How to Negotiate When Buying a Car

Discover tactics to use to reduce the price of the car you are interested in.
Published on December 7th, 2020
  Written by 
Adrian Edlington
Adrian Edlington is PR & Communications Manager at Savvy. With a keen interest in personal finance, car loans, the mortgage industry, cost of living pressures, electric vehicles and renewable technology, Adrian's research includes conducting primary data surveys and analysis of up-to-the-minute secondary Australian data sources. His work on behalf of Savvy has been featured on ABC.net.au The Conversation, the Sydney Morning Herald, AFR, News.com.au, The Age, Herald Sun, Adelaide Now, SBS On The Money, 7News, Car Expert, Which Car, Drive.com.au and more. In his spare time, Adrian enjoys mountain biking and business podcasts.
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   Reviewed by 
Bill Tsouvalas


Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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Many buyers find negotiating the price of a car a daunting task. However, it is often crucial for securing the best deal possible – whether you’re at the dealership or buying from a private seller. In this blog, we cover strategies and tactics you can use to navigate the negotiation process with confidence and get the car you want at a price that suits.

Prepare yourself for negotiation success

Before jumping into the negotiation process with a seller, take time to prepare. Here are some steps to take:

Do your research

Arm yourself with information about the car you're interested in, including its market value, features and potential alternatives. Researching recent sales data, customer reviews and typical dealer markups can provide valuable insights into negotiation opportunities.

Set a budget

Determine your budget before entering negotiations. Know your financial limits and consider factors such as taxes, registration fees and insurance costs. This will help you stay focused during the negotiation process and prevent you from overspending.

Get car loan pre-approval

Consider getting pre-approved for a car loan before negotiating. Pre-approval not only gives you a clear understanding of your purchasing power but also strengthens your negotiating position by demonstrating your seriousness as a buyer.

Explore your options

Before committing to any negotiation, explore multiple options to ensure you're making an informed decision. Visit different dealerships, explore private listings, and compare prices and features. Having a variety of options allows you to assess the market and choose the best deal that aligns with your preferences and budget.

Have the right mindset

Approaching the negotiation process with the right attitude is essential for achieving the outcome you’re after. Here are some tips:

  • Build rapport: establishing a positive relationship with the seller can create a more conducive negotiation environment. Find common ground, listen and show genuine interest.
  • Project confidence: confidence in your knowledge and negotiation skills can influence the outcome of the discussion. Maintain good posture, make eye contact and express yourself clearly and assertively.
  • Be open-minded: remain receptive to the seller's viewpoints and be willing to explore alternative solutions. Flexibility and open-mindedness can lead to more productive negotiations and better outcomes for both parties.
  • Foster collaboration: approach negotiations as a collaborative effort rather than a confrontational one. Focus on problem-solving together to reach a mutually beneficial agreement.
  • Be patient: negotiations often take time, and rushing the process can lead to suboptimal results. Exercise patience and avoid making impulsive decisions. Allow sufficient time for discussion and exploration of options.
  • Stay calm: maintain a calm and composed demeanour, even in the face of challenges or disagreements. Emotions can cloud judgment and derail negotiations, so strive to remain level-headed and focused on the end goal.
  • Ask questions: engage the seller in dialogue by asking insightful questions about the car, its features, and any relevant details. Active listening and probing can uncover valuable information and strengthen your position in the negotiation.

Key strategies during negotiations

When it comes time to haggle, here are some essential steps to secure the best deal on your new car:

  1. Begin with a fair offer: start negotiations with an offer that reflects the car's market value and your budget. Offering a reasonable price demonstrates your seriousness as a buyer and sets a positive tone for further discussions.
  2. Highlight your advantages: showcase any advantages you bring to the negotiation, such as pre-approved financing, knowledge of similar cars in the market or a willingness to close the deal quickly. This can strengthen your bargaining position and persuade the seller to consider your offer more favourably.
  3. Establish clear boundaries: define your negotiation boundaries and be prepared to stick to them. Determine the maximum price you're willing to pay and any non-negotiable terms or conditions. Communicate these boundaries clearly to the seller to avoid misunderstandings during the negotiation process.
  4. Be ready to counteroffer: instead of simply rejecting an offer, be prepared with well-considered counteroffers. These should remain within your budget but still represent a win for the seller. Base your counteroffers on your research and the car itself, highlighting any factors that might justify a lower price (e.g. mileage, minor cosmetic imperfections).
  5. Be prepared to walk away: don't feel pressured to agree to a deal that doesn't meet your requirements. Be willing to walk away if the seller isn't willing to negotiate or if the terms aren't favourable.
  6. Document everything: once you reach an agreement, ensure everything is documented in writing. This includes the final agreed-upon price, financing terms, warranty details, and any additional inclusions. A written contract protects both parties and avoids any misunderstandings later.

Dealerships vs private sellers

When it comes to negotiating the purchase of a car, the approach can vary significantly depending on whether you're dealing with a dealership or a private seller. At dealerships, negotiations typically unfold within a structured environment governed by set pricing and processes. You'll interact with trained sales representatives or managers who aim to close deals while maximising profits for the business. Negotiations often revolve around the selling price, trade-in value, financing terms and additional services like warranties or maintenance packages. While dealerships may have some flexibility in pricing, their bottom-line figures are often influenced by profit margins and sales targets, limiting negotiation options.

Negotiating with private sellers, meanwhile, is a more personalised experience. This can lead to tailored negotiations and opportunities to build rapport. Private sellers will generally be less experienced at selling cars and may have greater flexibility in pricing, influenced by factors such as urgency to sell or simply a willingness to negotiate. However, unlike dealerships, private sellers typically offer the car as-is without additional services, warranties or after-sale protections.

By following these steps and adopting the right mindset, you can approach car negotiations with confidence. By remaining patient, persistent and focused on your goals, you'll be well-equipped to secure a car you love at a price you can afford.

If you are looking for a car loan or car loan pre-approval for your new vehicle, turn to Savvy. Our helpful consultants are on hand to guide you through the process, helping you secure the deal you’re after. Get started today!

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

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