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Home » Auto Ownership

My New Car Negotiation & Trade-In Strategy Enacted

Last updated by on 18 Comments

If you’ve been following along, you know that my dying car, a 2000 Pontiac Grand Am, was on its last legs and I needed to move quick.

At last check, I had decided that my best car buying strategy was to go new vs. used, due to the inflated prices on used cars at the present time.

Beyond that, given the current incentives on new cars, I found the best new car value to be the 2012 Chevy Malibu, as GM was offering a total of $3,500 in rebates. Additionally, I had $2,000 in cash rewards from an old GM card I used heavily a few years ago, for a grand total of $5,500 off, before negotiation.

I didn’t want to stop there though. So I started researching.

Researching Car Prices Before Negotiating

new car negotiation tipsThe base Malibu was plenty of car for me:

  • 17″ alloy wheels with performance tires
  • power windows, doors, seats
  • keyless entry
  • AM/FM/XM/MP3/CD
  • AC
  • 6 air bags
  • cruise
  • automatic trans w/ manual tap shifting

…all things you typically have to pay up for on entry level cars. For me, to ask for anything more? Greedy.

Before you try to negotiate with a dealer, it’s important to know EXACTLY what car you want. I wanted the base Malibu, with no additional options.

Once you know that, find out what the MSRP is. MSRP is a good “I should never pay more than this” starting point, but that is all. For the Malibu, the MSRP was $22,870.

The next price you should find is the dealer cost. You can find this at TrueCar.com.

TrueCar listed this at $21,654 for the base Malibu, before rebates.

TrueCar also lists the market average of what that car is selling for. The Malibu LS was averaging a sale price of $22,406 (before rebates).

Let the Car Negotiating Over Email Begin

Armed with this info., my next step was to email 5 Chevy dealerships. You can find a contact email on their website or the email address for their internet sales manager (all dealers have one these days).

I would much rather do all of my negotiation work BEFORE going to a dealership so that you can avoid any chaos or sales tactics when you arrive, but that’s just me.

My email read like this:

“I am interested in buying a 2012 Chevy Malibu LS, with no added options, this weekend. Please give me your best offer on this vehicle including all fees, but excluding tax, title, registration, and any cash rebates or incentives from GM.”

You’ll notice that my simple email:

  1. Lets them know that I’m a serious buyer.
  2. Tells them I am comparing offers.
  3. Tells them exactly what vehicle I was looking for (if they don’t have it on the lot, they can find one).
  4. Asks for the best price THEY can give me – forget all the automaker incentives.
  5. Allows me to get an apple-to-apple comparison between offers.
  6. Asks them to include any and all fees so there were no surprises when I get to the dealership.

Did I get what I asked for from any of the dealerships? Hell no. Of course not.

Dealerships negotiate for a living. If they can confuse you, make it seem like they are offering you something other dealerships are not, or just make you tired of asking for answers, they win.

Rule #1 with negotiation: don’t be the one to make the first offer.

Most tried to work in the cash incentives (offered by GM, not them) to sweeten the overall price. I had to ask them to not do this.

You have to push and push hard.

I went back and forth with each dealership over email as few as 10 times and as many as 20 times before I got exactly what I was looking for. STICK TO YOUR ORIGINAL ASK.

Finally, I got responses from 4 of the dealerships, while one would only offer to “beat the best offer”. Sorry, but if you can’t even give me a price, you’re not going to get my business. Tell them as much, if this ever happens to you.

I had to tell a few I was heading out to another dealership right now before I got their actual offers.

Two offers were over the $22,870 MSRP. One was $22,500. The best offer came in at $21,914.

Given that the dealer cost was just $260 under that, I was happy with this offer, so long as the dealer kept to its word of no additional fees.

On to the Dealership

I went to the dealership.¬†They had the car I asked for and they said they had (if they don’t have what they said they did, you should walk out). I took the car for a test drive, and it checked out.

It was time to sit down and continue the negotiation.

I decided not to push further on the $21,914 offer, given it was the best I had received by a decent amount, and was not much higher than the dealer cost.

We then went through the paperwork on the car, and indeed, there were no additional funny business fees. If there is “funny business”, that is another reason to walk out – a negotiation tactic in its own right.

Trade-In Negotiation

Next, it was time to discuss trading in ole’ Grandy.

Before going to the dealership, I researched Grandy’s market worth so that I knew ahead of time what I wanted to get out of any trade-in negotiations.

KBB priced the trade-in value at $1,084 and the private-seller value at $2,119 for “good” condition (the description fit). Given Grandy’s recent issues, I felt much better leaving her at a dealership than selling to a private party. If I could get $1,500, I’d be satisfied.

The appraiser at the dealership looked at Grandy and came back with an offer of $1,200.

I countered at $2,100. They countered at $1,600. I told them to throw in some floor mats.

Done deal.

Of course, they tried to sell me some rust-protection, extended warranty crap. I said “no”, as they expected.

When all was said and done, the final out-of-pocket was:

$22,870
– $956 Dealership negotation
– $2,500 GM Chevy Malibu consumer cash
– $500 auto show bonus
– $500 GM loyalty bonus (for trading in the Grand Am)
– $2,000 GM card cash back
– $1,600 trade-in
_____________________
= $14,814 (before tax, title, registration)

Not bad! There were no good financing offers (2% or less is good, in my book), so I paid in cash.

Could I have done better? Maybe a tad if I had REALLY pushed it, but I think I did pretty good for myself. In the end, I was satisfied with the price and the purchase.

If I don’t sell her this year, maybe you’ll be hearing the story of ole’ Mally in 15 years. Of course… it might be 40somethingfinance.com by then.

Car Buying Discussion:

  • What car negotiation tips do you have?
  • Have you negotiated over email before? Did the dealer keep their promises?
  • What is the most off of MSRP you have purchased a car?

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About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 7,500+ others by getting FREE email updates. You'll also find every post by category & every post in order.


18 Comments »
  • Ginger says:

    Impressive, a $23,000 car for $15,000. Over the next 20 years your work will save you $400/year.

  • Leigh says:

    Awesome story, thanks! I’ll try to keep this in mind the next time I buy a car. (Probably not for another 8 years or so.)

    I definitely tried to follow this method when I was buying my current car, but I really needed a car by a specific date and didn’t feel like I had any back-up options, which made negotiating tricky. I think that not taking my parents with me would also help…

  • Melissa Hoffman says:

    Wow, this is incredible. I used to think my Dad was a good negotiator, but you take the cake!

    I don’t plan on buying a car for many years, but this is great advice that everyone should follow! I especially like the suggestion to email vs. call or haggle in person… I hate when the dealerships call and call and call and call…

    On that note, my parents bought a new truck 4 or 5 years ago and they’ve been getting calls WEEKLY from their old dealership to “trade in their truck for a new one”… uh, makes me want to give them a fake number!

  • Well done on the smart negotiating. It’s hard for people to remember that they should never make the first offer, but it’s important because doing so is seen as a sign of weakness. It means you want the car more than the seller wants to sell it.

    Beyond that, I’ve driven the Malibu a few times. It’s good a great ride, and overall far more comfortable than the old models from when I was a kid.

  • Warren says:

    From the dealer’s side, the cost is not the stated price to the dealer. Dealers get a bonus according the the number of vehicles they sell, so selling a vehicle “at cost” increases their sales number and they still make a profit. Cars are not shipped to the dealer ready to drive. There is a dealer prep process that the dealer gets paid from the manufacturer so the dealer has already been paid for the first service call.

  • Kate says:

    Thanks for sharing your strategy. This will be a helpful reference if/when I need to purchase a new car. I hope that by then, I will be able to pay in cash as well. You should be very proud of your success!

  • Peter says:

    Your method of starting off with an email negotiation is a fresh new approach that had never occurred to me. Gather the information you need ahead of time, throw it out there for the dealers to bite and go with the best deal back. All very simple, stress free and by the numbers. Can really help you avoid the emotional stress of the negotiation and their tactics used.

  • Long says:

    I have negotiated for a new car via e-mail before with good results as well. It really is much simpler than traveling around and dealing with all of the shady salesman tactics.

    Regarding the trade-in; do you think you would have been better off selling the vehicle yourself in the used-car market? If they were able to increase their offer by about 33%, I wonder what you could have gotten by selling yourself.

  • Julie says:

    great article. very practical.

  • Negotiation is a skill that takes good coaching and practice. Your tips for the initial email give a strong straight to the point introduction. Good job :)

  • Ron Ablang says:

    That 1st piece of advice about letting them make the first offer is golden, and can be used in probably any negotiating situation besides new car buying.

    • Warren says:

      The other option to letting them make the first offer is to know exactly all the costs and options and tell them what you will pay and exactly what you want to get (including tax and title) – take it or leave it – some other dealer will be glad to take the offer to get a sale. After all, before any bargaining begins, the dealer knows at what point he will take it or leave it.

      If the car is on the dealer’s lot, the dealer is more likely to allow you to have a better deal than if you make the dealer order the car – except in the case of some extremely popular models. As long as the dealer has the car, he has expenses for that car.

      There are lots of details to know. For example there are option packages which include several options for a single price – this price is less than the cost of the individual options. Don’t let the dealer sell the options as individual items.

      Learn to read the fields in the VIN , Vehicle Identification Number. This has lots of information from model year to the factory which built the car.

      Watch for the dealer swapping out items with counterfits. If you get a GM car, the radio is AC Delco, not AC Belco.

      Years ago I was doing computer consulting and had an assignment at a major auto manufacturer. I saw how some employees bought cars. They knew all the details, costs, inventories, dealer incentives, … down to what the dealer had in his inventory (including the cars that had not made it onto his lot yet).

  • Nick says:

    My finance also bought a Malibu. You can’t get much more bang for the buck, really.

  • Xufeng says:

    Thanks for sharing your story! I’m thinking to buy a 2012 Malibu too.

    Could you let me know how the GM $3000 cash back work? It is deducted from what you paid directly? Or GM pays back to you in the following months?

    Thanks!

  • tyla says:

    Thank you so much for posting about your experience at buying and trading your car in. I read everywhere online and most of time they just give you tips on doing so. But the negotiating conversation part is really useful.
    Did you negotiate the trade in via email? or, this can only be done at the dealership?

    Thanks!!!!!

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