What’s the Right Amount to Negotiate on Your New Car Purchase-
How Much Should You Negotiate on a New Car?
Buying a new car is an exciting experience, but it can also be overwhelming, especially when it comes to negotiating the price. Many car buyers wonder how much they should negotiate on a new car to ensure they get the best deal. The answer depends on various factors, including the car’s make, model, market value, and your negotiation skills.
Understanding the Market Value
The first step in determining how much to negotiate on a new car is to understand its market value. This involves researching the car’s MSRP (Manufacturer’s Suggested Retail Price) and its current market value. The MSRP is the price that the manufacturer recommends for the car, while the market value is the price that similar cars are selling for in your area. You can find this information by checking websites like Kelley Blue Book, Edmunds, or NADA Guides.
Consider the Dealership’s Profit Margin
Dealerships need to make a profit, so they have a certain amount they want to earn on each car sale. Understanding the dealership’s profit margin can help you determine how much room you have for negotiation. Typically, dealerships aim to make about 2-3% of the car’s selling price as profit. However, this can vary depending on the car, the dealer, and the market.
Be Prepared with a Low-Ball Offer
When it comes to negotiating, it’s essential to start with a low-ball offer. This means offering a price that is significantly lower than the market value or the MSRP. A good rule of thumb is to offer about 5-10% below the market value. This gives you room to negotiate and may also prompt the dealer to lower the price further.
Don’t Be Afraid to Walk Away
If the negotiation doesn’t go in your favor, don’t be afraid to walk away. This shows the dealer that you’re serious about getting the best deal and may encourage them to offer a better price. However, make sure you’ve done your research and are confident in your decision before walking away.
Focus on the Total Cost, Not Just the Monthly Payment
When negotiating, it’s important to focus on the total cost of the car, not just the monthly payment. A lower monthly payment may seem appealing, but it could come with a higher interest rate or a longer loan term, which can increase the total cost of the car. Always ask for the total cost of the car, including taxes, fees, and financing.
Use the Competition to Your Advantage
If you’re considering buying a new car from one dealership, but you’ve seen a better deal at another, don’t hesitate to use that information to your advantage. Inform the dealer about the competing offer and see if they can match or beat it. This can often lead to a better deal for you.
Conclusion
Negotiating the price of a new car can be a challenging task, but by understanding the market value, considering the dealership’s profit margin, and using these tips, you can secure a great deal. Remember to be prepared, patient, and confident in your negotiation strategy to get the best price on your new car.