New or used cars are very expensive these days. If you want to save money on a car, you need to learn about negotiating a car purchase to get the best deal.

Save Money by Negotiating a Car Purchase

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Next to buying a house, buying a car is one of the most expensive purchases we make.  It’s one time in your life when you will be pitted against professionals who are focused on separating you from as much of your money as they possibly can.  If you want to learn about negotiating a car purchase, you need to be on top of your game.  

Note that I’m talking about negotiate a used car from a dealership, although some of these tactics will work in a private party setting.  However, if you have your heart set on a new car, you won’t have quite as much negotiating power.  I don’t really know – I’ve bought lots of different used cars, but I’ve never thought a new car was a good enough deal, so I’m not sure if these tactics will work on a new car purchase.  

The good news is that if you go into this process prepared with the correct strategy, you have a good chance of coming out of the best deal on a car or truck.  For example – when I went with my son Matt went in to get his Ford Escape, we ended up saving him $3,000.  How do we know that?  We found an invoice in the glove box from the previous owner.  A girl had bought the car 2 months earlier and had to return it because she couldn’t make the payments.  Her price tag – exactly $3,000 more than we paid.  SCORE!  

Here is one tip that will help you get a deal – go in at the END of the month.  That is when the the window is closing for the big sales prizes and your salesman will be at maximum motivation to make a sale.  A rainy day is a good choice too – fewer customers equals a more attentive salesman.  A little strategy can help you get the best deal on a car (or not!).

Step 1 – Do Your Research First for Negotiating a Car Purchase

This is at least 50% of the job and with all the resources available on the Internet, there is no excuse for not being fully prepared to negotiate your best deal on a car.

First, you need to look at your situation and determine what model of car your family needs.  Think about what is most important to you.  Is it price, seating, style, safety?  Usually a combination of all these things.

Some sites you can use to do your research are –,, consumer reports.  Try to focus on “meaty” options like airbags, durability, and reliability rather than “soft” options like color, type of seats (although I do LOVE a seat heater), and fancy trims.  

I will drive the ugliest color in the world if it’s a good deal and a reliable car, but that’s not the priority for everyone else.  I am SO not kidding – I drive a bright orange Kia because it was a great deal.  It’s not a popular color, but it’s unique and very “me” so I get a ton of compliments on it and not being so picky can really help with saving money on a car.  

Ideally, before you ever set foot on a dealer lot, you should have the following information in your back pocket:

  • The model and features you want. Definitely decide which ones are must-have items and which are more in the “nice to have” items.
  • The range of prices for the vehicle – look at both dealers and private parties.  You may even do some private party test drives just to see what models may suit you.  Do not set foot on any dealer lot until you have finished your research – REPEAT DO NOT GO NEAR A DEALER LOT UNTIL YOU HAVE DONE YOUR RESEARCH.  That is where most people go wrong. I know you want a car NOW, but taking a little time can save you THOUSANDS.  You may be generating hundreds of dollars per hour in savings for this time, so it could be very valuable.
  • Roughly how many of this model are available in your area.  This is very useful information.  If 3 other dealers in the same block have this model and you know how much they are charging for it, this helps a lot.  Go in with some ads printed out or linked up on your phone to leverage your negotiation.  Learn the name of at least one guy at each lot so you can say “Bob over at Joe Schmo Dealership has this in black for a lot less”.  
  • If you require a car that is very specific or unusual, understand that it limits your bargaining power.  Alternatively, if you are going for something very common you are in the “sweet spot” for bargaining.  There’s never going to be a shortage of blue or white minivans, for example.

Step 2 – Figure Out the Money to Get Your Best Deal on Financing

Obviously, cash is your BEST option.  Being able to pay cash for a car is brilliant, but few people can do it.  I’ve managed to do it a few times, due to inheritances and other windfalls, but usually you need a loan.  Your best option is usually a credit union or a bank.  Check the papers or the websites to compare rates.  Using the dealer’s financing is usually not as good a deal as you can get privately.  And if you have a pre-approved loan, that helps your credibility.  

Check the papers or the websites to compare rates.  Using the car dealer’s financing is almost always a bad deal – avoid if at all possible unless it is a phenomenal deal.  Either way, you should have a very clear idea of what rates to expect and what terms you want.

If you go into a credit union before a purchase, they will be happy to review your credit and circumstances and pre-approve you for whatever amount of credit you can qualify for.  Keep in mind that this is a MAXIMUM number, not necessarily a number you can easily afford.  This is an important point in negotiating a car purchase – know your numbers – otherwise, emotion could get in the way and push you to spend more than you planned.

Decide on a car payment you KNOW you can afford and don’t budge from it.  Even if you think you’ve found the most fabulous deal in the world.  You don’t want to be eating PB&J’s for the next four years to pay for your vehicle.  PS:  Do NOT share this amount with the dealer under ANY circumstances.  If you do, you’ve automatically LOST the negotiation!

Step 3 – Playing the Game while Negotiating a Car Purchase

Realize from the moment you step on a car lot, you are playing a very sophisticated game.  It’s sort of like a very polite tug-of-war.  The dealer is trying to get information out of you and trying to drive the transaction in his (her) favor.  At the same time, you’re trying to turn the tide in your favor.  Just play the game better than they do and you win.

Be pleasant, but resist the temptation to be chatty – you are a CLAM.  You are not there to be his buddy, you are there to complete a business transaction.  Keep the emotion out of it. 

Above all, do not reveal any financial information to them whatsoever.  If he asks how much you are looking to spend – say you aren’t sure.  If he asks to run a credit report – politely decline and mutter something about the dealership next door.  He will try to get you in the office of the finance guy.  Again politely decline and mention you will discuss financial arrangements later on.

One cardinal rule of negotiations – the first person who mentions a number usually loses.  Very important tactic for saving money on a car


The test drive is just another stage of the game, but it’s a very important one.  Coach your spouse on what not to say or just politely ask for silence so you can concentrate.  Don’t indicate that you even like the car – instead, focus on the details.  Last car we bought, we didn’t notice a missing trim piece on the mirror.  No biggie, but it was a $95 trim piece and because we’d already sealed the deal, we were out of luck to get it corrected.  You snooze, you LOSE.  

Look the car over completely.  Check for any major dings or issues with the paint.  Look for any signs of possible damage indicating a previous accident or water damage.  Check the heater, A/C, tires, power windows/locks – these are pricey fixes.  Look at every possible feature and listen to the engine and the transmission.  This is your best time to ask to get something fixed or to request an adjustment for an issue.  Or maybe just walk away if the engine sounds too rough.

Step 5 – Learn How to Negotiate a Car Purchase

Keep in mind that you are dealing with people who negotiate for a living, so you are going to want to brush up on your negotiation skills prior to your visit.  This is a very good book written by an FBI Hostage Negotiator and it’s a quick read with some great real-life scenarios that you can employ to help you save money on a car.  If an hour or two of your time can save you several hundred dollars (or three THOUSAND in my case!), it’s definitely time well spent.  

Once you have settled on the vehicle you want, the game starts in earnest.  The dealer is going to bring you a series of offers that are supposedly approved by his sales manager.  Actually, they are mostly discussing football scores.  Don’t pay the slightest bit of attention to these “offers”.  You are going to choose a number that is significantly lower than his offer and then stick to it like glue.  This number is based on your research and it is going to be slightly lower than any other dealer is offering for this vehicle.

At appropriate intervals, you can employ your own game strategies – tell him you wish to have you own pow-wow with your spouse.  One of you needs to look very dubious and shake your head a lot.  Go out and take another look at the vehicle, giving the impression that you might change your mind soon.  Look up Blue Book figures on your phone and frown.

VERY IMPORTANT – Set a timeline up front.  Mention that you have kids to pick up from school soon or that you have an appointment.  Buying a car will take about 2-3 hours, but longer than that could tilt negotiations in his favor.  That will hurry things along – he does not want you to go out that door for any reason.  If negotiations seem really stuck – mention that you have been talking to “Bob” from a rival dealership and you want to check with him again before you sign.  Remember that every dealership in town carries similar cars and has similar deals.

After about the 3rd round of offers, up your offer slightly to give him a little encouragement.  If it seems like he is starting to get within range of a final number (something that seems somewhat fair and affordable based on your research) consider offering him 10% less than that figure.

If you are truly stuck and he won’t come down at all – go ahead and go home.  I guarantee you will get a call from him later that night offering you something that is probably the best deal you are going to get.  Sign the deal and enjoy your new car or start over with another dealer.  

Final note – regarding add-on items, be cautious. Undercoatings and stuff like that – you probably don’t need and they have a huge mark-up. Warranties are usually a pretty good deal, but you have a week or so to do a little research before you sign on the dotted line for them. There are 3rd party companies that offer some pretty good deals on car warranties without the dealer BS. Just check around to be sure they are convenient to use and seem like a legit company.

Other Resources for You to Look Into

Check out my freebie page. I have a video that will show you exactly how to pay off $500 worth of debt within 30 days with some easy tweaks. I also have a handy guide to help you control your impulse spending on Amazon, Target, and other places where you frequently overspend.

Check out my debt-free coaching page. I've helped hundreds of people save thousands of dollars in excess interest charges using simple Dave Ramsey-like strategies. It's simple, affordable and personalized to your unique financial situation.

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