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 November 15th, 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
Latitude New and Used Car Loan
From 6.99% (fixed)
8.1%
$5,000
1 to 7 years
$10
$295
Finance a range of vehicles including cars, motorbikes, boats and caravans.
Apply online to finance a new or used motor vehicle and receive a response in 90 seconds. You will receive a competitive tailored rate of between 6.99% p.a. to 14.99% p.a.
IMB New Car Loan
5.89% (fixed)
6.24%
$2,000
1 to 7 years
$0
$250
Borrow as little as $2,000 at a competitive fixed rate
Finance a new car up to two years old. Competitive 5.99% p.a. rate available to all approved applicants.
Loans.com.au - New Car Loan
5.44% (fixed)
5.99%
$5,000
3 to 5 years
$0
$400
Optional balloon payment available to reduce your repayments.
A competitive rate car loan suitable for a new cor used car.
Stratton Finance New Car Loan
From 5.14% (fixed)
5.8%
$18,000
1 to 7 years
$8.90
$457 (for private seller vehicles this fee is $608)
Fixed or variable rates starting from 5.14% p.a.
Apply for up to $100,000 and have up to 7 year(s) to repay. You can use cash or trade in a vehicle to use as a deposit.
Beyond Bank Low Rate Car Loan
From 5.69% (fixed)
5.97%
$25,000
1 to 7 years
$0
$175
Offset your interest with a Car Budget Account.
Take advantage of a competitive rate, pre-approval and no early repayment fees when you finance a car under two years old.
St.George Secured Personal Loan - Fixed Rate
From 8.49% (fixed)
9.6%
$3,000
1 to 5 years
$12
$195
You'll receive a fixed rate from 8.49% p.a. based on the value of your car
Get a competitive rate and apply for a larger loan up to $80,000 when you attach a new or used car as security to the loan.
Australian Military Bank Car Loan
From 5.71% (fixed)
6.57%
$1,000
1 to 7 years
$10
from $100 to $500
You'll receive a fixed rate between 5.71% p.a. and 8.66% p.a. based on your personal credit history
A flexible loan to help you finance a car, motorbike or boat up to five years old.
Westpac Car Loan
From 8.49% (fixed)
9.67%
$10,000
1 to 7 years
$12
$250
Use a new or used car as security.
A flexible loan thats lets you benefit from a car search tool as well as the option to borrow extra for on-road costs.
RACV New Car Loans
From 5.99% (fixed)
6.55%
$15,000
1 to 7 years
$0
$399
Benefit from 5-hour pre-approval.
A competitive rate car loan from RACV with no monthly fees.
IMB Secured Personal Loan
6.89% (fixed)
7.24%
$2,000
1 to 5 years
$0
$250
Secure this loan with a car and use the funds for any purpose.
Competitive 6.89% p.a. rate available to all approved applicants. Loan amounts up to $60,000 available.

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

You'll receive a fixed rate of 5.89% p.a.
A low minimum borrowing amount of $2,000 that you can use to purchase a new car or one up to two years old.

Loans.com.au - New Car Loan

You'll receive a fixed rate of 5.44% p.a.
Finance a new car and benefit from features such as fast approval, no ongoing fees and an optional balloon payment.

Latitude New and Used Car Loan

You'll receive a fixed rate between 6.99% p.a. and 14.99% p.a. based on your risk profile
Apply for a loan from $5,000 to finance a new or used car. Flexible repayments and options to finance a classic car.

Stratton Finance New Car Loan

You'll receive a fixed or variable rate depending on the lender you are approved with
Apply for up to $100,000 and use cash or trade in a vehicle to use as a deposit. Optional balloon payment available.

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