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How to Negotiate Price

You know what car you want and you're ready to negotiate. However, don't take this step too lightly - you can usually negotiate a lower price than the dealer is asking. It often depends on how keen you are to buy and how keen the seller is to sell.

Used car prices vary widely, depending on the condition of the car, the fitted options, the number of kilometres on the clock and even the colour. Therefore, estimate a realistic price then offer slightly less. If the seller meets or gets close to your price, do the deal. If they don't, walk away and look elsewhere.

The golden rule is to keep the seller uncertain whether you're interested in buying that car or another one from someone else. Until the deal is done, the price can always go a little lower. The key is to shop around, compare quotes, and ask other dealers if they can do better for similar cars. When comparing prices, always ask for the “on the road” price or "change-over” price if you're trading in your present car. This removes the risk of getting caught by a hidden cost that you hadn't considered.

Finally, make the seller nominate their best figure, then mention any lower offers by other sellers to force the price down even further. And, don't worry if someone else buys the once-in-a-lifetime bargain you've had your eyes on. Another car is sure to come along soon.

Let's Make a Deal (Getting the Best Price)

It's vital to have your finance arranged before you go shopping, because you then know how much you can afford to spend, and you won't end up going beyond your limits.

OK. You know the car you want, and you know you can afford it. Now comes the interesting part.

What you need to hear from the salesperson is how much it is going to cost you to drive your car out of the yard.  This is the only meaningful figure in the exercise because it includes all charges and options, so it's the only one which should enter into your negotiations.  We'll call it the 'drive away price'.  If you have a trade-in, the principle is exactly the same, but we're talking about a "changeover price" ie. what it will cost you to exchange your old car for a new one.

Ask the dealer "could I have a drive away price on this model please"? Always say "Please" because many people disguise their fear of negotiating with car salespeople by being obnoxious, which only makes things unpleasant for everybody.

At this point, the salesperson will invite you to sit down.  If you have a trade-in, it will be given a quick once over beforehand.  At the sales desk, a calculator will be produced, and the salesperson will take your name, address and telephone number, write down lots of figures, add them up, and give you a price.

You may also be asked if you're sure this is the car you want. If you are happy with the car and price you could say "Yes".  But, if you already have a lower price from another dealer, say "No".  You may also be asked if you are interested in looking at other cars which they're doing special deals on this month, say "No, thanks."

When the salesperson shows you the price, check that it includes everything you talked about. For example, extra registration, accessories, new tyres, and/or any repairs needed. The most common mistake many buyers make is to negotiate a price on the car only, which is a lot less than when other fees or repairs apply.

At this point, you will thank the salesperson for his or her time, ask for a copy of the quote, and leave the showroom.  The salesperson may try to delay your departure by telling you that:

a) this is a special price for today only or
b) you won't get a better price anywhere else, or
c) they’re not making any money out of the deal  

Neither of these statements is true. If the salesperson refuses to put the quoted price in writing, then simply leave and go to another dealer. But, this is what you will do in any case, because you now have a price with which to work.  

Next, go to a second dealer who sells the same car, and ask if they can better the price you got from the first dealer you visited.  If they can, you'll go through the same process, and walk out with another piece of paper and a better deal. And, if possible, go to a third dealer and repeat the exercise, using the second dealer's price as the basis for negotiation, or the first dealer's price if dealer number two can't do any better (which is highly unlikely). Once you have a price from dealer number three, go back to dealer number one, whose original price will by this stage look rather expensive.

This is the hand to hand combat stage.  Dealer number one now knows you are serious because your shopping has shown how silly his original price was, so there'll be a furrowed brow and some grinding of teeth from the salesperson, who will probably duck off for a chat with 'the boss'.  On his return, you'll be given a price which is "absolutely the best we can do".

Take this price to dealer number two, then take number two's price (now a bit less) to dealer number three.  By, now you are nearly there.  Chances are you won't have to do the rounds a third time, because one of your second round prices will be too good for the next dealer to beat and the salesperson there will tell you so. You then have a choice of going back to the dealer who gave you the lowest price and buying the car, or making it a two-way contest.  By now, each successive price you're offered will be very close to the last, so there will be little benefit in negotiating further.

After you have agreed on a price, you may be offered a few goodies to go with your car.  These are a handy way for the dealer to pick up a few hundred easy dollars on top of whatever he's making on the deal itself. Rust proofing, window tinting, fabric protection and headlight and bonnet protectors may be dangled your way just before you sign on the dotted line. Don’t buy any of them because you can get these fitted later for half the price.

Shopping around in an organised way can save you thousands of dollars but you must know exactly what make, model, colour and options you want, and negotiate only on the drive away price.  If you are firm on these things and courteous to the salesperson with whom you deal, the experience of buying a car will be one from which you drive away feeling satisfied, rather than ripped off.


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