How to negotiate the best price for a new car

On a Thursday evening last year, I found myself at a Mazda dealership in Toronto. My partner and I had taken one of their CX-5s for a test drive around 7:30 that night, and somehow, at 10:30 p.m, we were still there — talking numbers.

Car salespeople know there are three types of buyers: payment buyers (those focussed on the monthly payment), cash buyers (those with enough money to buy the vehicle outright), and difference figure buyers (those looking to trade in their existing vehicle for a new one and are focused mainly on the price difference between the two). 

We’d fall into the payment buyers category, since our main concern from the get-go was arriving at a monthly payment that made fiscal sense for our respective budgets. But the numbers the saleswoman was quoting were outside our budget. And after much back and forth, my partner stood up, signalling (I thought) that he wanted to leave. That’s when the manager of the dealership hurried over. He shook our hands — then things really started snowballing. After some rapid-fire back-and-forth offers, we negotiated the monthly payment down by about $100 and got free heated seats on the base model. When we arrived home that night, my partner asked me, “So, how’d you like my standing-up move?”

Little had I known this was a negotiation strategy all along.

The automotive sector is one industry where haggling is alive and well. In fact, dealers expect you to negotiate. Here’s how to make sure you’re getting the best price before you enter the dealership and before you leave it:

Compare prices and dealers online

The first step in being able to successfully negotiate a better price on a new vehicle is to see what’s out there. And the easiest place to do that is online.

Every dealership’s prices are going to be slightly different, since every dealership has a certain quota that they need to meet, (i.e. a certain volume of cars they need to move off the lot). A dealer in Stratford, Ont., for instance, might not have as many vehicles to move as a dealer in London, Ont. It’s in your best interest to find out where the best price is and whether or not it’s worth it for you to travel farther to get it.

But when you’re comparing prices online, make sure you’re comparing apples to apples. That means comparing the same model across all dealers. If you’re looking at the base model of a Mazda CX-5 at one dealer, don’t then look at the top-of-the-line model at the next.

Do the math in advance

Price negotiations are entirely based on math equations. So, don’t go in blind. Before you head into the dealership, crunch the numbers yourself.

For example, if the car you’re interested in buying is $30,000, divide that by 60 months (that comes out to five years — a typical finance term), and you’ll get your monthly payment without interest. This will give you a clear picture of where you’re starting at, and what your budget can handle once the interest is factored in.

Be realistic about payments, too. Your salesperson wants you to leave something on the table for them, too.

“The best deal is a negotiated deal,” says John Musicco, sales and leasing consultant at Barrie Honda. “But there are limitations.”

Being straight forward goes a long way 

Ask yourself what qualities you’d like to see in a car salesperson — friendly? Confident? Educated? Honest? Good listener? — and emulate those same traits when it comes time to negotiate. 

Do your research, act confident, be honest and upfront about what’s most important to you (price point, safety, resale value, etc.), do it all in a polite way, and you’ll probably land yourself a better deal. If a price doesn’t make sense for you, ask the salesperson in a polite but direct way: “Have you got a little more room?”

Negotiations don’t always have to be about price, either. So if the salesperson can’t come down on price any further, you could ask for some perks to be thrown in instead, like free heated seats, a remote starter, or floor mats.

Remember: the salesperson is working for you

Car salespeople know what consumers need in order to close a deal. “One: they have to like the car,” says Musicco. “And two: they have to like the number.”

So while it might feel at times like you’re fighting them for a deal, the truth is: salespeople really want to sell you the car. It will mean a commission for them, and another piece of inventory moved off the lot for the dealer. Not only that, it means they’ve guaranteed your business for at least five to seven years, as you return to the dealer for all your repairs and maintenance. 

“If I don’t listen to buyers and meet their expectations in terms of where I land on a number, they’re going to walk down the street and get the deal somewhere else,” says Musicco.

“I don’t want to lose them. So I’d rather come to a deal that works for both parties as opposed to walking them out the door.”

In fact, salespeople actually have their own negotiating to do during a sale: they have to work their sales manager on your behalf. That’s where the final approval comes from.

That’s certainly what happened in my case. The saleswoman kept leaving her desk to go somewhere unseen before she’d come back and keep negotiating. She was working her sales manager, the man who later came out himself to speak with me and my partner. So don’t forget that they want to close as much as you do. Use that to your advantage. 

And if you’ve done all of these things and still don’t seem to be getting anywhere in your negotiations, well, don’t rule out the simple act of standing up.