Car dealer showing car

How to negotiate with a clever car dealer

So, you’ve decided that you want a new or used car. The rust bucket you’ve been driving since you were 16 is getting too expensive and buying a new or used car is cheaper, or at least that’s what your partner tells you. No matter how much you try and put it off, it’s what you’ve both set out to do this weekend.

However, before you get too excited by the balloons and the flashy “sale” stickers pasted on the windscreens of the cars you’re looking at, here are a few tips that might help you get the best deal for your new vehicle.

The three-dealership rule

The three-dealership rule is something you might not have heard of, but it is a pretty good rule to stick to when shopping for a new car. Do a quick Google search and find the closest three dealerships near your house. Pick a weekend that works best for you and make the time to go to all three of them.

It sounds like a waste of time, but once you’ve gone to all three dealerships, you’ll have a good idea of which one has the best deal on the car you’ve already rigorously researched online.

It’s important to make sure that you go to the dealership that’s farther away from you and work your way closer. That way if there is a better deal down the road, you’re aware of it and can take your hard-earned cash there instead. Whatever discount you can get at the dealerships you go to means more savings for you.

Shop in the middle of the month

It turns out that shopping at least 10 to 12 days before the end of the month ensures that the salespeople at the dealership you decide to go to haven’t hit their targets just yet.

You know what that means, right?

They want to hit that target so badly that they’re sometimes willing to play ball and lower the price! Lucky you!

However, if you decide to go later in the month, you run the risk of the salespeople having already hit those targets. If this happens, they may delay your sale until the next month so it counts for that one instead of this one, or you may not be able to negotiate as good a deal

There’s always the option of shopping around for a new car towards the end of the financial year as car dealerships have stock that they need to get rid of and will lower the price of the vehicle to do this.

Get your loan from the bank or car lender instead of the car dealership

You’re willing to admit that you’ve been distracted by the pretty balloons and found the car of your dreams. The only issue is that it is slightly over the budget that you had planned for your new or used car. Before you sign on to dealership finance so you can drive away with the car of your dreams right there, take the time to compare your options and see if you can get a better deal from a bank or other car lender.

Dealership finance can be quite competitive but can cause other things to happen in the sale. For example, you may not get as good a price on the car because you got a good deal on the finance. Getting a car loan from a lender before you buy the car also puts you in a better position to negotiate as you know how much you have to spend on the car.

Loans you can compare today

Rates last updated February 18th, 2018
$
Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Monthly Service Fee Application Fee Product Description Monthly Repayment
IMB New Car Loan
From 5.99% (fixed)
6.34%
$2,000
1 to 7 years
$0
$250
Borrow up to $75,000 for a new car up to two years old. Competitive 5.99% p.a. rate available to all approved applicants.
Stratton Finance New Car Loan
From 5.49% (fixed)
6.62%
$18,000
1 to 10 years
$7
$499
Benefit from a car broker with over 25 years experience
Latitude Car Loan
From 6.99% (fixed)
8.1%
$5,000
1 to 7 years
$10
$295
A secured loan with a competitive rate that can help you finance a range of new or used vehicles.
Heritage Bank Car Loan
From 8.99% (fixed)
9.62%
$5,000
1 to 7 years
$5
$200
Apply for up to $100,000 to finance a new or used car at a competitive fixed rate.
RACV Personal Loan
From 7.49% (fixed)
8.04%
$5,000
1 to 7 years
$0
$380
Take advantage of a competitive rate by securing an asset to this loan. Use the funds for any purpose.
Beyond Bank Low Rate Car Loan
From 5.69% (fixed)
5.97%
$25,000
1 to 7 years
$0
$175
A great rate for cars under 2 years old.
IMB Secured Personal Loan
From 6.89% (fixed)
7.24%
$2,000
1 to 5 years
$0
$250
All approved applicants can access this competitive rate and use the loan to finance a range of purposes. Loan amounts up to $60,000 available.
MoneyForJam Car Loan
From 4.95% (fixed)
5.8%
$5,000
1 to 7 years
$6
$400
Apply for a car loan from $5,000 and get access to a panel of lenders.
AutoCarLoans
From 5.16% (fixed)
6.64%
$15,000
1 to 7 years
$5
$381.80
AutoCarLoans can match you with a lender from its panel with rates starting from 5.16% p.a. Suitable for vehicles up to 2 years old.
MyState Secured Personal Loan
From 7.99% (variable)
8.96%
$10,000
1 to 10 years
$10
$200
Apply for a loan up to $75,000 and benefit from loan terms up to 10 years. Your choice between secured or unsecured.
Freedom Finance Car Loan
From 5.1% (fixed)
5.94%
$35,000
1 to 5 years
$0
$380
If you meet all the requirements you could get access to a range of lenders to finance a new or used car up to 4 years.
Westpac Car Loan
From 8.49% (fixed)
9.67%
$10,000
1 to 7 years
$12
$250
Finance a new or used car and benefit from great features for car buyers including a car search tool and the option to borrow extra for on-road costs.

Compare up to 4 providers

Don’t be afraid to walk away

It can be tough when the dealership closest to you is offering window tint and a free automatic upgrade on a car that you thought only came in manual. However, it’s important to remember that these people are not your friends and that they just want to make a sale, no matter how friendly or polite they are to you.

If the car is not exactly what you want and you know you can get it cheaper due to the three-dealership rule, feel free to walk away. It’s a total power move and might just make the salesperson lower their offer price.

Walking away from a salesperson can be tough, but if you’re sure that the deal they’re trying to sell you just isn’t right for you, walking away is the best option for you and your wallet. If you think that there’s a better deal out there, there probably is. You’ve just got to walk away and find it.

Be polite to the person who's trying to sell you something

As a general rule, you should be polite to everyone you talk to. When you’re shopping for anything, especially cars, this rule comes into play as well. Although it can be frustrating when people don’t take no for an answer, take the time to think about how emotionally draining their day as a salesperson must be.

It’s not an easy job to talk to strangers and get them to feel at ease, but that’s what salespeople have to do. As with any business transaction, do not threaten the person who's trying to sell you something to “take it or leave it” as this is an aggressive approach that will not work out in your favour.

While it’s important to be strong when negotiating, people are more likely to do something nice for someone who has been nice to them. Keep this in mind while shopping around for your new car and you might just find a salesperson who loves being treated with kindness and will sell you the car for lower than the advertised price.

Follow these five tips for dealing with a car dealership and their salespeople, and you might just find that the next new or used car you buy will be a bargain! Good luck!

Picture: Shutterstock

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Car Loan Offers

Important Information*
IMB New Car Loan

Borrow up to $75,000 for a new car up to two years old. Competitive 5.99% p.a. rate available to all approved applicants.

Beyond Bank Low Rate Car Loan "Special Offer"

A great rate for cars under 2 years old.

RACV New Car Loans

A competitive rate car loan from RACV with no monthly fees and 5-hour loan approval.

Heritage Bank Car Loan

Apply for up to $100,000 to finance a new or used car at a competitive fixed rate.

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