As a customer, you need to negotiate each of the five items (purchase price, trade-in allowance, add-
ons, warranty, and financing) in order to get a “better deal”.  Ignoring any one of these items is likely
to cost you money.

  Sound complex?  It is!  You have to negotiate
all five items!

It is this complexity that allows Dealerships to make a profit, sometimes a large profit, despite fierce
competition.

All of us negotiate items without consciously thinking about it being a “negotiation”.  Most of us have
a high success rate!  We often get what we want!  We are natural negotiators!

Have you ever negotiated with a 2-year old?
Have you ever negotiated with a teenager?
Have you ever negotiated with a parent?
Have you ever negotiated at work?
Have you ever negotiated at play?

We usually don’t think about the fundamentals of negotiation that we apply in day to day situations.  
The way that we negotiate is as individual as each of us.  However, there are common principles
involved.  The following is a selection of some of the most relevant to negotiating a better deal.

PRINCIPLES OF NEGOTIATION

Set Goals – Know exactly what you want, what you expect to achieve.  Set a target price for your
vehicle purchase, set a target price for your trade-in.  You may wish to write your targets down and
refer to them as you proceed throughout the negotiation process.  Monitor your progress.  Have you
met or exceeded your goal?  How close are you?  Make your goal specific such as “$400 over dealer
invoice”, not “the lowest price possible”.

Prepare – Do your homework, be knowledgeable, read the car reviews, and make a list of
comparable vehicles (and be familiar with them).  Know Your Credit Score, Know Your APR, Know
Your Trade-In Value, Know the benefits and the cost of add-ons, and Know the benefits and the
costs of Warranties.

Identify Alternatives – Your first alternative:  Buy, Don’t Buy.  Second, what alternative vehicles
would you consider if you can’t get your first choice at the price you are willing to pay?  What
alternative dealerships would you consider?  If you don’t like the trade-in allowance, are you willing to
sell your old car yourself?  Think these alternatives over prior to visiting a dealership.

Be Professional – Present yourself in a professional manner.  Dress for success.  Maintain a
positive attitude.  Be aware of body language.

Maintain Focus – Keep your goals in mind.  Be friendly, be cordial, but don’t let the negotiation
move off course.

Listen – This is probably the most powerful principle.  The more others talk, the more information
they reveal.  Some of this information could be very valuable to you.  What do others want?  How can
you meet their needs, while meeting yours?  They want a sale and you want a good price.

When you get what you want, time to stop talking – Time to move on to the next topic, discuss
next steps, discuss delivery.  Don’t risk undoing what you have already accomplished.  Example:  You
negotiated the trade-in allowance that you targeted, stop talking about your trade-in.


NEGOTIATING SITUATIONS TO AVOID

The following situations should be recognized as less than optimal.  It is difficult, if not impossible to
meet your goals on a timely basis under these conditions.  Are these negotiating ploys?  You will
need to evaluate your alternatives and think about your strategies.

Negotiating with someone who lacks authority to negotiate – This occurs when the
Salesperson must get approval from the Sales Manager on all points.  You can have no more than a
discussion with the Salesperson, it is not a negotiation.  However, the Salesperson should be able to
provide you with important information as to what the Dealership wants.  This is a great time to listen!  
Ask questions and gather information, but don’t make any concessions.  Don’t negotiate.  When you
are ready, ask to speak with the decision maker.

Negotiating with a terrorist – This occurs when someone (Salesperson, Sales Manager, or
Finance Manager) crosses the line.  If someone is abusive, speaks to you in an inappropriate
manner, invades your personal space or is attempting to otherwise intimidate you into seeing things
their way, they are not in a negotiating mode.  No need to try to negotiate.  People employed by a
dealership work with customers everyday and know how to behave.  They should know when their
behavior crosses the line.  Don’t negotiate.  Either, speak up and point out the behavior or choose to
continue your discussions maybe at another time.

Negotiating with a dishonest person – When an offer is made and that offer is accepted, you
have a deal!  If it is subsequently not honored, you have a problem.  If the Salesperson is knowingly
making false or even misleading statements about the vehicle or the financing, you have a problem.  
Was it a mistake?  Was it a negotiating ploy?   You decide.  You have alternatives:  Buy, Don’t Buy.

Negotiating with an irrational person – If someone has made a ridiculous initial offer, should you
make a counteroffer?  Do you counter with a ridiculous counteroffer?  Usually this is a waste of time.  

A strategy to consider for each of the items above involves time.  Your time, not theirs.  Let the
dealership know that you are running out of time.  If any of the above is a negotiating ploy, you put
the dealership in the position of either changing their behavior in order to get the deal done or risk
losing a sale.  If you leave, you may not return.  You might tell them:  
“Look, I only have another 30
minutes to get this done, this is what I can do, do we have a deal?”


SOME ADDITIONAL NEGOTIATING STRATEGIES

Whoever speaks a number first, loses – This appears to be true more often than not.  Always try
to get the dealership to “give you their best price so you can think it over”.  Avoid speaking a number
first (their target price could be lower than your expectation and you would never know).  This can
often result if there is a factory to dealer incentive that you are unaware of.  This strategy is also very
important in negotiating your trade-in allowance.  If the first number is completely unacceptable, tell
them.  Was the first number a way of getting you to give “a real” number first?  Sometimes it is.  Try
to get a better number without giving them a number you thought was fair.  You might tell them:
 “If
this is the best number you can do, I need to continue shopping, I am disappointed, I expected better
from your dealership.  Can you take another look?”

You won’t get what you don’t ask for – Don’t be afraid of going too low.  You could be surprised.  
This is especially true with used cars at franchised new car dealerships.  Often the asking price is
very high.  Based on your research, a 4 year old car with 70,000 miles should sell for $8,000, but the
dealership is asking $9,999.  You might tell them:  
“the most I can pay for this car is $7,000, can we
get it done”
 All they can say is no, but the answer may surprise you.

Avoid splitting the difference – unless it is insignificant.  How many times in the past did you split
the difference and feel you did the right thing?  How many times did you feel you did the wrong
thing?  Trust your instincts.  Splitting the difference is more about saving time than meeting your
more important goals.  If a “splitting the difference” offer is made to you, you may decide it is
reasonable to counter with a number that meets 25% of the way.


SUMMARY

All of us have experienced success at negotiating.  We each have a negotiating style that fits our
personality and works for us.  When it comes to negotiating, one size does
not fit all.

Also, don’t get discouraged if you are not getting what you want.  Take some time to think about it.  
Were your goals realistic?  Were you taking full advantage of a highly competitive market place?  Be
patient.  Be knowledgeable.  
Be StreetSmart!

                 If you do get all that you want, Congratulations!


                                              Next:  Negotiate the Purchase Price
NEGOTIATE A BETTER DEAL


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purchase and finance
vehicles in a
competitive market"