Getting competing prices from several dealerships is one of the easiest ways to save money on a new car.
But there's a simple mistake many buyers make.
They accept the lowest quote.
Don't. At least not yet.
You've already done the hard part. Several dealerships know they're competing for your business. Now give each of them one more opportunity to win the sale.
That's where this strategy gets interesting.
And getting those initial quotes doesn't mean you have to search for dealerships and contact each one individually. Getting multiple new car dealer quotes online is actually quite easy, with free services that can send your request to several local dealers at once. I'll show you an easy way to do that below.
The Lowest Dealer Quote May Not Be the Lowest Price
Let's say you've requested prices from four dealerships for the same new car. A short time later, you have four offers that look something like this:
- Dealer A: $36,700
- Dealer B: $36,250
- Dealer C: $35,900
- Dealer D: $35,650
The natural reaction is to focus on Dealer D. He's $1,050 below the highest offer and $250 below his closest competitor.
Looks like a pretty good deal.
And it may be.
But here's the question: Why assume $35,650 is the lowest Dealer D is willing to go?
He gave you a competitive price because he knew other dealerships were also getting a chance at your business. But he doesn't necessarily know what those other dealers quoted you.
And he wants the sale.
So before accepting anybody's offer, give the dealerships one more opportunity to compete.
Give the Dealers a Second Chance at Your Business
You don't need a complicated negotiating strategy. You don't need to argue about invoice prices, dealer holdbacks or how much profit the dealership is making.
You're simply going to respond to the offers you've received.
If a dealer's price has already been beaten, you can say something like:
"Thanks for the quote. I'm ready to buy, but I've received a lower offer from another dealership. If you'd like to send me your best revised price, I'll definitely consider it."
That's it.
You're not demanding that he lower the price. You're simply telling him that another dealership currently has a better offer and giving him another opportunity to win your business.
Now do the same with the other dealers whose prices have been beaten.
But what about Dealer D, who currently has the lowest price?
Don't automatically accept his offer either.
You can simply say:
"Thanks for the quote. Your price is very competitive. Before I make my decision, I'm giving each dealership one opportunity to send me its best final price. If you have any room left, I'll be happy to consider another offer."
You've now given every dealer another reason to look at the numbers.
What Happens Next?
This is where people sometimes imagine the process becoming difficult or confrontational.
It doesn't have to be either.
Some dealers may lower their prices. Some may tell you they're already at their bottom. One may decide he isn't interested in going any further.
That's all useful information.
For example, our hypothetical second round might look something like this:
- Dealer A: Drops out
- Dealer B: $35,600
- Dealer C: $35,350
- Dealer D: $35,200
These numbers are only an illustration; there's obviously no guarantee that you'll save a particular amount or that every dealer will lower his price.
But in this example, the buyer who would have happily accepted the original lowest quote of $35,650 has now saved another $450 simply by asking the dealers for one more offer.
And there's something else important happening.
The dealers are showing you how badly they want the sale.
Don't Tell a Dealer the Price He Has to Beat
There's a good chance one of the dealers will ask:
"What did the other dealer quote you?"
I generally wouldn't tell him.
Think about what happens if you do.
If Dealer B quoted $35,600 and you tell him he needs to beat $35,200, you've essentially given him a target. He no longer has much reason to give you the lowest price he's actually willing to accept. He just needs to beat $35,200 by enough to get your attention.
Instead, you can say:
"I'd rather not start passing one dealer's written offer to another and going back and forth over the next $100. Just give me the best price you're comfortable selling the car for. If you're already at your bottom price, I completely understand."
That's a perfectly reasonable response.
You're not asking the dealer to beat an imaginary price. You're asking him to decide what price makes sense for his dealership.
And that's exactly what you want.
When a Dealer Drops Out, That's Useful Too
Suppose a dealer tells you:
"That's already my absolute best price. I can't go any lower."
Fine.
Thank him for the offer and move on.
Don't argue with him. Don't threaten to buy somewhere else. And don't spend another half hour trying to squeeze another $50 out of the deal.
If a dealership is willing to lose a ready-to-buy customer rather than lower its price again, there's a pretty good chance you've reached, or come very close to, its actual bottom.
Meanwhile, another dealership may still have room to move.
You're not trying to out-negotiate the dealers. You're letting the dealers decide how badly they want your sale.
Eventually, the last dealer standing gets the business.
You Can Do This by Phone or Email
Some buyers may like this idea but immediately think, "I don't want a bunch of car salespeople calling me."
That's understandable. But you don't have to turn this into a series of high-pressure phone negotiations.
Dealers may respond by email, phone or both. If you're comfortable talking by phone, that's perfectly fine. This strategy works either way.
But if you'd rather handle everything by email, just say so.
If a salesperson calls, you can politely tell him:
"I'm getting prices from several dealerships and I'd prefer to handle the offers by email. It gives me a chance to look at everything when I have time and helps me keep the different offers straight. Please send me your best price there."
There's nothing unreasonable about that request.
In fact, if you'd rather negotiate a new car price by email, there are some real advantages. You can respond when it's convenient, compare the offers side by side and have the prices in writing.
You also don't have to think of the perfect response while a salesperson is waiting on the other end of the phone.
You can run the entire competition from your computer or phone at your own pace.
There's No Need to Bluff
I wouldn't make up a competing price or tell a dealer he's been beaten when he hasn't.
You don't need to.
If a dealer really has been beaten, tell him you've received a lower offer and give him another opportunity.
If he's currently your lowest bidder, simply tell him his price is competitive and you're giving every dealership one final opportunity to submit its best price before you make your decision.
The objective isn't to trick anyone.
You're creating competition and allowing each dealership to decide what it's willing to do to earn your business.
And dealerships can have very different motivations at any particular moment. One may be perfectly happy to let you walk away while another may really want one more sale.
That's why shopping the dealer can sometimes be every bit as important as shopping the car.
Know When to Stop
I also wouldn't keep repeating this process endlessly.
The idea isn't to take a $35,200 offer back to everybody, get $35,100, take that back again and spend the next three days trying to knock another $25 off the car.
You've already created the competition.
You've received the initial offers and given the dealers another opportunity to sharpen their prices. Some may have dropped out. Others may have told you they're at their bottom.
At some point, you've learned what you needed to learn.
Pick the strongest deal from a dealership you're comfortable doing business with, confirm exactly what is included in the price and move forward.
And remember, the negotiated vehicle price is only part of the transaction. Learn which car dealer fees you must pay, which you can negotiate and which to avoid before accepting an offer.
How to Get Your Competing Dealer Quotes
The first step is simply getting several dealerships competing for your business.
My preferred place to start is Edmunds.com, although other great sites such as AutoTrader, KellyBlueBook, or TrueCar provide the same free service. Use wherever you prefer.
The important part is to request pricing from participating dealers in your area and compare the responses.
I normally recommend including several dealerships rather than just one or two. Depending on where you live and the vehicle you're shopping for, you may also want to expand the distance you're willing to travel. A dealership 50 or even 100 miles away may have considerably more motivation to make a deal than the store down the street.
Then remember the important part.
Don't automatically accept the lowest initial quote.
Respond to the dealers. Give them one more opportunity. Let each dealership decide how badly it wants your business.
It takes very little effort, there's no need for an uncomfortable face-to-face negotiation, and you may discover that the "best price" you initially received wasn't the best price after all.
Getting competing dealer quotes is a smart way to buy a new car. Taking the competition one step further can make it even better.