I recently had the opportunity to go along with our oldest daughter when she purchased her very first car. By very first car I mean one that she didn’t buy from mom and dad. Now, I may be a lot more financially savvy than I used to be, but I have never purchased a car, let alone negotiated the price of one ever in my life. There is a certain level of people-pleasing that I’m accustomed to and while I’m working on lowering those levels, I wasn’t sure I was totally prepared for negotiating car prices. Spoiler alert: mama cut 10% off the cost of the car and didn’t falter once. Now, ladies, it’s time to unite. Let me break down how you can be a negotiating boss — no man necessary.
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Don’t let financial confusion hold you back
For years and years and years I let confusion around money hold me back from living my best life. I never liked numbers or spreadsheets and the idea of having a budget made me want to go on a panicked shopping spree.
Then, in 2015, I decided enough was enough. I lead our family through BIG financial changes and I buckled down and figured out this whole money thing once and for all. If you are where I was at…if you are sick and tired of the paycheck to paycheck game and not understanding money at all…check out The Bucket List Budget course I created.
This is a course I designed specifically for people feeling broke and overwhelmed when it comes to managing money. No big fancy money talk…just real-world knowledge coming from a girl who flunked all the math classes. If I can figure this whole money thing out, so can you! Click here to learn more about The Bucket List Budget.
Become a quick car expert
If you didn’t grow up knowing a single flippin’ thing about cars, you’re not alone. Neither did I. But, between my daughter and I, we were able to gather a helpful ton of information about the type of car she wanted to purchase in only a few days.
Understand your car’s features
As much as I recommend buying a new car, I know that’s not always how it’s gonna go down. Whether you are buying new or used it’s a good idea to know what car you’re going to be looking at and know what features it offers.
Know pricing in your area
Once you’ve landed on a certain type of car, look into other dealerships in the area. What are the sticker prices on your same vehicle at different locations?
Get an idea of what prices other dealerships are asking so you can find the best price and be sure to have the upper-hand when it comes to negotiating.
*Expert Advice: When in the process of negotiating, our salesman tried to tell me that they couldn’t lower the price of the car because they would be pricing themselves out of the market. He tried to tell me that they HAD to offer the best price so we wouldn’t go somewhere different.
Little did he know, I already knew all the other prices in the area and knew that what he was offering me wasn’t any different than any of the surrounding dealerships.
It’s sure nice to see through BS after you’ve done your homework.
Check Kelley Blue Book
Another thing I wish we had done before we showed up to the dealership was to check Kelley Blue Book. I had plenty of time to type in all of our info while we were there, but I would have preferred to have done this research beforehand.
What Kelley Blue Book allows you to do is get an idea of what your car should be selling for. You can enter all of its particular features as well as your car’s particular VIN number. Don’t be embarrassed or ashamed to ask for this number before you visit (or during your visit) as a consumer it is your right to make sure you are purchasing the absolute best product available.
Know where you stand
When I say to know where you stand, I mean financially. There are 4 major things to be sure of before you head to the car dealership:
- How much you can put for a downpayment — Hopefully you have a good savings in place so you can put as much money down as possible. This is so helpful to help you avoid paying more each month and paying more interest in the long run. *Having a good down payment helped my NO credit daughter get a lower interest rate*
- What your credit score is — Speaking of credit, it’s important to know where you stand with yours. If your credit is struggling, there is a good chance you’re going to get slapped with a higher interest rate. If you want to avoid high monthly payments, you might want to consider opting for a less-expensive car in order to compensate for the potential higher interest you’ll be paying. *Check your FICO credit score for free*
- The loan amount you’ll potentially qualify for — Before you go to the car dealership, it’s a good idea to get pre-approved for other loans. You can apply online for free without affecting your credit score at The Loan Exchange — and get a variety of different loan options. This will give you a good idea of potential interest rates you could be getting elsewhere and allows you to use this information as leverage when borrowing with a dealership.
- Your absolute must-stick-to budget — One of the most important things you’ll need to bring with you is a firm number in your head. If you only want to pay $10,000 for a car, then do not let this number waver. Having a firm, set number in your head will be your best tool for negotiating.
Don’t let numbers sway you
There were a few sneaky numbers “tricks” I noticed when negotiating with our salesman.
- He quoted us at a very generous interest rate (APR)
- After I asked to lower the price of the vehicle he reduced other costs
- Told me the total price of the car and the interest rate (APR) didn’t affect one another
It felt so liberating to know what he was talking about and to not let myself get fast talked out of saving more money.
Slow it down, process what they are saying to you and don’t be afraid to ask questions. Let’s quickly go over these 3 things he did that I was fully aware of, but I would not have picked up on 10 years ago.
Quoting monthly payments with a generous interest rate
This was my daughter’s first credit and that would mean her interest rate would most likely be on the higher end. Our salesman was quoting her prices with a 7% interest rate for a 3-year and 4-year loan.
She left with an interest rate of 13% and a 20-month loan! His quote was $177 per month for a payment. Her actual payment is $255!
“However, most buyers are what are known in the business as “payment shoppers,” and they are looking for low monthly payments. This is absolutely a terrible way to purchase a car.”Kelley Blue Book
I was very aware that that quote of $177 was most likely going to be much higher, therefore I continued to negotiate a lower price for the vehicle in order to help her get a lower monthly payment.
Had she been on her own, she would have been dazzled with that $177 and assumed that that would be her actual payment amount.
“Lowering the cost”
I let our salesman know right away that I needed her loan to be below $5,000. That was the price cap that we had set. After telling me he didn’t know if he could adjust the price (because they had to stay competitive), he showed up with a new offer that looked something like this.
- $200 off the cost of the car
- $30 lowered license fees (because he had priced them wrong the first time)
There was another additional change he made for $30 or so. While he did lower the price of the car, he presented it to me as if he had made all of these changes for me. And one of those “changes” was a price adjustment from an error he had made before.
*Expert Advice:* Listen to what they say, not how they say it. Although he listed of 3 price-reducing changes he made, at the end of the day, he did not lower the price enough and like I said, some of the cost-cutting things he did were because he had priced them incorrectly before.
APR (interest rate) and loan amount affect one another
This is about when I wanted to punch something. I clearly stated that we needed to lower my daughter’s loan amount to $5,000. My reasoning was because this was her first time borrowing. Her APR would be higher which meant she would be paying far more than $5,000 in the long run and her monthly payment would be higher.
He told me that the two numbers (loan amount and APR) were two separate things. That’s when my sass came out. “Yes, they are two different things but they directly affect one another. This number (APR) is going to be higher than what you quoted. If I can get this number lower (loan amount) it will keep THIS number lower (monthly payment). Do you understand?”
Then he reduced the cost of the car to $4,474. Boom.
However, there was a little bit more about the entire situation that you really need to know about.
Bring your “A” game and your “B” face
Having a good grasp of your knowledge of cars and numbers is going to take you a long way. And, it doesn’t have to be complicated. Watch YouTube videos, read up on this stuff and just price other cars in your area a few days before you go to the dealership.
Knowing your stuff is your “A” game. But your “B” face (I’ve learned) will take you very, very far.
I did not smile at our salesman once. Which was painful for me because I am one of the friendliest people in the world.
I’ve also been one of the most gullible, eager to buy people in the world. Keeping a poker face on was beneficial to keep my giddy shopaholic in check and to let him know I wasn’t there to mess around.
Did anyone else just start singing No Doubt in their head? Just me?
When we were going through Financial Peace University, they covered negotiation tactics and one of the tips was to not speak.
Talk. about. uncomfortable.
*Expert Advice:* During our second time negotiating our salesman made a big smiley face, took a deep breath and said he didn’t think he could manage to lower the cost another $200. “Maybe $100,” he said. I said –absolutely nothing. Then he lowered the price $200. Thanks, Dave Ramsey.
Be willing to walk away
I’m going to be honest. If we weren’t on a time crunch and my daughter wasn’t on the verge of a panic attack, I would have thanked our salesman and walked away.
We had set a price of $5,000. That was the original price of the car and while I did get the total cost of the car down to $4,475 — her total loan amount was still over $5,000 with all the added taxes and fees.
Had I been shopping for myself, I would have politely thanked him for his time and walked away because the total was still over my set budget. Rumor has it, this works fantastically. Dealers don’t want you leaving their parking lot and will be a lot more willing to negotiate if you are about to walk away.
You are capable!
I say this to my kids all the time and I’m saying it to you too.
Don’t allow yourself to be intimidated by something you don’t fully understand. You are not naive. You are a smart, intelligent woman and you are capable of far more than you give yourself credit for.
Hopefully, this post was helpful and gave you some ideas on how to be better prepared before purchasing a vehicle.