How to Negotiate for New Car Price in USA

Have you ever negotiated for new car price in the USA? Many people do not even know that the MSRP price printed on a car window is much more than what you can really buy it for.

This includes me as my first car in the USA was bought at window sticker price without any negotiation. The reason was the high rate of rental car insurance for a newcomer to the USA.

The first car I bought at window sticker price was Honda CRV. Later, my Gujju friend told me the real deal and how to buy a new car easily at 10-20% less than the sticker price (MSRP).

Car Price Negotiation Tips and Tricks

These are tried and test tips that I have used personally to get a 14% discount on the fully-loaded Lexus RX 350 window sticker price.

#1 Buy on Last 2 days of quarter or month

The number one target should be to buy your dream car in the last 2 days of a month. To add more sweetness to the deal, try to buy on the last 2 days at end of a quarter.

This means last 2 days of March, June, September and December can get you the best car deals.

The best day to get the highest car buying discount is Dec 31.

One of my friends had bought a Chrysler sedan at a staggering 25% discount on the last day of the year when he closed the deal at 11 PM-midnight.

New car dealers do not make much money on selling new cars but they have monthly and quarterly targets to complete. You can really negotiate hard and bring down the MSRP by at least 10% without much effort.

#2 Check Lowest Prices for Same Car in Other US States

You may not know but you can buy a car from any dealer anywhere in the USA and can get it shipped to your home only for USD $800.

#A- TRUECAR.COM

The idea is to get the lowest price which should be the highest you should pay for this car even if you have your heart set on it.

The first step to finding a lower price is to search online on truecar.com with a Delaware zip code of 19706. This will give you an indicative price that this car model has been sold for. My Gujju friend told me that most of the time, prices are lowest in Delaware.

Now, check the same configuration in your own zip code. For example, I chose Dallas and zip 75001 to compare the price.

This price shows that people are paying about 4.5% less than MSRP for this car. Note that this is the average price which means that some people would have paid even less. Our target is a 15% discount.

Use this indicative price and subtract another 5-10% from this price to set your target price to buy.

For example, In this case, I would go and start my negotiation with 44K and would settle for around 45-46K based on how the deal plays.

#B- CARGURUS.COM

The other useful site is cargurus.com. This will show you the price of the same car as offered by dealers around the US. This can be a very good tool to find the real price to use as a negotiation starting point in your own state.

Example, This Toyota Highlander platinum is being offered at around 8% lower than MSRP by many dealers:

In the US, the costs for a car are reduced by giving higher discounts if it has been standing in the lot for more time. Cargurus helps you find the number of days that particular car (using the unique VIN number) has been sitting in the dealer lot.

Open the CarGurus listing and scroll down to the ‘Negotiation’ section to know the number of days. Dealers are ready to give a discount if this car is unsold for 20+ days.

The more number of days means that dealer is more inclined to give higher discount to sell it.

#3 Count Price of Additional Packages Over Base at 25% of MSRP

Whatever additional packages like entertainment package, luxury leather trim package, etc are added on top of the base model of the car have extremely high prices.

You should count only 25% of the package’s MSRP value in your cost estimate for this car.

Example:

The base model’s price is 44k. Dealer adds an entertainment package worth 3000 US dollars to reach MSRP of 47K.

Now, your own cost estimate should only count the additional package’s cost as $750. This means that your price point to buy a car with this package should be about 44k + $750 = $44,750 and not 47k as set by the dealer.

#4 Take Your Wife To Negotiate, Leave Kid at Home

This sounds funny but it is a genuine advise. Women are better negotiators than men.

• First, Fix a price in your mind which is at least 10% below MSRP for prime selling cars like Honda CRV, Toyota RAV 4, or Nissan Rogue and 15% for luxury cars like Lexus, Audi, and BMW.
• The second thing to note is that you should introduce your wife as the financial decision-maker and not you. Let the salesman try and convince both of you.

The car salesman is an expert in playing tricks over your wife’s heart and your mind. But, by changing the roles, you have at least tried to make playing a little harder for him.

He will run here and there to try and give you the impression that he is talking around trying to get the best deal for you. He will reach out to his manager (there is no manager that he really talks to, even though you can see him talking to someone through glass doors).

They are just talking non-sense to show you off and nothing related to your car price. He will also write and print quotations, to give you an impression that it is his final best deal. Do not fall for it.

Mark my words that if you are buying at quarter-end, you can easily get a 15-20% discount on luxury cars. Keep negotiating.

Just stay firm on your price until you get close enough to sign the deal. It may take an hour or more but you will get it even if it is time to shut the showroom doors.

You need to understand that it is the salesman who is under pressure to make you sign and not you. You can easily walk away and come again tomorrow.

#5 Be Ready to Walk Away without Buying

If you can’t get at least an 8-10% discount, you should be ready to walk away and try another dealer in your area or away from downtown.

Dealers farther from city have better deals many times and you should get their quote.

#6 Be Focused On What Model You Want to Buy

The salesman will try to offer you another model that may be missing a couple of features that you really absolutely want at the price that you are negotiating for.

This is their trick to make you happy with your price point but still make a profit as they are actually selling you an inferior model than what you want.

Stay firm on what you want and at what price.

Just say: I have X amount and I know you can make it happen.

Place the ball in salesman court. He has to think about how to make this deal happen. They know all the tricks to play with numbers even if they have to get a bank loan for you.

#7 Manufacturer, Finance Discount

Most car manufacturers run special discounts called ‘manufacturers discount’ if you buy before a certain month-end or take their own finance deal.

Do ask for it as these are normally in the range of USD $1000.

Even if you have the cash to pay for the car, you can get the financing done from the car dealer to get this 1k discount and pay off the loan in about 30 days.

#8 Don’t Talk About Monthly Payment, Talk About Car Price

Car dealer will ask you about what number you want for your monthly payments. Do not ever get into this trap.

Just simply talk about the final car price and say that you will manage whatever monthly payment it comes out to be.

As a human mind, you cannot really calculate monthly payments easily but you can focus on one number which is the final car selling price. The salesman knows this and he tries to confuse you with the monthly payment amount.

#9 Do not Tell That you want to trade your old Car

The golden rule of car negotiation is to not tell the salesman about your intentions of trading your old car off until you have settled on a new car price.

You can simply say that you want to buy a second car and not planning to trade off.

#10 Should you trade Off old car?

I recommend trading off the car only if you are in hurry to sell.

As per my experience, you can easily get at least 1k to 2.5k higher on CraigsList, Facebook MarketPlace, or other such private party sales than what is offered by Car dealer as a trade-off price.

But, do not forget that car dealer charges you sales tax only on the final price of the new car after deducting your old car’s trade value.

For example, You are buying a new car for $45,000 and the car dealer is ready to buy your old car at $15,000. You will only be charged a sales tax on $30,000. That’s a benefit of trade-off.

So, you do the math by exploring your old car price on KBB site first before agreeing for trade off value.

Car Finance at Local Credit Union

My suggestion is to always check the car loan rates from your local credit union first, then a national bank like Chase or Bank of America, and then the car dealer finance.

I have seen that DCU (Digital Credit Union) almost always has the lowest car loan rate. It is my favorite bank.

Other Tips

I am sure you would have tried lot more tricks to strike a car deal. Why don’t you share it in comments with us?

If its really good, I will add it to this page with your name with your permission.