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How to negotiate with a clever car dealer

Five ways to negotiate with a clever car dealer

Updated

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

Data indicated here is updated regularly
$
Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Service Fee Monthly Repayment
Loans.com.au - New and Dealer Used Car Loan
From 4.67% (fixed)
5.22%
$5,000
3 to 5 years
$400
$0
You'll receive a fixed rate from 4.67% p.a. based on your risk profile
Finance a new car and benefit from features such as fast approval, no ongoing fees and an optional balloon payment. Note: Settle the loan before 30 November 2020 and enter the draw to win a $1,000 fuel voucher. Terms & conditions apply.
IMB New Car Loan
5.45% (fixed)
5.8%
$2,000
1 to 7 years
$275.12 ($250 Application fee + $25.12 PPS registration fee)
$0
You'll receive a fixed rate of 5.45% 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.
Stratton Finance New Car Loan
From 4.05% (fixed)
5.63%
$10,000
3 to 7 years
$700
$8.25
You'll receive a fixed or variable rate depending on the lender you are approved with
Apply for up to $250,000 and use cash or trade in a vehicle to use as a deposit. Optional balloon payment available.
Credit Concierge Car Loan
From 4.45% (fixed)
5%
$10,000
1 to 7 years
$350
$0
You'll receive a fixed rate of 4.45% p.a. with a comparison rate of 5% p.a.
Get access to over 20 providers to fund a new or used car.

Heritage Bank Car Loan
5.99% (fixed)
6.63%
$5,000
1 to 7 years
$200
$5
You'll receive a fixed rate from 5.99% p.a.
Finance a new or used car up to 5 years old. Large maximum borrowing amount up to $100,000 and terms up to 7 years.
CUA Secured Fixed Car Loan
6.79% (fixed)
7.16%
$5,000
1 to 7 years
$265 ($175 Establishment Fee + $90 Security Administration Fee)
$0
You'll receive a fixed rate of 6.79% p.a.
A secured loan with a high maximum borrowing amount up to $100,000. Redraw facility and no monthly fees.
NRMA New Car Loan
From 4.99% (fixed)
5.69%
$5,000
1 to 7 years
$499
$0
You'll receive a fixed rate from 4.99% p. a.
Purchase a new or used car up to 2 years old and benefit from a fixed rate and no monthly fees. Pre-approval available within 5 business hours.
Plenti Car Loan
From 4.89% (fixed)
5.44%
$10,000
3 to 7 years
$799 (from $249 to $799)
$0
You'll receive a fixed rate from 4.89% p.a.
Borrow up to $100,000 with a RateSetter Car Loan and benefit from no early repayment or exit fees.
Driva Car Loan
From 4.34% (fixed)
5.5%
$2,000
1 to 7 years
$295 (Varies by lender, starting from $295)
$10
You'll receive a fixed rate from 4.34% p.a.
Borrow up to $250,000 with loan terms from 1 to 7 years. Get access to a range of lenders.
NRMA Used Car Loan
From 6.49% (fixed)
7.19%
$5,000
1 to 7 years
$499
$0
You'll receive a fixed rate from 6.49% p.a.
Finance a used car with NRMA and benefit from a fixed rate term and no monthly fees. Pre-approval available within 5 business hours.
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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*
Logo for IMB New Car Loan
IMB New Car Loan

You'll receive a fixed rate of 5.45% 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.

Logo for Beyond Bank Low Rate Car Loan "Special Offer"
Beyond Bank Low Rate Car Loan "Special Offer"

You'll receive a fixed rate of 4.89% p.a.
Take advantage of a competitive rate, pre-approval and no early repayment fees when you finance a car under two years old.

Logo for RACV New Car Loans
RACV New Car Loans

You'll receive a fixed rate from 4.99% p.a.
A larger loan of $5,000 or more to help you buy a new or used car. 5-hour pre approval available and no ongoing fees.

Logo for CUA Secured Fixed Car Loan
CUA Secured Fixed Car Loan

You'll receive a fixed rate of 6.79% p.a.
A secured loan with a high maximum borrowing amount up to $100,000. Redraw facility and no monthly fees.

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