How to Negotiate the Best Car Price for You in Just 11 Steps

By Eric Rosenberg
Reviewed by: Lauren Bringle, AFC®
Published on: 03/19/2020

A car is one of the biggest purchases most people ever make outside of buying a home. But before you go spend thousands of dollars at a car dealer, maybe even tens of thousands of dollars, it’s important to do your research and prepare to negotiate.

Here are some important things to know and strategies to follow to negotiate a car price in the best way for you.

Don’t know how to negotiate a car price? Here’s a quick infographic you can take with you to help you negotiate too.

1 - Do your research before leaving home

When learning how to negotiate a new car price, research is absolutely essential. The most important part of a car negotiating process happens before you leave home. It takes more than Google to find a fair car price. You’ll want to use multiple resources to get an idea of what you should pay for your ideal car, truck, or van.

For a new car, look at the manufacturer’s website for the manufacturer’s suggested retail price (MSRP) before talking to a car dealer.. You should never pay more than MSRP for any new car.

For a used car, look to Kelley Blue Book as a guide for what the car is worth today. A good negotiator will end up with a price below what they found in this step.

If you’re able to hunt it down, the dealer’s cost for a new car is likely the best price around, since this is what they pay the manufacturer. Dealers are rarely willing to sell a car at a loss.

Knowing what dealers pay to buy a car and the MSRP sets the top and bottom limits of your negotiation

2 - Understand the true costs of buying a car

Aside from just knowing the total cost of a car, it’s important to weigh other cost-considerations before you buy a vehicle too.

Here are just a few costs you might want to pay attention to so you can negotiate the best price...

The cost of buying new vs. used cars

Budget-minded car shoppers often prefer used cars to new ones. The biggest drop in value for a car happens when you drive it off the lot. A low-mileage, recent-model used car is almost always a financially prudent decision.

For example, a 2019 Honda Civic Sedan with a manual transmission starts at about $19,550 as of the writing of this article (March 2020). But a comparable 2018 model with just over 30,000 miles on it ranges from about $15,000-$17,000.

In this example, just by picking a model that’s one year older, you could save about $2,000-$4,000. Depending on the car’s condition, it could be a much better value to get the two year old car.

Vehicle depreciation matters too

While looking at the total cost savings of buying new vs. used matters, it’s important to take into account vehicle depreciation too. You don’t want to end up in a situation where you owe more on the car than the car is worth.

Over time, your car starts to lose value, which is also known as depreciation. Some car makes and models depreciate in value faster than others. What age of car you buy can also impact how quickly it depreciates.

In fact, according to Carfax:

“The value of a new vehicle can drop by more than 20% after the first 12 months of ownership. Then, for the next 4 years, you can expect your car to lost 10% of its value annually.”

In other words, if you buy a brand-new car, it could lost 30% of its value in the first two years. Imagine how much money you could save if you just waited out those first two years of value-depreciation and bought it then?

Don’t forget hidden costs of owning a car either

When setting your budget, don’t forget about costs like gas, maintenance, and auto insurance. Even if you can afford a high monthly payment, that doesn’t mean you can afford the other expenses that go along with it.

Whether you are buying a used car or prefer a brand new one, you should almost always negotiate the price.

Following the tips below will help you drive away with the best possible price.

3 - Price shop outside of your local area

The dealership down the street may not offer the best price by a long shot. Contact dealerships within a few hours drive of your home. You might find the best deal is worth a drive to the next town over or even farther.

You don’t have to visit each dealership in person while car shopping either. Once you know what car you want, you can email the dealership to get a price quote and start negotiating.

If you get multiple prices, you’ll likely start saving right away by focusing on the car dealership with the lowest price.

4 - Don’t buddy up to the salesperson

Car salespeople will try to buddy up to you and act like your friend, but remember that you just met them and probably won’t see them again in the future.

You don’t owe them anything.

The local dealer you are talking to is getting paid to sell you the car, so don’t be afraid to push on price because they are friendly. It’s their job.

It’s a good idea to be polite. Ultimately, however, you should focus on the numbers, not the relationship.

5 - Consider negotiating from home

The showroom or sales office is built to pressure you to say yes. Even if it isn’t the best deal, you may feel compelled to say yes when someone’s staring you in the face. Sometimes just taking that part out of the equation can help.

When you reach out to multiple dealerships via email, you can do all of your negotiations from home on your timeline. It takes out much of the pressure and slows down your decision-making process while car shopping. This helps you be more deliberate and get the best price.

6 - Focus on the total price

If you buy a new car and finance it through the dealership, they may present you with a monthly payment instead of a car price. The monthly payment is good to know, but it shouldn’t be the place you focus.

Tell the salesperson you want to focus on the total asking price. Ask for a breakdown of all parts of the final price so you can look for any dealer-added fees and other questionable charges.

When you buy based on the car price, not the monthly payment, you know you’re getting a fair deal.

7 - Negotiate your trade-in separately

Trading in a car is a great way to get funds for your next one. But in many cases, the dealership will lump the car price and trade-in together when presenting you with an offer.

By taking your focus away from the trade-in value and putting it on the monthly payment, you might get less for the trade-in than if you make a point to negotiate the trade-in value on its own.

Don’t negotiate the final price only. Break it down and negotiate the new or used car and the trade-in separately.

8 - Consider a no-haggle buying program

If you are really intimidated by negotiating or haggling with your local dealer, some services allow you to skip it altogether.

Warehouse clubs like Costco and Sam’s Club often have pre-negotiated prices with major car manufacturers. You can also find these programs at some credit unions, such as USAA. You may pay a bit more than the very lowest price, but you’ll generally get a pretty good deal and don’t have to spend the time or effort on negotiating.

There are also some online car sellers that have fixed prices on new and used cars. Companies like Carvana, Vroom, and Joydrive let you buy online and deliver the car right to your house. It’s not quite as easy as shopping on Amazon, but it’s getting pretty close.

9 - Shop at the best time of the month

Timing matters when you buy a car. The time, day of the week, and day of the month you buy can influence your negotiating power. Shopping early in the week when foot traffic is slow may help you snag a better deal.

If you’re able, it may also help to shop at the end of the month when salespeople and dealers are under pressure to hit their quotas. Super negotiators look to buy at the end of a calendar quarter or end of the year when quarterly quotas or bonuses are on the line.

10 - Check your credit and shop around for vehicle financing

If you’re planning on getting a car loan, you may want to find out your financing options before heading to a dealership. With perfect credit, you may qualify for a 0% loan for a new car. Otherwise, a local credit union may have a better rate than the dealer’s financing.

With bad credit or no credit, improving your credit score can save you money when it comes time to buy a car.

However you pay or finance the purchase, don’t buy from any traditional dealership without negotiating the price.

Check out this article for more information on buying a car with no credit.

When you get a loan through the dealership, you may have some wiggle room to negotiate your financing as well. Also, consider different terms and how that influences both your monthly payment and total interest costs.

Loans longer than five years may be a tempting way to lower your monthly cost, but it can cost you a lot more in total interest charges over the life of the loan.

Leasing a car can be tempting because of a low monthly payment, but it rarely works out in your favor financially. Leasing is a very expensive way to rent a vehicle for a few years, and in the end you have to pay even more to keep it.

Generally, leasing is only a good idea if you plan to buy a brand-new car every few years.

11 - Know your numbers and when to walk away

When you know the numbers, you’re in the best position to negotiate a fair price on a car, since you can then spot a bad deal from a mile away. If you can tell someone’s trying to sell you an unfair price, walk away and find a dealer who’s more willing to work with you.

Not being afraid to walk away can be a powerful negotiating tool.

Bonus question: Can you pay with a credit card to save money?

Some buyers may want to put part of the down payment on a credit card. While some dealerships allow this, it doesn’t usually work out in your favor.

Credit card processing costs the dealer around 2% to 3% of the charge amount, and that cost could be passed on to you in the final purchase price.

Credit cards can help you get valuable rewards points, but you should only use a card when buying a car if you can pay it off in full before the next statement due date.

Credit cards charge a lot more than auto loans in most cases, so you’re better off with a bigger car loan than financing the car with your credit card, even if you have excellent credit.

Bottom line

Don’t let car dealers upsell you if you’re on a budget. Use your resources, do your research, and improve your credit if you need to so you can find a fair price on your next ride.

How to be a super negotiator

Super negotiator


  1. Make it. "How to negotiate the best price on a car, according to former car salesmen".

  2. Consumer Reports. "How to Negotiate a New-Car Price Effectively".

  3. Npr. "5 Tips For Buying A Car The Smart Way".

About the author

Eric Rosenberg is a former bank manager and corporate finance worker with a Bachelor’s degree and MBA in finance. His work is featured at Business Insider, Credit Karma, The Balance, Investopedia, and many other websites and publications.

About the reviewer

Lauren Bringle is an Accredited Financial Counselor® with Self Financial– a financial technology company with a mission to help people build credit and savings. See Lauren on Linkedin and Twitter.

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Written on March 19, 2020
Self is a venture-backed startup that helps people build credit and savings.

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