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Buying A Car - How to negotiate a car sale

13 August 2012

Haggling over the price of a car is an essential element of the buying process, so knowing how to do it properly could save you thousands of pounds.

If you're buying a new car from a dealer, the bigger and more expensive it is, the more profit there is built in for the manufacturers – and the more potential there is for you to save.

If you're buying a used car from a private individual, the laws of supply and demand are even more on your side. Millions of used cars are sold every year. It's a buyer's market.

British people are typically characterised as poor hagglers, so here are a few simple pointers to help you become an effective negotiator and clinch a great deal.

Knowing the market – either dealer or private – is hugely important.

If you're buying privately, find out what similar cars are going for, set your price and then negotiate to that point with the seller. Auction websites are a good source of pricing information, if you refine your search to a specific model, year and mileage and then take an average.

Start at a low opening price, but be realistic. Let the other person negotiate you up to a price you're both happy with.

Waving cash in the seller's face used to be a recommended technique for cutting a sharp deal at a low price, but now that electronic banking is easily done on the spot, either through a smartphone or laptop, there's no need to compromise your personal safety by taking along large bundles cash.

The key to buying from a dealer is knowledge – knowing what you want, and what the salesperson wants.

The simple job of car sales staff is to maximise profit. The knowledge they use to achieve that is to charge you as much as possible for the car they're selling to you, and to give you as little as possible for the car you're trading in.

You don't have the benefit of expensive sales training, but being in a buyer's market does give you a massive advantage. It's your money, and you can choose to take it to any one of the thirty or so other manufacturers operating in the UK. In a depressed market, any dealer with one eye on sales targets is almost certainly rather more aware of your financial mobility than you are. Know this, and use it to your advantage.

How to buy a car

Do your homework before you arrive at the dealers. Know exactly what it is you're looking to buy, and what the costs of the options will be. Don't be talked down into a lower-specified car unless the price reflects it. There's no harm in letting yourself be 'talked up' from the car you say you want, to the car you actually want.

If you're buying a secondhand car from a dealership, make sure you understand the terms and conditions of whatever warranty is included. Arguing about warranty conditions in a claim situation will be difficult after the event.

Before you start negotiations, make sure you're aware of what sort of discount the dealer is likely to offer on the car you're interested in, and then compare it to the corresponding What Car? Target Price.

What Car? Target Price researchers get price information from dealers nationwide on a daily basis. The Target Price is the price, after discounts, that their research indicates should be achievable for a car. It's a 'real' price that's being offered somewhere in the UK by a real dealer.

This Target Price is an invaluable tool for any car buyer. Take a copy of the latest What Car? magazine into the dealership and point to the figure in the Target Price column. Then invite the local dealer to look it up on his own terminal. It's a good plan to do the online comparison as well as the print one, and in that order, because the online Target Price is likely to have changed since the print magazine went to press.

If the dealer refuses to match the Target Price, call the TP team on 0845 272 6000 to find out where that deal is available. You don't have to care where your new car comes from, because the servicing and warranty is not 'attached' to the supplying dealer and you'll be paying a delivery charge for the car anyway – even if you live next door to the dealership.

Information is currency. You can't have too much of it. Brokers, internet companies and car supermarkets also publish price information online. Make a note of the price they're offering your car at, ideally printing out the relevant pages from their websites and taking them along to the dealership. Use these only sparingly as visual aids though, because the dealer will deflect them as irrelevant and a bogus comparison.

Many car industry sales targets are set on a monthly basis. The car you buy or don't buy could make or break that target. If you make your visit towards the end of the month, you will almost certainly find it easier to squeeze a bigger discount out of the dealer, in the form of either a reduced price or the free supply of options.

Don't be tempted to try and establish a 'matey' relationship with the sales person, either. The friendly atmosphere could lull you into thinking you're getting a great deal, when in fact the 'mateyness' is being used to 'work' you into a weaker position.

Take the emotion out of the situation – you're at the dealer to buy a car, not make friends. Adopt a professional and detached approach, stay poker-faced, and keep calm. You'll get a better deal if you make the salesperson earn their commission.

How to buy a car

Don't come across as a 'messer', though. If you look like a serious buyer who's ready to do a deal, a decent salesperson should respond. If you're getting close to a deal, say that you'll buy a particular car at a particular price – but only if they agree to that price there and then, and in writing.

Don't be charmed by special offers in the showroom. Supermarkets are full of two-for-one or three-for-two 'special offers' which don't stand up to closer examination. You have all the time you need in the showroom to check offers slowly and calmly to see if they're as good as they look.

They'll usually be tied to cars that are hard to shift; sometimes the car may be about to be superseded (see 'know your market' above), in which case you'll take a large and instant depreciation hit as soon as the new one comes out. If you're fixed on that special offer car, you might be better off aiming for a bigger discount instead.

Don't be afraid to leave if you can't reach a deal that makes you happy. There's always another car, always another deal.

Never pay more for a car than you have to. Play the game – and play it to win.

Next step: Car finance explained >>

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