If you’ve ever bought a car, you probably know how difficult it is to negotiate for all the features you want AND get a good deal. Even the most reputable dealers will try their best to upsell you on options and services to increase their profit. And they don’t want you to know that some of the most popular pricing deals aren’t necessarily in your favor. Also, within a deal, while some items aren’t negotiable, others definitely are. Knowing the secrets of vehicle deals can work to your advantage when you’re negotiating your lease or purchase.
Which charges are negotiable during a vehicle purchase?
Independent car buyer’s agent Lindsay Graham explains that during a vehicle purchase, many items are typically negotiable:
Bottom-line purchase price of the car
The car’s sticker price is what you see, but the dealer invoice price is what the dealer has paid for the car. Often there’s not a huge difference between the two, but it’s always worth knowing both figures. Don’t be afraid to ask about the dealer invoice price as it may provide a baseline for your negotiations.
Secret dealer incentives
Some of these are so secret that the dealer may not have advertised them, but they can be worth digging into. Dealers may have manufacturer-provided “bonus cash” that they won’t openly offer, but that they’ll give if you ask.
If you’re financing a vehicle, negotiating the interest rate may be as simple as asking for a lower rate than the dealer offers you. You could also find another dealership offering a lower rate and ask the first dealer to match or beat it. As always, the key is to make the initial request.
Sometimes a dealer will insist that because a vehicle is already equipped with an accessory you may not have wanted, you must pay for it. When that happens, you can ask for a different vehicle without that accessory, and this may be enough to get the dealer to drop the charge. Alternately, the dealer may give you a “best price” and then tell you that they’re adding charges for certain accessories because they’re already on the car. This is when you can make the point that you don’t agree to these charges because you didn’t request the accessories. It may not work, but you can make every effort to get the dealer to remove either the accessories or the charges.
“You’ve ascertained a best deal, only to learn that the dealer is adding window-tinting and body-side molding to the final bill of sale for $300 extra. Be firm that you’re not interested in these features (which often carry huge markups). If you can’t have the accessories removed, you can at least request that the charges be removed or reduced,” explains Lindsay Graham.
Warranties such as glass protection
“Remember that your car insurance usually covers the windshield, so you probably don’t need to purchase glass-protection coverage,” Graham says. “However, if the vehicle’s windshield includes EyeSight® or a similar driver-assistance feature that insurance doesn’t cover or covers only partially, you may want to consider buying the extra insurance from the dealership. Warranties and extra protection aren’t inherently bad, it’s simply important that the consumer understand the fine print and buy the negotiate the purchase price for these plans.”
These can be easy to overlook in your negotiations on used cars because they are so obvious. If a sales associate avoids answering your tire questions and distracts you with other details, it can be easy to forget the obvious, so look carefully and insist on answers. For example, your sales associate may assure you that the tires on a pre-owned vehicle have passed inspection even if they’re close to the end of their life. This is a vital negotiating point! In this case, you can say, “If you won’t reduce the vehicle price any further, I’d like to have four new [insert quality-tire brand of your choice] tires mounted and balanced, or I won’t be able to make this deal.”
Whether a dealer warranty covers repairs that may be needed for pre-owned vehicles
Similar to knowing the condition of a used vehicle’s tires, it’s important to know what else is and isn’t covered by a dealer warranty. For example, a convertible top may not be covered. If you discover that it requires repair, the repair could be costly. Especially on a high-end vehicle such as an Audi or a BMW, a convertible top could set you back over $5000 if an electronic mechanism is involved. Get as much information as you can before agreeing to any deal, so you’ll have plenty of room to negotiate.
Can I negotiate the documentation fee?
Dealers typically include a documentation fee (“doc fee”) for their administrative costs related to processing a title, registration, and other paperwork needed for a vehicle purchase. Here’s the secret: documentation fees vary by state, and your negotiating ability regarding this fee will depend on where you’re leasing or purchasing your vehicle. Some states cap the documentation fee; for example, California currently caps it at $75, while in New York the cap is $125. In states without a cap, such as Florida and North Carolina, documentation fees can sometimes rise as high as $900.
While dealers are required by law to charge each customer the same documentation fee, you may still be able to negotiate a discount based on the fee amount—especially if it’s on the high end—on the total price of the car.
What kinds of charges aren’t negotiable?
In the US, the automatic transmission is king. According to a 2018 article in the Chicago Tribune, just 2% of all vehicles sold in the US in 2018 featured manual transmissions, and only 20% of all vehicle models for that year even offered the manual option. Despite those numbers, an extra charge for automatic transmission is not negotiable if the car is available with a stick shift.
Destination charge fees
These aren’t negotiable because every dealer has to pay them even if they’re located a mile down the road from the car manufacturer.
What should I know about employee pricing? Is it a good deal for regular customers?
There’s no such thing as standardized employee pricing. “Employee pricing” is a pre-established purchase price determined by individual dealerships and/or dealer groups. Regular customers see the vehicle sticker price, which is higher than the dealer invoice. The “employee pricing” that dealers offer to regular customers is often the invoice price itself. In reality, individual dealers set “employee pricing” at their own discretion. On occasion it will be aggressive and appealing, and in these cases, it can be an excellent purchase price. But that’s not because it’s called “employee pricing.” As always, these need to be analyzed on a case by case basis while paying close attention to the other components of the deal (such as interest rate, add-ons, and accessories.)
What should I know about Costco pricing?
Costco pricing is no different from employee pricing—it varies by car dealer. This arrangement is a partnership between Costco and a dealer in which the dealership decides what the special pricing will be and pays Costco once you make your car purchase. It is not a predetermined price favoring buyers coming from Costco. And since Costco cannot and does not control the price of accessories, warranties, or interest rates, it may not be a better deal for you at all.
The last word
If you’re handling your own vehicle negotiations, do your homework. Be aware of dealers’ secrets and their sales tactics. Ask them as many questions as you need in order to get all the details; then walk away if you’re uncomfortable or feel that you’re not receiving straightforward answers. If you’re a calm, informed customer, you’ll be in control—and being in control is always in your favor during vehicle negotiations.