Negotiating car price still saves big bucks

By Tom Ripley

Haggling over the price of a vehicle in a dealership is an uncomfortable experience for most of us. A small percentage of buyers really love negotiating a car price and revel in the verbal and mental combat, but most consumers find it an intimidating process and wonder if they really have to do it. The answer is no, you really don't have to … if you don't mind paying hundreds or even thousands more for your new car.

Dealers would love it if every prospect gave a vehicle a quick once-over and then paid the Manufacturer's Suggested Retail Price (MSRP). But buyers aren't getting the deal they could if they applied a little old-fashioned horse trading to the process.

The background: The dealer has big incentives to put out a high price and then let the consumer try to negotiate it downward. Since a vehicle purchase is a relatively large transaction, the dealership can afford to spend time and effort in an attempt to maximize the cash derived from each deal.

Murky Negotiations Lead to Buyer's Remorse
Another factor perpetuating haggling in the auto-purchase process is the nearly ubiquitous trade-in. Trading one car for another is really two simultaneous transactions. And since used-car values are hardly set in stone, the concept of the trade-in guarantees that some sort of negotiation will take place.

One part of that negotiation is the trade-in value (i.e., purchase price) of the vehicle going to the dealer. Since that price is already in play, it's not a stretch to throw the purchase price of the new vehicle up for negotiation as well. Add negotiations over possible dealer financing of the transaction, and you have the basis for a complicated and often murky series of negotiations.

The process can quickly lead to buyer's remorse, the feeling that when all's said and done, you didn't get as good a deal as you could have. Many consumers have the sneaking suspicion that the person who bought the same model before them -- as well as the person who bought the same model right after them -- probably got a better deal.

Negotiating Your Car Price Like a Pro

So how do you avoid feeling like you've been had?

Separate negotiations. Understand the vehicle acquisition process involves several transactions. Approach each negotiation discretely rather than lumping the negotiations together. This allows you breathing room to examine each one more clearly rather than trying to make sense out of a multi-phase deal.
Arm yourself with information. The Web has made it much simpler to get key pre-negotiation information like list prices, invoice prices, incentives and even "target" or "market" prices. Equipped with this knowledge, you can better assess each individual transaction -- and the acquisition as a whole -- before you shake hands on the deal.
Let it go. To maintain your sanity, try not to wring every last dollar out of the deal. Prolonging a negotiation diminishes returns, especially in light of the fact that you could spend hours trying to capture that last 50 bucks. Instead, aim for deals others are getting. You'll feel more satisfied in the long run.

Tom Ripley writes frequently about the auto industry, car-buying issues and the human condition from his home in Villeperce, France.