A Day At The New Car Dealer

New car dealership

If walking onto the new car dealer’s lot is a stressful and complicated experience for you, I’m going to take care of that right now.

There’s a lot of car-buying advice out there. However, much of it tells you what you should do but not how you should do it. That’s what I’m going to clear up for you. What you’ll read here is based on my experiences and much of it may be advice you’ve never seen before.

After having bought 22 cars over the years, half new and half used, I’ve made just about every car-buying mistake possible.

It wasn’t until about car number 15 or 16 that I finally figured out how to survive a trip to the dealer and not get screwed. I’m now going to share how I was able to get the price I wanted for both my trade-in and the car I wanted to buy.

Don’t Go In Blind and Dumb

By this, I mean there are a few things you must research in advance if you want to have any chance of holding your own with the dealer salespeople. Remember, they are pros and have done this far more times than you ever will.

The saying ‘Knowledge is Power’ is never more true than at the car dealership.

Here’s what you’ll need to find out before ever stepping onto the lot, regardless of the car you’re looking to buy.

What Your Trade-In is Worth – Be Honest With Yourself

The three most well-known Internet sites to find out the value of your car are Kelly Blue Book, Edmonds, and NADA. Just Google them to find their sites.

It will only take you a few minutes on each site to find out the trade-in value for your car. It will probably be a bit different at each one, so I just take the highest one and use that as the lowest price I will take for my trade-in (more on this later).

Be sure to be honest with yourself when putting your car information into these sites. If it doesn’t fit their description for, say, “excellent condition”, don’t use that price as your benchmark.

The Interest Rate Your Bank Will Give You For a New Car Loan – Is Your Credit Score 500 or 800?

Unless you’re paying cash (if you are, you have my admiration!), you’ll need to know this. Here too, you can probably find this out on their website.

Pro-Tip: If you can, have the bank actually approve you for a new car loan. This gives you even more leverage at the car dealer.

What the Demand Is For the Car You’re Looking to Buy – Hint: You Won’t Get a Deal On That Z06 Corvette

Once again, the Internet is your best friend.

What I do is look at the websites for 3 or 4 dealerships and see what their advertised prices are for the car I want. If none of them are discounting much, it’s probably a vehicle in fairly high demand. I’ll then know I won’t be able to negotiate much off the sticker price.

On the other hand, if this make and model has a lot of advertised discounts off the sticker price, I know I’ll be in a stronger negotiating position.

The Maximum You’re Willing to Pay for That Car – The Line That Can’t be Crossed

This can be a bit tricky to determine.

You can do a massive amount of research as to dealer invoice prices, what the markups are for accessories, whether the dealer has high or low expenses, etc, etc.

Far too much time and effort, in my opinion, so let’s make it simple.

If your research shows it’s a high-demand vehicle, then offer a price 5% lower than the sticker price and be willing to negotiate up to 3% below the sticker price. I draw the line there. 3% off the sticker is the highest I will go for high-demand cars.

If you’ve seen several dealers offering fairly good discounts off the sticker price, indicating that this is a lower-demand car, then start at 7.5% off the sticker price and be willing to negotiate to 5% but no higher.

In no case will I ever pay the sticker price for a new car – and neither should you.

Yes, sometimes a new model comes out that becomes wildly popular and dealers are getting more than the sticker price, but these are models that I never look at. They are always, and I mean always, a bad deal in the long run, no matter how popular they are.

Best Days and Times to Shop – Hint: It Isn’t Mid-Month at 9:00 AM

For the last three new cars I’ve purchased, here’s how I always got the deal I wanted.

  • Shop on either the last or second to the last day of the month. It’s still true that salespeople have incentives to make monthly sales goals.
  • Go to the dealer early in the afternoon. Tell the salesperson they are the first dealer you’ve visited and you just want to look around for now, as you have a couple of other dealers you want to visit, ask if they will be there all day, and if so get their card. AND THEN LEAVE!
  • Do this with two or three other dealers. Then choose the one you liked the best (or that has the exact car you want in stock).
  • Here’s the most important part: go back to the dealer you chose 30 minutes before they close and ask to speak with the salesperson you saw earlier that day. Tell them you’re done shopping and ready to buy immediately if the deal is right. Now they know you’re a serious buyer.

They will badly want to make that last sale before month-end, but at the same time would like to not stay too late. Both of these things work in your favor because you are in NO hurry.

True Story: I followed this exact process three cars ago. It took so long to finish the deal after the dealership closed that they sent out for pizza for everybody! I got the deal I wanted, enjoyed some pizza, and they got to finally go home.

Now the Real Fun Begins – The Negotiation. Where Your Resolve Will be REALLY Tested

Always remember two things:

  1. No matter how friendly salespeople are, they are not your friends and do not have your best interests at heart. They are there to get the most money possible for the dealership.
  2. Never, under any circumstances, accept a price lower for your trade-in, or higher for the new car, than the limits you set for yourself in advance. If you don’t stick to these limits, I guarantee that you will get less for your trade-in and pay more for your new car. Remember: these people are experts.

Negotiate the Price of Your Trade-In First – Really!

I know this goes contrary to most of the advice you’ve seen elsewhere, but hear me out.

By finalizing a price for your trade-in upfront, you’ve prevented the dealer from trying to negotiate your new car and your trade-in as a package deal, which forces them to be upfront about the price of each one.

The dealer may try to lowball you by saying they are the experts on what your car is really worth and the online valuation sites aren’t accurate. Tell them you did your homework and the price you want is based on your research.

You have to stand firm on what you set in advance as the lowest price you’ll accept. If you don’t get your minimum price after three counteroffers, you must be prepared to stop right there and walk out. They have to know you’re serious when you give them the final price you will accept.

Don’t let them try to say they’ll make it up in the price of the new car. Once you let them start negotiating your trade-in and new car as a package, you will lose.

Never Negotiate For a Certain Monthly Payment – ONLY Negotiate the Price. Show Them You’re Not a Fool!

The dealer will try to find out what the highest monthly payment is that you can afford. They will then almost always find a way to reach that amount, or close to it, without regard to how bad of a deal it is for you.

No matter how much they pressure you, tell them you don’t want to discuss the monthly payment until you’ve agreed on an out-the-door price for the car. If they continue to balk at this, simply thank them for their time and tell them you’ll continue shopping other dealers.

As with everything, you have to be ready to walk out – this is your greatest strength in any negotiation.

For the New Car, Let the Dealer Offer the First Price – And We Don’t Mean The Sticker Price!

Ask them right up front what they can give you off the sticker.

Counter with a price 5% lower than the sticker (for in-demand vehicles) or 7.5% lower for a car less in demand. That will be the first of what will be many steps in the negotiation if you let them, or just a few steps if you follow the advice below.

You’re In Charge, So Make Them Keep It Short!

The salesperson will always tell you that the manager has to review and approve all prices and for the most part this is true.

This means that each time you counter with an offer, they will go to the manager and leave you sitting there. And sitting there.

They’ll want to do this multiple times, the goal being to eventually wear you down. I’ve read horror stories about people (frequently elderly people) being trapped for hours by a drawn-out negotiation. Some have even said the dealer wouldn’t let them leave.


Don’t let this happen to you. Instead, here’s how you can limit the entire new car price negotiation to 30 minutes or less.

  • Inform them up front that you realize they have to run every offer by their manager. But you’re willing to wait no more than 10 minutes each time. And then you must be prepared to get up and walk out after 10 minutes to show them you mean what you say.
  • Let them go back to the manager only twice. If you have to make a third offer, tell them before they go to the manager that this is your final offer and please come back with an answer of yes or no, nothing else. Tell them that If the answer is yes, you’ll buy the car. If it’s no, you’ll thank them for their time and part friends. But make it clear that if they make another counteroffer, you’ll get up and go – even if it’s only a few dollars more.

Another true story: I had this situation come up two cars ago. The third time the salesperson came back, instead of a yes or no, I got another counteroffer for $185 higher. Admittedly a small amount, but I simply pointed out that, as I told them in advance, I would only accept a yes or no. I then got up to leave, even though it was late and I had already gone through the process of negotiating the price of my trade-in. The salesperson looked at me and said, “Are you really going to walk out over $185?” I said yes. They accepted my last offer.

No one should let themselves be trapped for hours in a new car negotiation.

The entire process of buying a new car, from the test drive, to the trade-in, to the new car price, and finally the paperwork at the end, will probably take at least a couple of hours. But the new car price negotiation should be no more than 30 minutes.

You may have read stories about people who try to end the negotiation and leave but the dealer won’t give them back the keys to their trade-in, using excuses such as it’s “up on the rack being inspected”, we misplaced the keys, or some such nonsense.

If this ever happens to you, tell them you’re calling 911 and reporting that they’ve stolen your car. I guarantee you the keys will be returned immediately. End of story.

Dealers Use Sneaky Tricks – Here’s a Couple For You

We all know that there are some sneaky tricks dealers use to pad their profits, such as adding on needless accessories or trying to complicate the negotiations to the point where you think you’re getting a good deal when you’re not.

So, here’s a couple of sneaky – and I mean sneaky – tricks to fight back with.

  • I got this one from a friend of mine who is a professional salesperson himself, although for heavy equipment rather than cars. It’s pretty ingenious but not entirely honest. What he does is collect a business card from another dealership and then writes on the back of it the price he wants to pay for the car. He shows it to the salesperson and says this is what he got at the other dealership. It’s of course not true, but he claims it’s worked more than once to get him a lower price.
  • If you plan on financing, tell the salesperson you’ll finance through them if they give you the same rate as your bank. This costs you nothing if they agree and gives you more leverage because dealers make a commission on the financing. If you plan on paying cash, you can still do this and then pay off the loan a month or two later (but make sure there is no early payment penalty). If this is too sneaky for you to feel good about, make three payments before you pay off the loan. That’s usually the point at which the dealer can keep the loan commission. You’ll pay some interest, but it may be worth it for the extra negotiating power it gives you.

Before You Go…

This was a lot to digest, I know. I want to leave you with one piece of universally applicable advice:

You are in control, not the dealer. If you’re uncomfortable at any point in the buying process, simply say “Thank you for your time but I need to think some more about this.”

Then get up and walk out. You are under no obligation to continue, no matter how much time they have invested in you.

Ignore any pleadings they make to get you to stop. If they’ve made you uncomfortable enough to get up and walk, this is not a dealership with which you want to do business.

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