How to negotiate the best price for a new car

By: Lisa Coxon on October 24, 2023
Article image

This article has been updated from a previous version.

On a Thursday evening a few years ago, I found myself at a Mazda dealership in Toronto. My partner and I had taken one of their CX-5s for a test drive around 7:30 that night. Three hours later, we were still there — talking numbers. 

Right from the beginning, our main priority was finding a monthly payment that comfortably fit into our budgets. But the initial figures quoted by the sales associate were well above what we had in mind. After a lengthy exchange of offers and counter-offers, my partner stood up — a signal I interpreted as our intention to walk away, both literally and figuratively.  

At that precise moment, the dealership’s manager rushed over, extending his hand for a handshake. At the time I didn’t realize that this move would trigger a series of events leading to a successful negotiation. Through a rapid exchange of offers, we managed to reduce the monthly payment by about $100 and secured complimentary heated seats on the base model.  

Later that night, when we arrived home, my partner asked me, “So, how’d you like my standing-up move?” 

Little had I known, this had been a negotiation strategy all along. 

The automotive industry remains one of the few where haggling remains a common practice. In fact, car dealers expect you to negotiate. Here’s how to make sure you’re getting the best price before you enter the dealership and when you leave it. 

Compare prices and dealers online 

The first step to securing a better deal on a new car is to look at your options. And the easiest place to do that is online. 

Price variations: Keep in mind that each dealership sets its own prices based on their specific sales goals. For instance, a dealership in Stratford, Ontario, may have different pricing strategies compared to one an hour’s drive away in London because of different inventories. It’s in your best interest to find out where the best price is and whether it’s worthwhile travelling farther to get it. 

Apples to apples: When you’re comparing prices online, make sure you’re comparing similar models across different dealerships. If you’re considering the base model of a Mazda CX-5 at one dealer, stick to that model when researching others. 

Related: This is how the car you drive affects your insurance rate 

Do the math in advance 

Successful price negotiations are based on math equations.  Crunch the numbers before you walk into a dealership. 

Calculate the monthly payments. For example, if the car you’re interested in buying is priced at $30,000, divide that by 60 months (equal to a typical five-year finance term) to determine your monthly payment without interest. This calculation provides a clear starting point and helps you understand your budget once interest is factored in. 

Be realistic about payments. Salespeople earn commission on sales, so leaving room for negotiation will lead to a sale that both of you benefit from.  

“The best deal is a negotiated deal,” says John Musicco, sales and leasing consultant at Barrie Honda. “But there are limitations.” 

Related: How to estimate the cost of insurance before buying a car 

A little directness goes a long way  

Effective negotiations are not just about numbers; they also involve interpersonal skills. 

Emulate desirable traits. Ask yourself what qualities you’d like to see in a car salesperson — friendly? Confident? Educated? Honest? A good listener? Mirror those traits during your negotiation.  

Honesty pays off. Be upfront about your priorities (price point, safety, resale value, etc.). Politeness and transparency can help you land a better deal. If a price doesn’t work for your budget, ask the salesperson in a polite but direct way: “Have you got a little more room?” 

Consider additional perks. Negotiations don’t always have to be about price. If the salesperson can’t further reduce the price, explore the possibility for car upgrades, like free heated seats, a remote starter, or floor mats. 

Remember: the salesperson is working for you 

Car salespeople are well-versed in what it takes to close a deal.  

“One: they have to like the car,” says Musicco. “And two: they have to like the number.” 

While it may sometimes feel like you’re fighting them for a deal, the truth is that salespeople genuinely want to sell you the car. They get a commission, and it adds another vehicle to the dealership’s sold list. Moreover, it secures your business for at least five to seven years, as you continue to return for car repairs and maintenance.  

Read more: Should you get your car serviced at an auto shop or a dealership? 

“If I don’t listen to buyers and meet their expectations in terms of where I land on a number, they’re going to walk down the street and get the deal somewhere else,” says Musicco. 

“I don’t want to lose them. So, I’d rather come to a deal that works for both parties as opposed to walking them out the door,” he adds. 

In fact, salespeople have their own negotiations to handle during their sales – they need to negotiate with their sales manager on your behalf. That’s where the final approval typically comes from. 

This was precisely what happened in my case. The associate frequently left her desk to consult with her manager behind the scenes before returning to negotiate further.  

Don’t forget: An auto sales associate wants to close the deal as much as you do. Use this knowledge to your advantage.  

And if, despite all your efforts, you still make little progress in your negotiations, don’t underestimate the power of a simple gesture – standing up. 

Read next: How to buy car insurance in Canada

Save 30% on average on car insurance

Compare quotes from 50+ Canadian providers in 3 minutes.