Car Deal Canada

How To Get The Best Deal From Car Dealers

How To Get The Best Deal From Car Dealers

Buying a new or used car is one of the biggest purchases many people will make. With the average price of a new vehicle topping $47,000 in 2022, getting the best possible deal can mean thousands of dollars in savings.


Yet negotiating with car dealerships has a reputation for being stressful and intimidating. Many buyers dread haggling and just want the process to be over quickly. This leads some people to overpay simply because they feel uncomfortable negotiating.


But by entering a car dealership prepared with the right strategies and techniques, you can take control of the negotiation and maximize your savings. This comprehensive guide will provide you with insider tips used by expert negotiators to get the absolute lowest price.


With the knowledge gained from these proven car buying pro tips, you’ll walk away feeling satisfied knowing you secured the very best deal, without any buyer’s remorse.



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Know the True Market Value

The most important step in getting the best possible deal is researching the fair market value of the specific car you want. Don’t rely only on the dealer’s sticker price or ask them “what’s your best price?” Without knowing what the car is truly worth, it’s impossible to recognize a good deal.

Instead, spend time at home looking up the car’s value from independent, third-party pricing sources. Sites like Kelley Blue Book (KBB), Edmunds, and TrueCar can give you an accurate price range based on the car’s make, model, year, mileage, options, and location. Compare prices across these sources to get a good sense of the typical asking price for that vehicle in your area.

It’s smart to check prices at multiple dealerships too. Look up the same car on their websites or inventory pages to see what they are listing it for. This will account for local demand and supply. Armed with this pricing intelligence, you’ll have a target price range in mind and be able to spot lowball offers or high markups.

The time invested in valuing the car will pay off tremendously when you negotiate. Knowledge is power – if a dealer quotes you above the fair price range, you have concrete evidence to push back. You’ll also know a good deal when you see one. Setting a maximum target price based on market value is essential to getting the best deal.

 

Get Pre-Approved Financing

One of the most important steps to take before negotiating with a car dealer is to get pre-approved for financing from an outside lender like your bank or credit union. By having financing already secured, you gain tremendous leverage in the negotiation and show the dealer you are a serious buyer ready to purchase. Dealers make a good portion of their profit from financing and pushing loans with higher interest rates, so they won’t be thrilled if you already have your own financing lined up.

To get the best possible rate, you’ll want to shop around and apply with multiple lenders rather than just going with the first offer you receive. Compare interest rates, loan terms, fees, and other factors across banks, credit unions, and online lenders. You can start with where you already have accounts, but also look at major national banks and lenders known for competitive auto loan rates.

Online lender sites like LendingTree allow you to easily compare personalized loan offers from their network of lenders, simplifying the process of finding the lowest rate. Having multiple pre-approvals gives you the flexibility to use whichever lender provides the best deal. Just be sure to only formally accept one loan offer when you are ready to finalize the purchase.

Armed with pre-approved financing, you have established control over a major cost component of the transaction before negotiations even begin. Make sure not to reveal the full details of your financing terms too early in the negotiation, as this intel can weaken your position. Simply let the dealer know you are pre-approved and ready to buy at the right price.

 

Focus on the Out-the-Door Price

One of the most important negotiation strategies when buying a car is to focus first and foremost on negotiating the all-inclusive “out-the-door” price. This refers to the total purchase price after all add-ons, fees, accessories, taxes, registration costs, and any other charges the dealer may try to tack on.

Rather than getting lost in monthly payment discussions or negotiating on the vehicle price alone, make it clear up front that you will only consider the single bottom-line drive-away price. This takes into account the entire financial commitment for the vehicle purchase and ownership transfer.

By concentrating negotiations around this comprehensive out-the-door price, you avoid having the dealer pad the deal with extra profit margin through back-end add-ons after you’ve already agreed on a vehicle price. It also prevents them from diverting attention to monthly payments, which may seem small but can hide high overall costs.

To keep focus where it matters most, reiterate that you are only interested in negotiating one number – the full out-the-door cost. Tell the salesperson you will not discuss monthly payments, financing terms, or additional items until an agreeable all-in OTD price can be reached.

Once a satisfactory OTD price has been negotiated and the deal seems ready for signature, still make sure to carefully review the full contract and itemization. Verify that the final price matches the agreed OTD figure without any hidden charges added after the fact.

 

Use Strategic Timing

Timing your car shopping strategically can give you extra leverage when negotiating with dealers. Salespeople have monthly quotas to meet, so visiting the dealership at the very end of the month or quarter is ideal. The sales staff will be more motivated to make a deal to hit their numbers before the month flips over.

Similarly, arriving near closing time in the evening can work to your advantage. Salespeople are eager to finalize one more deal before they go home for the day, so they may be more flexible on price to get you to sign. Just be prepared to purchase right then if you get an excellent out-the-door offer.

Holiday weekends are another opportunity, as dealerships tend to run big sales promotions around holiday times to clear out inventory. You can take advantage of those advertised sale prices or special financing offers as a baseline, and then negotiate from there to see if they will go even lower.

The key is to put yourself in a position where the sales staff feels a bit more urgency to make the sale. Use their desire to hit targets and eagerness to finish the day strong to strengthen your negotiating position.

 

Start Low But Within Reason

When making your initial offer on a car purchase, it’s important not to lowball to the point that the dealer finds your offer laughable or insulting. However, you do want to start out lower than the fair market price you’ve researched to leave room for negotiation. A good rule of thumb is to open 10-15% below the fair purchase price you’ve determined for that specific make, model, trim and year of vehicle.

For example, if your research indicates the fair purchase price is $25,000 for the car you want, start your offer around $21,250 – $22,500. While significantly lower than asking price, this shows you’ve done your homework on fair value, and also leaves adequate room to compromise upward to reach a deal.

If pressed by the dealer on why your offer seems low, calmly explain you’ve thoroughly researched the current market value for this vehicle based on condition, mileage and equipment. Provide printouts of your research data if needed to justify your starting offer. However, avoid revealing your maximum limit you’re willing to pay.

With some dealers, an extreme lowball offer risks them dismissing you as not serious. By keeping your initial offer within 10-15% of fair value, you show knowledge without appearing completely unrealistic. It also maximizes your negotiating range to get the best possible deal.

 

Master Negotiation Tactics

When negotiating with car dealers, you’ll need to have some savvy negotiation tactics up your sleeve. One of the most common tricks salespeople use is to steer the conversation towards monthly payments rather than the total purchase price. Don’t fall for this trap – politely steer the discussion back to the overall out-the-door price. Say something like “I’m not concerned with monthly payments right now, I’m focused on agreeing on a fair overall price first.”

Silence can also be a useful negotiation tool. After you make an offer, resist the urge to keep talking or negotiate against yourself. Let the salesperson respond and make a counteroffer. Don’t feel pressured to fill awkward silences – that tension often motivates the other party to move closer to your offer. Count to 10 after making an offer before saying anything else. Use the time to evaluate their body language for signs of flexibility. The pressure of silence can result in significant savings.

 

Be Ready to Walk Out

One of the most effective negotiation tactics is being willing to walk away from a deal if the dealer won’t meet your target out-the-door price. Make sure you have done your research beforehand and determined a fair price to pay. Approach the negotiations calmly and make an initial offer at least 10-15% below your maximum price.

If the salesperson won’t come down to your target price after some back and forth, politely let them know this price is above what you are willing to pay based on your research. Tell them you will need to continue shopping around at other dealers unless they can meet your terms.

As you get up to leave, provide the salesperson with your name and phone number. Let them know that if they reconsider and can offer your target OTD price, they should give you a call. More often than not, a salesperson will contact you in the next day or two with a better offer once they realize you are a serious buyer ready to purchase at the right price.

Walking out demonstrates you are willing to go elsewhere to get the OTD price you want. It also puts time pressure on the dealer to either meet your terms quickly or risk losing the sale altogether. Just be ready to follow through and continue shopping if your bluff is called.

 

Watch for Common Negotiation Tricks

Car dealers employ all kinds of tactics to make you pay more without realizing it. Here are some of the most common tricks to watch out for:

 

The Four Square

The four square worksheet is a tool salespeople use to confuse buyers and mask the true price of the car. It divides negotiations into monthly payment, down payment, trade-in value, and purchase price. By mixing these elements together, the salesperson hides the total you’re actually paying. Insist on negotiating just one number – the out-the-door price.

 

Lowballing Your Trade-In

Dealers make a large portion of their profits from giving you less for your trade-in. They may offer an unreasonably low number, hoping you just accept it. But you can fight back by getting quotes from other dealers, checking trade-in estimators online, and pointing out reconditioning needed to justify your higher asking price.

 

Payment Packing

Dealers know buyers tend to focus on the monthly payment. So they pack the deal with extras like extended warranties, rust-proofing, and gap insurance to raise the payment but make more profit. Combat this by sticking to negotiating just the sale price of the car itself first before any add-ons.

 

Spot Delivery

Some dealers will let you drive the new car home before financing is finalized, then call days later saying the deal fell through unless you accept a higher rate. To avoid this, secure approved financing beforehand. Or don’t take the car until all paperwork is signed.

 

Bring Reference Materials

When heading into negotiations, make sure to come equipped with reference materials to support your position. This includes printed copies of pricing data, offer letters, and vehicle comparison charts. Having this information on hand gives you concrete proof to back up your target price and can prevent dealers from making claims that are unfounded.

For pricing data, bring the latest pricing guides for the specific make and model you are looking to buy. Resources like Kelley Blue Book and Edmunds TMV provide current fair market value ranges based on your area. You can demonstrate to the dealer that you’ve done extensive research on real prices being paid.

In addition, print out any better offer letters or quotes you’ve received from other dealerships for the same vehicle. This shows you are a serious buyer who has shopped around, and it forces the dealer to match or beat the competitor’s pricing if they want your business.

Finally, compile your own vehicle comparison chart documenting the prices, features, and add-ons for the exact car at multiple dealers. This allows you to demonstrate in writing how one dealer’s overall offer is superior, giving you logical justification for your chosen price target.

Having this reference material close at hand empowers you to stand firm when a dealer claims that unrealistic prices or add-ons are “standard.” Simply pull out your pricing guides and offer letters to refute any assertions that seem inflated or dishonest.

 

Consider Certified Pre-Owned

Certified pre-owned (CPO) vehicles can provide an excellent middle ground between buying new and used. CPO cars are typically off-lease returns or trade-ins that are no more than 5 years old and have fewer than 80,000 miles. They undergo rigorous inspections and reconditioning to meet manufacturer standards.

The major benefit of CPO is getting a lightly used car that still has plenty of factory warranty left. Most CPO vehicles come with a 1-year bumper-to-bumper and 5-year/100k mile powertrain warranty. Some luxury brands like Lexus even offer unlimited mileage CPO warranties up to 6 years from the original in-service date.

When negotiating a CPO car, there is less room for discounting since the price already reflects the vehicle’s certified status. However, you can still target 5-10% off list price. Emphasize that you are cross-shopping CPO and new inventory and are weighing the warranty coverage and peace of mind versus new car smell and features.

CPO can save $5,000-10,000 or more over new depending on the brand, and still gives you confidence in reliability and warranty protection. For buyers wanting near-new condition without the higher cost, choosing CPO over new can be a smart financial move.

 

Don’t Overpay on Financing

One area where dealers often make extra profit is on financing. Many people just accept the interest rate and loan terms the dealer offers without shopping around. But securing financing ahead of time, either through your bank, credit union, or an online auto lender, puts you in a much stronger negotiating position.

With pre-approved financing, you know the rates and terms you qualify for based on your credit. That gives you leverage when the dealer offers you financing. Be sure to negotiate the interest rate after you get the purchase price locked. Dealers make money on financing, so they may offer you a higher interest rate than what you’ve already been approved for.

By having your own financing lined up, you can compare rates and force the dealer to beat the rate or lose your business. Just don’t reveal your full financing terms too early in the negotiation or the dealer may use it against you on the purchase price. Lock in the “out-the-door” price first before negotiating financing.

Additionally, watch out for tricks some dealers use around financing. For example, they may try to distract you from the purchase price by only talking monthly payments. Or they may use a lower interest rate but a longer loan term, which results in more interest paid over the life of the loan. Keep the focus on total purchase price first, then get the best financing terms.

 

Maximize Trade-In Value

If you have an existing car to trade in, this can be another area of major savings in your overall deal. Many buyers simply take the dealer’s initial offer for their trade-in, not realizing there may be thousands more left on the table.

To maximize your trade-in value, get offers from multiple dealerships and websites like Carvana or Vroom before even heading to the lot. This gives you solid data points on what your car is truly worth. Bring the highest of these quotes with you and be ready to walk out if the dealer won’t match it.

Some tips for boosting your trade-in value:

 

  • Have the car detailed inside and out so it shows well
  • Provide maintenance records showing you cared for the vehicle
  • Note any high-end options or packages your car has
  • Point out recent repairs or brand new tires
  • If possible, pay off any remaining loan balance beforehand

 

With multiple competitive offers in hand and good documentation on your car’s condition, you’ll be in a great position to negotiate top dollar for your trade-in and lower the net cost of your new car purchase.

 

Check for Unadvertised Rebates

Car dealerships often run special rebates and incentive programs to help move inventory. But these aren’t always heavily advertised to the public. It pays to ask the salesperson or manager if there are any other rebates or incentives available on top of the standard deals.

For example, they may offer bonus cash for financing through the manufacturer’s financing arm or an extra discount for recent college grads. There could be rebates for loyalty customers or those with a trade-in from the same brand. Don’t be shy about asking for details on manufacturer incentives that aren’t listed publicly online or in ads.

The dealer makes more profit if you aren’t aware of unadvertised rebates you may qualify for. But by inquiring about any potential incentives, you can uncover extra savings you may have otherwise missed out on. Make sure to ask specifically about any other manufacturer rebates or incentives that may apply to you.

Having this information allows you to be a more informed negotiator. You’ll know if the dealer is giving you the best possible deal or if they are trying to pocket some extra profit by not revealing applicable rebates. Do your due diligence to learn about any hidden opportunities to maximize savings.

 

Conclusion: Top Tips for Negotiating the Best Deal on a Car

Getting the lowest price possible on a car purchase requires going into negotiations prepared and leveraging key strategies. Here is a summary of the most important tips covered in this guide for maximizing your savings when buying a car:

 

  • Know the fair market value through thorough research of pricing guides and local dealer listings.
  • Get pre-approved financing so you have stronger negotiating power.
  • Focus negotiations strictly on the all-inclusive out-the-door price.
  • Time your purchase at month’s end when dealers are motivated to meet quotas.
  • Make an initial offer 10-15% below fair market value, but within reason.
  • Use proven tactics like silence and not answering “What will it take?” questions.
  • Be prepared to walk out if your target OTD price isn’t met.
  • Watch for tricks like talking monthly payments or citing nonexistent fees.
  • Bring reference materials like pricing data to support your assertions.
  • Consider certified pre-owned cars which typically have better pricing.
  • Don’t overpay on dealer financing; know your credit union rates.
  • Maximize your trade-in value by getting quotes from other dealers.
  • Check manufacturer sites for unadvertised rebates you can leverage.

 

By arming yourself with insider knowledge and proven negotiation strategies, you can feel empowered when shopping for a car. Approach the negotiation calmly but firmly, and don’t be afraid to walk away if the dealer won’t meet your reasonable target price. With the right preparation and tactics, you can negotiate the very best deal on your next car purchase.

 

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Questions About Getting The Best Deal From Car Dealers

The key to getting the best deal on a car in Canada is coming prepared. Do your research beforehand on pricing for the models you’re interested in, determine what features are must-haves vs. nice-to-haves, get pre-approved for financing so you know what rate you qualify for, and be ready to negotiate. When making an offer, open low but within reason. Point out competitive pricing you’ve seen and comparable models that are cheaper. Be firm but fair and willing to walk away if you can’t reach an agreeable price.



The main fees and taxes to budget for when buying a car in Canada include GST/HST, PST in some provinces, air conditioning tax, tire tax, documentation fee and licensing costs. Expect to pay up to 15% in taxes. You may also face dealer fees for admin, cleaning and certification. Get an all-in out-the-door price from the dealer so there are no surprise charges.

The best way to negotiate a good price on a used car is to check listing prices online for similar vehicles so you know the average market price. Point out any flaws, missing features or high mileage to ask for a lower price. Get a Vehicle History Report to check for accidents or issues. Be ready to walk away if you can’t agree on pricing – this gives you negotiation leverage. Time your purchase right as prices dip during slower sales months.



It’s best not to reveal your budget or desired monthly payment. Dealers may use this info against you to push you to that limit rather than focus on the actual value of the car. Instead, negotiate only on the vehicle price. Get pre-approved financing so you know what monthly payments you can afford. This gives you power to negotiate the best overall deal on your terms.

New car dealerships typically have around 10-15% wiggle room on the MSRP price before incentives are applied. Luxury brands tend to have less flexibility, around 5%. Leverage competitive dealer quotes and be willing to walk out to get a dealer to their bottom dollar price. Time your purchase right – dealers have more flexibility to discount aging inventory nearing the end of model years.



When negotiating add-ons and financing, be firm from the start that you will only pay for items you specifically request. Require itemized quotes on your chosen extras like extended warranties. Get quotes from outside financing sources like banks and credit unions so you can negotiate the best interest rates through the dealer. Be wary of tactics pushing certain products and long loan terms since these most benefit the dealer.

New car incentives in Canada include cash rebates, 0% and other low-interest financing offers, discounts off MRSP for recent graduates, military, first responders, loyalty rebates for returning customers and conquest offers for competing make owners. Incentives can save you thousands, so be sure to check a manufacturer’s website for current deals before negotiating with dealers.



Yes, you hold more power making the first reasonable offer anchored around your research on fair value. Avoid asking for quotes first or tipping your hand on your budget limit. If you allow the dealer initial range, their first offer sets an inflated starting point well above where they expect to land. Make the dealer negotiate down towards your offer rather than up from their inflated bid.

Yes, timing your car purchase right can give you extra negotiating leverage. Shop late in the month or quarter when sales staff need to hit quotas. Holiday weekends and the end of annual sales events also pressure dealers to discount cars. Delaying your purchase by just a few weeks can mean substantial savings off sticker prices as eager dealers deeply discount aging inventory.

Carefully review the full sales contract and do not sign until you understand all terms and fees. Verify the selling price, trade-in value, your down payment and clearly note the interest rate and loan length for financing. Check all add-ons like extended warranties and confirm no unwanted items were added without your consent. Read the small print and ask for clarification from the finance manager on any unclear points.

Some creative negotiating tactics do give buyers an edge at the dealership. Mentioning competitive quotes or offers from other dealers adds pressure to earn your business. Having your own financing lined up limits dealer control. Waiting until month/quarter end when sales quotas loom boosts discounting urgency. Trading in multiple older cars at once can mean bigger total trade-in allowance too. Knowing what proven tactics work gives confidence in negotiations.

 

Never take the first offer from the dealer – their initial quote starts the negotiations high so room remains to work down towards an acceptable number for you. Do counteroffer about 10% below your target price; that allows some give and take while still securing a good deal. Use competitive quotes as justification for your lower counter and get detailed on flaws or missing features to negotiate harder on the vehicle value.



Backfire strategies include visibly falling in love with a specific car, oversharing your budget limit or monthly payment goal, or believing you need to buy today without shopping competitors. Don’t disclose trade-in details until negotiating vehicle price first. Rejecting reasonable counteroffers also fails, since you must expect some dealer give-and-take. Insulting sales staff burns goodwill needed to facilitate the best possible deal too.



If unable to get a dealer below a certain price after several reasonable counters, politely ask for an explanation why they cannot meet your offer in light of competitive quotes you’ve shown. Point out any flaws or missing features that merit a lower value. If there is no willingness to negotiate further, simply say you need more time to think it over and will be in touch if you decide their price works for you. Then walk out without caving to pressure tactics.



Know Canadian-specific incentives and rebates offered by automakers. Research price differences and features for Canada vs. US models. Leverage low Canadian dollar exchange rates that make importing US vehicles appealing. Quebec and Maritime provinces register highest discounting due to lower incomes. Waiting for seasonal rebates around holidays and income tax season pays off. Get US trade-in quotes to negotiate harder against Canadian offers.

Luxury brands like Mercedes, BMW and Land Rover along with imports like Volvo, Volkswagen and Subaru typically price higher in the Canadian car market due to lower supply and demand from US buyers. Domestic brands GM, Ford and Chrysler offer more negotiation room. Mass market favorites Honda, Toyota, Hyundai and Kia usually deliver the best value pricing to Canadian buyers based on features, quality and reliability.



Never complete a credit application before negotiating the vehicle purchase price first. Dealers will use your credit status to assess the maximum monthly payment you can likely handle and use this to push transaction prices higher. Secure independent financing first so you maintain leverage and only apply for dealer financing once you’ve negotiated the overall vehicle price and trade-in down to an acceptable number.

Yes, a cash offer signals to the dealer you have funds readily available and won’t require financing. This saves the dealer time and cost preparing bank approval paperwork. Make your cash offer near the end of negotiations after agreeing on vehicle price, extras and trade-in value – that total lump sum cash deal may compel the dealer to remove additional profit padding to close the sale.

Common tricks include starting negotiations very high on vehicle price and then focusing talks on monthly payments which obscures the total cost. They may apply incentives only after inflating the MSRP. Add-ons are overpriced then used as “negotiating tools” to remove later. Low trade-in offers require financing that earns the dealer kickbacks from banks. Be vigilant about these tactics and call them out when encountered.



The best way to negotiate extended warranties and maintenance plans is to first inquire about factory coverage length and limitations. Only then determine if an extended warranty suits your expected ownership term or driving mileage. Require detailed coverage and quote breakdowns on the exact provider plan a dealer recommends. Negotiate pricing down by requesting to drop certain components – this incremental reduction is easier for dealers to agree to.

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