matter which camp you’re in, buying a vehicle requires solid research, diligence, and patience.
Be a savvy shopper and prepare for your car-buying experience before gathering documents and heading to the dealership or buying a car online. These steps apply to both new and used cars, though the details you research, such as incentives for new cars or mileage and condition for used cars, may differ.
Read on for valuable tips and tricks as we help you learn how to negotiate a car deal.
- Step 1: Research the Car and Its Value
- Step 2: Set Your Budget and Arrange Financing
- Step 3: Request Written Quotes From Multiple Dealers
- Step 4: Negotiate the Out-the-Door Price
- Step 5: Keep Each Part of the Deal Separate
- Step 6: Review Paperwork Before Signing
Step 1: Research the Car and Its Value
Before contacting a dealer, decide which models and trim levels meet your needs. Then research what buyers in your area are paying.
Compare:
- The manufacturer’s suggested retail price (MSRP)
- The vehicle’s estimated market value
- Prices advertised by nearby dealers for comparable vehicles
- Available manufacturer incentives and promotional interest rates
- The vehicle’s features, mileage, and condition
- Recent sales prices for similar used vehicles
Use this research to establish a realistic target price and a maximum amount you are willing to pay.
Keep More Than One Option Open
Avoid becoming attached to a specific vehicle. Dealers have less reason to negotiate when they know you will not consider another car.
Identify at least two acceptable models or several similarly equipped vehicles at different dealerships. Being flexible gives you more leverage and confidence that you’re getting a fair deal.
Step 2: Set Your Budget and Arrange Financing
Determine how much you can comfortably spend before you start negotiating. Include more than the car payment when calculating your budget.
Consider:
- Down payment
- Sales tax and registration
- Loan interest
- Insurance
- Fuel or charging costs
- Maintenance and repairs
Get preapproved for an auto loan from a bank, credit union, or online lender before visiting the dealership. A preapproval gives you a rate and loan offer to compare with dealer or manufacturer financing.
The dealer may offer a better rate or promotional financing. Compare the interest rate, loan term, amount financed, and total cost before making a decision.
Avoid Focusing on the Monthly Payment
A salesperson may ask, “What monthly payment are you looking for?”
Do not use your desired payment as the basis for negotiations. Dealers can reduce a payment by extending the loan term while increasing the total amount you pay.
Instead, say, “I want to agree on the out-the-door price before discussing financing.”
Step 3: Request Written Quotes From Multiple Dealers
You do not need to begin negotiating inside a showroom. Contact several dealers by email, text, phone, or through their websites.
Ask each dealer for a written, out-the-door quote on a specific vehicle. Include the vehicle identification number (VIN) when possible so every quote refers to the cars you’re considering, and not just the same makes and models.
Your request can be simple: “I am comparing offers from several dealers. Please send your best out-the-door price, including all required fees, for this vehicle.”
Written quotes make it easier to compare offers, identify unexpected fees, and negotiate without the pressure of sitting in a dealership.
Once you receive several quotes, ask dealers whether they can beat the best offer.
Step 4: Negotiate the Out-the-Door Price
The out-the-door price is the total amount required to purchase the car and drive it away. It generally includes:
- Vehicle price
- Destination charge for new vehicles
- Sales tax
- Title and registration fees
- Documentation or dealer fees
- Installed accessories and add-ons
Ask the dealer to provide an itemized breakdown. Question any charge you do not recognize.
Government charges such as sales tax, title, and registration fees are usually not negotiable. Optional protection packages, accessories, service plans, and other dealer products, such as nitrogen-filled tires, anti-theft products, and extended warranties, may be negotiable or removable.
Make a Reasonable Counteroffer
If a dealer doesn’t make an offer you wish to accept, that doesn’t have to end the negotiation. You can make a counteroffer that you are willing to follow through on.
Base your counteroffer on market research and competing dealer quotes — not an arbitrary amount below MSRP.
Some negotiators use a “lowballing” technique, submitting a counteroffer far below the dealer’s quote in the hope of provoking a substantial price reduction. This technique is risky and can lead to prolonged negotiation and a highly adversarial atmosphere. Use lowballing with great caution — it’s not a great way to build a relationship with a dealer.
You might have less negotiating room on a popular model with limited availability.
Dealers may be more willing to discount vehicles that are widely available, approaching a model-year change, or have remained in inventory for a long time.
Remain polite and direct. A reasonable, evidence-based offer is more likely to produce a useful response.
Step 5: Keep Each Part of the Deal Separate
A dealership transaction can include several negotiations:
- The vehicle’s out-the-door price
- Your trade-in value
- Financing terms
- Optional products and add-ons
Handle each negotiation separately. First, agree on the price of the car you are buying. Then discuss your trade-in. Finally, compare financing and decide whether you want any optional products.
Combining everything into one monthly payment to negotiate makes it difficult to determine whether you are receiving a good deal.
Compare Your Trade-in Separately
Research your current vehicle’s value and obtain offers from other dealers or car-buying services before negotiating a trade-in.
A dealer may offer an attractive discount on the new car but reduce the value of your trade. Comparing each number separately helps you evaluate the full transaction.
Consider selling your car privately or to a dealer independently of your new vehicle purchase.
Step 6: Review Paperwork Before Signing
A verbal agreement is not the final deal. Before signing, confirm that the contract matches the terms you negotiated, including the price and out-the-door total, trade-in credit, fees, add-ons, and discounts. Ask for unwanted optional products to be removed.
Do not sign documents you do not understand.
Visit our Buying hub page for curated articles, resources, and tools to help you go into your car deal with confidence.
Editor’s Note: We have updated this article since its initial publication.
What do you do when cancel a sale due to dealership not being able to delivery the car and they cash the check and sell car to someone else? How do you get money back?
What about when a known dealer won’t fulfill signed contract term? I recently bought a preowned vehicle from the “nation of autos”. Before receiving the keys I asked how many keys came with the car? Finance guy said to ask sales person. He leaves then returns with sales person and ushers me out to my car. They both were sort of talking to me but without really talking to me about how good I got and blah blah blah. We get to the vehicle sales person opens the door to usher me into the car and shoved the keys in my hand. I ask again about # of keys. They look @ each other and the finance guy says you bout the key and tire protection they can get you an extra set, just give the paperwork a week or so to go through. I drive off. It’s been a couple weeks so I call the organization that handles the tire and key warranty and bought. Come to find out it’s specifically mentioned twice on my contract that unless dealership/seller provides two sets of keys @ warranty purchase the coverages ( specifically tires and keys) are void. The rep told me dealerships do this ALL THE TIME on pre owned cars to keep more of the down payment or to avoid fulfillment of their contracted responsibilities. Have been calling over a week and leaving messages to get this squared away with no replies from the “NATION OF AUTOS” or the specific local branch. How do I get them to fulfill their contracted obligations l?
I’m excited 😁 about purchasing a Bentley
Can you change your mind within 24 hours after signing paperwork
Hi Felicia, and thanks for reading. Unfortunately, the deal is done when you sign the paperwork, and there isn’t a magic grace period to let the significance of the purchase sink in. There might be extreme and unusual cases when a sympathetic dealer might take a used car back, but that would be very uncommon. Even if the car is a lemon, there are proper channels to take that aren’t as easy as returning the car for a refund, as you might do if you changed your mind about a jacket you bought.
We watched some You Tube videos that suggested buyers negotiate a price based on financing (not cash), that the dealer offers a lower price if buyers take a loan with interest. Then they pay more in the long run. As a buyer, we could then pay off the loan after a couple of weeks and avoid interest charges. Not sure this is true, but worth considering.
That’s a good point for new car shoppers to remember, Stanford. The commission a dealer earns from initiating a loan through the manufacturer can be more than a cash-sale commission. If the buyer can take advantage of cashback offers and other discounts and then immediately pay off the loan before accruing any interest, it’s a win for the them and the salesperson. Still, cash usually has more leverage when shopping for a used car.
What is it with dealerships when they advertise a sales price or a reduced sales price….and before its over your CASH sales price out the door is 3k higher than MSRP!! Im paying cash…made offer plus sales tax…I can get my own titling and registration done myself..its what I do…the salesperson told me that it was LAW that they add the other fees and closing cost to it! BS….dont u think? Im handing him a check..and he is suppose to hand me the keys…looks like they think Im a dumb woman…what is closing cost on a CASH sale??
Why does a car dealer add closing cost or processing fees of 1k or more to the advertised sales price? Im paying cash…I can get my registration and titling done in one day..thats what I do…then he starts adding closing cost fees and Im handing him a check! Lease price was different and cheaper than dang cash price! What a joke..ended up 3k higher than MSRP…he obviously thought I was a dumb woman…told me the extra fees were LAW..they had to charge that ….BS…what is it with dealerships who advertise a sales price..a reduced price and u end up 3k higher than asking price on a CASH sale!
Research is the number 1 most valuable tool while shopping for a vehicle. For example, a lot of people do not know that in the state of Georgia the dealership is required to include any fees that they charge (ONLY excluding government fees such as tax, tag & title) in the advertised sales price. You’d be surprised how many don’t abide by this law!
Thank you for reading Teresa and for your comment.
I’m not sure how it is in every state but if a dealer charges a doc fee, defined in Wisconsin as “services related to state, federal laws, and public safety” to anyone they must charge it to everyone. You may be able to negotiate that much lower but they still need to reflect that fee on the contract.
Thanks for reading, Dr.B. That’s a good point to make. Similarly, the destination charge is a separate line item for a vehicle transaction. While it’s wise to be aware of — and negotiate — individual lines of the sales contract, car buyers must remember to not lose focus on the “out-the-door” price.
Can doc fees be negotiable if paying cash instead of financing?
Thanks for reading, Alvin. You might be able to negotiate the doc fees a dealer charges whether you’re paying cash or financing a car loan. Typically, a car’s destination charge is the only non-negotiable dealer fee.
Thank you for reading. You can try negotiating the doc fees when paying for a car in cash. But some dealers don’t budge. Bring all your reasons and see if they do. Then, please let us know.
Enjoyed the article I am currently looking to buy a used car would love pointers on that .will be paying cash no trade in any pointers ?
Thanks for reading, Jim. Paying with cash sometimes gives buyers more leverage when negotiating a used car purchase. Please read our article about buying a car with cash to learn more.
Enjoyed the article I am currently looking to buy a used car would love pointers on that .will be paying cash no trade in any pointers ?
This was a great and incredibly informative article that I found interesting, helpful, and enjoyable to read.
I’m glad you enjoyed the article, RCM. Remember to keep your trade-in as one distinct part of negotiating a car purchase. And be sure to clean your current car to get top-dollar when trading it.
awesome article. Very very helpful!
Hello , Glad you enjoyed the article. Please visit https://www.autotrader.com/car-news for more of our current articles!
loved reading your article. it was really informational for me. wish to see more in the coming days.