Always be prepared: 4 tips when negotiating with a car dealer

November 23, 2017
Posted by: admin

Be prepared next time you walk into the car dealership. Most of us aren’t prepared for and don’t like negotiating, which means that more often than not we walk out of a car yard feeling like we’ve paid more than we should have. But with a bit of preparation you’ll go into the negotiation armed with all the tools you need to succeed.

So, how do you negotiate with a car dealer so that you get a great deal? (Hint: it’s not offering half the advertised price for “cash”). Read on to learn how to become a negotiation wizard!


Rule 1: Establish yourself as a serious buyer

First step – go and see the car in person. Or if you’re not local to the dealer, at least ask some questions before you bring up the price.

The point of these questions is not to make small talk – it’s to ascertain whether this car is right for you. There’s no point hashing out a deal only to find out that the car won’t suit your requirements.

You would be surprised by how many people ask about our “best price” before they ask anything about the car. You wouldn’t walk into a restaurant and start asking them to reduce the price of their meals before you even select from the menu, would you?

Asking intelligent questions about the car also also shows the dealer that you’re a serious buyer. If the dealer thinks that you’re serious, they will be happy to spend time working out a fab deal that suits your budget.

If you do go for a test drive, don’t be rude or rubbish the car. Pointing out every scratch on a second-hand car is a sure-fire to get yourself put on the bottom of any sales person’s priority list. This doesn’t mean that you never bring up imperfections in the vehicle, but wait until you’re actually discussing the deal.

Pro tip: When you negotiate with a car dealer, you’ll usually have more success asking for any repairs to be included in the deal, rather than asking for money off. It’s a win-win – you’ll get a great car and the dealer gets to maintain some profit margin by fixing the imperfections in-house rather than slashing the price.

Image from Redbook.

Rule 2: Get an independent mechanical inspection

  • “Independent” means someone who is unbiased. A dealer will take an independent report more seriously than the word of your mate, even if they are a mechanic.
  • “Professional” means  someone who is appropriately qualified and experienced. We recommend Redbook or RACV – they do mechanical inspections day in, day out and they know what to look for in a used vehicle.

Pro tip: Use the report of an independent mechanic to negotiate with a car dealer. Say the report identifies a bit of rust on the roof – go back to the dealer and say; “Hey Mr (or Ms) Dealer, I’m super happy with the car and I’m happy to pay you the price that you’re asking, but is it possible for you to fix that little bit of rust in the roof?”

A dealer is more likely to say yes in this situation for three reasons:

  • An independent professional has identified the issue – it’s not your mate trying to be hero
  • You’re not asking the dealer to reduce the price of the car, so he or she can still maintain a good profit margin by rectifying the issue/s in-house
  • The dealer is reassured that by fixing the issue he or she is selling you a good car that you are happy with, backed by an independent inspection. Contrary to popular opinion, (good) dealers want to sell you the best possible car. Nobody – not even a car dealer – wants someone screaming down the phone at them on a Saturday night about that piece of rust that they have just discovered on the roof of their new car.

Image from Integrity Car Care.

Rule 3: Negotiate the cost of a warranty

So, once you negotiate with a car dealer about fixing the important issues identified in the independent report and possibly including the repair of some cosmetic imperfections, now is the time to ask them about the warranties that they offer. A good warranty can help you financially if your car experiences an unexpected mechanical breakdown.

A warranty doesn’t cover everything and all warranties are different, so make sure that you read the terms and conditions carefully. Warranties usually require regular servicing, so you need to be prepared to commit to this.

The aim of getting the best warranty possible is that you will be increasing your level of protection in the future. We won’t beat around the bush – you’re buying a used vehicle. Used vehicles are unpredictable and sometimes unfortunate and unforeseeable things happen with used vehicles. A good warranty can help you financially if the unexpected does happen.

Pro tip: Ask the dealer to go halves with you in the cost of a warranty or even to sell you a comprehensive warranty at cost price.


Rule 4: Bonus negotiating tip if you’re trading a vehicle

Don’t tell the dealer that you have a potential trade until after you’ve finalised the details of the deal. Once you’ve settled on the price and inclusions, bring up your trade. The advantage of this strategy is that the dealer will give you a true value on your car – your agreed price minus the true value of your car. If you’re happy with the trade in value, then you get a genuine discount on the sale.

Alternatively, it also gives you a benchmark on the value of your car. While the dealer is getting your new car ready for you, you can advertise your current vehicle for sale. If you can sell it for more than the trade in value, then happy days. Otherwise, you always have the option of taking the dealer up on the trade value of the car.


So, how to negotiate with a car dealer?

Negotiate on value, not on price.

The reason why many people feel like they’ve been ripped off by a car dealer is because they focus on getting the cheapest price, not the best deal. Really, your objective when you negotiate with a car dealer is to get a great car that you have confidence in.

It might surprise you, but this is also the dealer’s objective! Any good car dealer wants you to walk away with a fabulous car that you love and that will serve you well for as long as possible.

Once you realise that both you and the car dealer have the same ultimate objective, any negotiation becomes a lot easier. However, if you just focus on beating down the price, the car dealer will only start taking out things that make the deal worthwhile, like warranties, roadside assistance, and great after-sales service.

If you follow the 3 golden rules in this blog (plus one bonus rule if you’re trading a vehicle) and focus on negotiating a great deal not a cheap price, you will dramatically increase your chances of walking away with a smile on your face.


Any other tips on how to negotiate with a car dealer? Or any burning questions for a car dealer? Let us know in the comments section!

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