Car Deal Canada

Negotiating The Best Car Price

Negotiating The Best Car Price

“The only time to buy a car is when you come across a deal too good to pass up.” – Anonymous


Purchasing a new or used vehicle is one of the largest and most important financial decisions most people make. With the average price of a new car now over $47,000 in Canada, getting the best possible deal can save you thousands of dollars.


Yet many buyers dread negotiating with dealerships, or don’t feel fully prepared with the knowledge and tactics needed to negotiate effectively. That results in paying excessive dealer markups and losing out on substantial savings.


This comprehensive guide will walk through the key steps to take in order to negotiate the absolute lowest price when buying a car. We’ll cover how to thoroughly research vehicle values, determine your budget, assess dealership payment options, make your best offer, negotiate the vehicle price, agree on trade-in value, finalize financing details, and carefully review all paperwork.


Follow these proven tips to negotiate like a pro, save big money, and drive away ecstatic with the new car deal you’ve secured.

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Research Vehicle Values Thoroughly

The first step in negotiating the best price on a new or used car is doing your research on the vehicle’s true market value. You’ll want to compare the Manufacturer’s Suggested Retail Price (MSRP) to the dealer invoice price. The invoice price is what the dealer themselves paid the manufacturer for the car, and is typically a few thousand dollars less than MSRP. You can find invoice pricing on sites like Edmunds and Kelley Blue Book (KBB). This gives you a baseline to begin negotiating down from.

It’s also important to research any current rebates, incentives, or promotional offers available on the vehicle from the manufacturer. Oftentimes there are cash back offers, 0% financing deals, or discounted lease pricing you can take advantage of to lower the price. The dealer will likely share these with you, but make sure you’ve done your homework ahead of time so you can calculate them into your target out-the-door price.

For used vehicles, check the KBB, Edmunds, or NADA value guides to find the fair market price range for the make, model, year and mileage of the car you want. Compare prices of similar vehicles currently for sale in your area. This gives you justification to negotiate the price down if the dealer’s asking price is higher than the fair market value.

Doing this pricing research beforehand arms you with the knowledge and facts needed to negotiate the lowest price possible. You’ll know what a fair price is for the car, taking into account invoice cost as well as any incentives or used car value guides. Don’t skip this critical first step.

 

Determine Your Budget

Before starting the negotiation process, you need to have a clear budget in mind for what you can realistically afford. This involves setting a maximum monthly payment amount you are comfortable with based on your income and expenses. Be sure to only consider a monthly car payment that leaves you with enough income left over for other necessities.

Next, determine the down payment amount you can put towards the purchase upfront. Most experts recommend at least 10-20% down if possible. But any amount over $2,000 can help lower your monthly payments. Have this down payment amount ready to discuss with the dealer when negotiating.

Finally, get pre-approved for auto financing from your bank, credit union or online lender before visiting the dealership. This gives you concrete data on the loan terms and interest rates you qualify for based on your credit. That way the dealer cannot inflate the numbers. Having financing pre-approved also shows the dealer you are serious about purchasing.

With your monthly budget, down payment and financing pre-approval in place, you have strong data points to negotiate within your limits. Make sure any deal you accept aligns with what you can realistically afford each month.

 

Assess Dealership Payment Options

Before negotiating on price, you’ll want to have a clear understanding of all the various fees and additional costs involved in the transaction. Dealerships typically charge extra beyond just the price of the vehicle itself. Be sure to ask the salesperson to clarify and explain the following:

 

  • Documentation fees – This covers the dealer’s administrative costs for processing paperwork. Ask if it’s negotiable.
  • Destination/Delivery fees – Charges for transporting the vehicle to the dealership.
  • Taxes – Applicable sales tax which varies by state and municipality.
  • Title and registration fees – For transferring ownership and license plates.
  • Add-ons – Things like fabric protection, extended warranties, accessories that increase the price.

 

It’s important to understand these extra costs upfront before negotiating the vehicle price. You want the salesperson to give you an accurate, all-in “out-the-door” price that encompasses everything. Don’t let them go back and forth adding more fees after you’ve negotiated the price down. Get them to commit to a total price first.

Only after you’ve agreed on the vehicle price itself should you move on to negotiating the value of a trade-in or any financing offers. Discussing those other factors too early can distract you from focusing in on the most important negotiation – bringing down the vehicle purchase price. Get the salesperson to commit to an all-in final number before bringing up anything else.

 

Make Your Best Offer

One of the most critical steps in negotiating a great price on a new or used car is to make an offer that anchors the negotiation in your favor. You want to aim low, but still within a reasonable range based on your research. The general guideline is to start your offer around 10-15% below the vehicle’s asking price. This gives you plenty of room to negotiate up towards a fair market price.

For example, if the car you want has an asking price of $20,000, make your first offer around $17,000. That allows over $3,000 for the back and forth negotiation process. Refer back to the pricing research you gathered beforehand from resources like Edmunds, Kelley Blue Book, TrueCar, etc. Point out that competitive vehicles with similar mileage and features are priced lower at other dealers in your area. Use that third-party data to support and justify your initial offer.

Making an unrealistically low first offer risks offending the salesperson and could end negotiations before they even start. So anchor the negotiation with your best offer based on real market value evidence. That puts you in a strong position to negotiate up to an excellent price.

 

Negotiate Vehicle Price

Once you’ve made your initial best offer based on pricing research, the dealership will almost always come back with a counteroffer. This begins the back and forth negotiation process. The salesperson may say your offer is too low or not possible. Stay firm in the knowledge of your research and pricing information.

Don’t immediately go up to their counter price. Instead, incrementally increase your offer by a few hundred dollars or so. See if they will come down equivalently from their counter. Go back and forth like this with offers and counters, give and take, until you reach an agreeable price.

It can take some time to go through this process to get the price down. Be patient and keep the goal of reaching a fair price based on your research. Don’t just cave in too quickly to what they want. But also don’t make unrealistic offers well below market value.

With persistence and rational counters, you can negotiate vehicle price successfully to an amount acceptable for both parties. Keep the transaction friendly and professional, not adversarial. Maintain composure and don’t get emotional. The back and forth negotiation is simply part of the process to reach a fair and reasonable vehicle price.

 

Agree on Trade-In Value

Before even heading to the dealership, do your homework and research what your trade-in vehicle is worth. Sites like Kelley Blue Book (KBB), Edmunds and NADA Guides can provide free trade-in value estimates based on your car’s year, make, model, mileage, condition, options and location. This gives you a solid baseline to begin negotiations.

When you sit down with the dealer, let them assess your trade-in first and make you an offer. It will likely be lower than market value. Don’t get offended or angry, just stay calm. Now present your findings from KBB, Edmunds etc, highlighting the higher value you found. Point out any notable features, lack of damage and good condition that support your numbers.

The dealer will likely counter and you can go back and forth a bit finding middle ground. Aim to negotiate up from their initial offer, but be realistic. If you reach an agreed price close to your research or slightly below, that is still a fair deal. Getting more for your trade-in lowers the overall purchase price of your new vehicle.

 

Finalize Financing Details

Once you’ve agreed on the vehicle price and trade-in value, it’s time to finalize the financing details. This is your last opportunity in the negotiation process to save even more money.

First, confirm the interest rate being offered by the dealership’s financing company or your outside lender. Make sure it matches the rate you were quoted previously. If the rate seems high, politely ask the finance manager if there is any room to lower it further. You may be able to negotiate a slightly better rate, especially if you have strong credit.

Next, re-review all the key figures on the purchase agreement paperwork. Verify the negotiated vehicle price, trade-in allowance, down payment, loan amount, interest rate, and monthly payments. Make absolutely certain everything matches your previous discussions and the notes you’ve taken.

If any numbers look different, question the finance manager to understand why. Don’t sign anything until you’re comfortable with every dollar amount in the purchase agreement. Locking in the agreed upon figures on paper, before submitting final paperwork, is crucial to get the deal you negotiated.

Take your time and be ready to walk out if the financing terms change at the last moment. Politely stand your ground on the deal points you already reached during negotiation. Only sign the final paperwork when satisfied that financing details match your negotiations.

 

Review Paperwork Carefully

Once you have negotiated the vehicle price, trade-in value, and financing terms, be sure to carefully review all the paperwork before signing anything. This is a critical final step, as errors can cost you thousands if you don’t catch them.

First, double check that all the fees and taxes itemized match the negotiations. Verify the documentation fee, registration and title fees, sales tax, and any other charges. Ensure the totals match what was agreed upon.

Next, review the financing paperwork thoroughly. Confirm the interest rate, loan length, and monthly payments are what you negotiated. Make sure they didn’t switch the rate or term without your consent.

Finally, ensure the vehicle purchase price on the buyer’s order and financing paperwork matches the negotiated amount. This is the big one – you want this price in writing before signing off. Don’t rely on a verbal commitment.

It’s easy to gloss over the paperwork when you’re excited to drive home your new car. But take the time to carefully review every document, making sure all figures are accurate. Don’t sign until you’re 100% certain everything matches the negotiation. Being diligent here will prevent any unpleasant surprises down the road.

 

Be Flexible

Having some wiggle room in your budget and desired price can help the negotiation process go more smoothly. While having a firm number in mind for the maximum you want to spend is important, being a little flexible gives you more room to negotiate.

For example, if your budget is $20,000, your initial offer could be $17,000, with flexibility to go up to $19,500 if needed. That gives you space to make some concessions during back and forth negotiating.

You may have to be flexible on certain aspects of the deal as well. Perhaps you wanted a specific trim package or feature, but it pushes the price too high. Consider compromising on those to get the overall price where you want it to be.

The dealer likely won’t accept your initial offer, so having some flexibility prevents you from getting locked in too low. As long as you stay within your predetermined limits, being open to some movement can help facilitate the negotiation process.

Just don’t let flexibility lead you to making large concessions outside your budget. Know where your limits are and stand firm once you reach them. With a combination of flexibility and restraint, you can negotiate the best possible deal.

 

Remain Patient and Polite

Negotiations require patience. The back and forth process can be lengthy and frustrating at times. It’s important to keep your cool throughout and not let emotions get the best of you. Being impatient or losing your temper will not serve you well at the bargaining table.

Stay calm and professional in your demeanor, even if the dealer is not. Take your time and don’t feel rushed into accepting an offer that doesn’t meet your goals. Negotiation is a give and take that requires persistence. Don’t get flustered if you have to go back and forth many times before reaching an agreement.

Avoid getting angry or raising your voice if the dealer is not cooperating. That will only make them defensive and less likely to work with you. Keep things cordial and businesslike. You can be politely assertive while still being respectful.

Don’t take things personally or get offended if the dealer drives a hard bargain. Remain focused on the bottom line numbers rather than any sales tactics designed to frustrate you. With levelheaded patience and professionalism, you are more likely to negotiate the best possible deal.

 

Focus on Bottom Line Price

One of the most important tips for negotiating the best price on a new or used car is to focus first solely on the bottom line purchase price. Do not get distracted negotiating other factors like financing, trade-in value, or add-ons until you have agreed upon the lowest out-the-door price.

The purchase price of the vehicle itself should be your prime objective. Make it clear to the salesperson you will only discuss the bottom line price at first. Say something like “I’m interested in focusing on the total drive-away price first before we discuss anything else.”

By concentrating initially on the vehicle price alone, you avoid getting sidetracked by the dealership on other profit centers. Often salespeople will try to turn the conversation to monthly payments or financing early in the negotiation to obscure the total real price.

Be persistent on nailing down the rock bottom purchase price on the car or truck itself before allowing the discussion to move into areas like trade-in value, financing terms, extended warranties, accessories etc. You’ll be in a much stronger position to save overall if you secure the lowest vehicle price first.

Come armed with the invoice price, fair market value, and competitive pricing data so you can negotiate from a position of strength on the vehicle itself. Only once you’ve secured the absolute lowest price on the car alone do you then move on to maximize your trade-in value, followed by getting the best financing rates possible.

 

Bring Someone Along

Bringing someone along with you to the dealership can provide extra support during negotiations. Having a second pair of eyes and ears will ensure nothing gets missed during what can often feel like an overwhelming process. Test driving and inspecting the vehicle together also allows you to get a second opinion on the car before making a large purchase.

When you bring someone along, agree beforehand on pricing targets, negotiating tactics, and purchasing decisions. Present a united front and have your companion help verify information provided by the salesperson. If you feel pressured or overwhelmed, your partner can step in to get negotiations back on track or suggest taking a break.

Having a friend or family member with you also means there’s another person who can ask questions you may not think of on your own. They may spot issues, like prior damage or wear, that you miss when caught up in the buying experience. Your companion can also compare similar makes and models across dealerships if visiting multiple locations.

While it’s ideal to bring someone willing and able to devote several hours to the process, even having someone along just for test drives and final negotiations can provide huge value. The whole experience tends to go more smoothly with a partner to strategize with.

 

Walk Away if Necessary

One of the most important negotiation tactics is being willing to walk away from a bad deal. If the salesperson refuses to come down to a reasonable price that you have researched and calculated beforehand, don’t be afraid to politely end discussions and leave the dealership.

Let the salesperson know you are still interested in purchasing the vehicle, but their price is simply too high compared to current market values. Tell them sincerely that you hope to continue negotiations soon, and will follow up in a day or two.

More often than not, the salesperson or manager will ask you to wait and then quickly scramble to see how much they can drop the price to keep you from leaving. However, if they let you walk away, follow through and exit without looking back.

Return to the dealership in a couple days and see if they are now willing to get down to your target price. The time away often motivates the dealership to negotiate more flexibly, especially if they think they are at risk of losing a sale entirely.

Walking away demonstrates you are serious about negotiating a fair price and won’t simply accept whatever they offer. Being ready and willing to leave a dealership that won’t negotiate is one of the most effective tactics to eventually get the price you want.

 

Conclusion

In summary, the key steps to negotiating the absolute best price on your new or used car purchase are: do your homework on fair pricing, determine your budget, get pre-approved financing, start with a low offer, negotiate only the vehicle price first, then discuss trade-in and financing. Come prepared with competitive pricing data and your budget limits clearly defined. Be ready to go back and forth with reasonable offers and counteroffers. Patience, perseverance and assertiveness are critical in this negotiation dance. Focus first and foremost on getting the vehicle price down as far as possible.

Thorough preparation and knowledge are vital to negotiate effectively on a major purchase like a car. The more pricing research you do ahead of time, including checking guides like Edmunds and TrueCar, the better equipped you’ll be to drive a hard bargain. Knowing your budget constraints and what you can realistically afford is also key. Get pre-approved financing so you have strong ground to negotiate the best rates.

Follow these proven tips to negotiate with confidence, armed with the facts and figures. You’ll drive away with the car you want at the absolute lowest price when you enter the dealership prepared to haggle politely but firmly. Do your due diligence and you’ll get the best deal.

 

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Questions About Negotiating Car Prices

When negotiating for a new car in Canada, a good rule of thumb is to start around 10-15% below the sticker price. However, the exact discount you can get depends on factors like the popularity and availability of the model, whether there are any rebates or incentives available, and market conditions. Aim to negotiate all fees and extras to get the best possible out-the-door price.

The main fees and extras to watch out for include freight and PDI (pre-delivery inspection), documentation fees, licensing fees, sales tax, added accessories, rustproofing, fabric protection, extended warranties, and financing fees if you take a dealership loan. Make sure to negotiate these costs and understand exactly what is included in the final price.

To gain leverage when negotiating, consider getting pre-approved financing from your bank or credit union before visiting the dealership. This allows you to negotiate purely on the sale price without the complexity of financing terms. You can also leverage competitive offers from other dealerships and be willing to walk away if you can’t get the price you want. Having flexibility on the specific car model or being able to pay in cash also helps.

The best times of year to get a good deal on a car in Canada are typically late summer around August/September when dealerships are looking to clear out older inventory for the new model year, and late fall/winter in November and December when sales are slower and dealerships want to meet annual sales targets. Shopping on weekday evenings or weekends when the dealership is less busy can also help get you a better bargain.

It’s generally recommended that you make the first offer when negotiating the purchase of a new car in Canada. This allows you to anchor the negotiations around a price that is already below sticker value. Letting the dealer make the first offer risks them starting higher than you may have budgeted. Come in armed with competitive market research on pricing so your initial offer is realistic.

Some common tactics include starting with a higher price to leave room for false “concessions,” making you wait to increase pressure, adding fees for extras you don’t want, denying reasonable offers in hopes you’ll raise your price, and presenting monthly financing terms rather than the total purchase amount. Respond by focusing all negotiations on the total out-the-door price, being willing to walk out, getting terms in writing first, and insisting any added fees be justified and reasonable.

No, when negotiating it’s important not to reveal what monthly payment you hope to pay, but instead stay focused solely on negotiating down the total out-the-door price. Telling them your ideal monthly payment gives the dealer leverage to simply adjust the financing terms, loan length, and interest rate to hit that number while keeping the overall price higher.

To determine reasonable pricing benchmarks, look for sites like Unhaggle and CarCostCanada that track what others in your area paid for the same new car. Online forums for that make/model and chatting with owners can provide real price data points. Local car dealers may even share anonymized sales reports on the average selling prices in your region in the spirit of transparency.

When buying a used car from an individual, build rapport first about why they are selling and offer to take a test drive. Mention budget limitations and ask if they have flexibility on the asking price. Refer to pricing data from online valuation tools that show typical resale values for their specific car based on kms, specs and condition. Offer 10-15% below their asking price and negotiate to a fair market price for both parties.

Yes, bringing someone along to negotiate buying a car can be very effective. It gives you a chance to discuss pricing and potentially take a “bad cop/good cop” approach. Conferring with your partner in front of the salesperson also sends the signal that any offer will have to be reviewed before deciding. Just make sure you are aligned on target pricing and negotiating strategy beforehand.

To maximize your trade-in value, clean and detail your old car thoroughly inside and out to focus attention on its strengths not flaws. Obtain the dealer’s offer for your trade in writing first before negotiations on the new car price begin. Be willing to sell it privately if their offer seems too low. Negotiate trade and sale price separately. Time it right when supply conditions favor buyers for the best trade-in price.

The most important negotiating tips include: do your pricing research online first, determine your target out-the-door price, make the first offer, negotiate the trade-in separately, focus only on total price – not monthly payments, be ready to walk out, pit dealerships against each other with better offers, and get all promises in writing before signing.

Red flags include pressure tactics to make you decide quickly, critical comments about competitors, refusal to offer specifics on rates/fees in writing, adding substantial fees well above standard documentation fees for your province, forceful denial of reasonable offers, and an overall lack of transparency on pricing breakdowns. Shop elsewhere if red flags appear.

General negotiating advice includes: always negotiate the final drive-away price not monthly payments, have competitive offers in writing to use as leverage, be willing to walk out if you aren’t getting fair value, don’t reveal trade-in information early, get promises in writing, know the market value from online resources before entering talks, and set a reasonable target price as your “walkaway point”.

Consumer protections include limits on documentation fees charged, required all-in pricing advertising showing full costs, bans on misleading advertising on prices and incentives, mandatory disclosure of used car accident history, rights to cancel financing within a certain window, laws requiring clear disclosure of warranty coverage, and ability to report unethical sales tactics to provincial consumer affairs bureaus.

Online directories like Unhaggle allow you to submit a request for quotes from pre-screened local auto brokers who will then leverage their dealer connections to negotiate great pricing for you, usually for a flat $100-$500 fee. This saves time and hassle and taps their negotiation expertise. Just be sure to use well-reviewed brokers affiliated with licensing bodies as quality varies.

When at the finance manager’s office, avoid getting distracted from the already-negotiated total price by saying you’ll arrange your own financing. If not paying in cash, secure approval from your bank/CU beforehand. Decline all extras like warranties, rustproofing, etc. and refocus talks solely on finalizing details of the agreed deal. Get every detail in writing before signing.

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