Reality Upgrade

One of the biggest financial decisions in the lives of most Americans is their car. Other than a house, cars are likely the most expensive thing any of us will buy in our lives, and they are one of the few things still sold by salesmen, where haggling is not only accepted, but almost required. And the opportunity for savings by haggling properly is huge - by getting a good deal on a car, you can potentially save thousands of dollars.

There are a few tricks to haggling effectively. Mostly they come down to psycology, which all sucessful salesmen use whether they know it or not.

Get Prepared

Before you start to haggle, you must be prepared. A few minutes of research can mean the difference between sucessful haggling and paying too much.

• Know what you want. Know which car, and what features you want. It is fine to visit car lots before you have decided, just make sure not to let a salesman talk you into buying before you are ready. 
• Do not buy on the same day you shop. Shopping is fine, but go home and sleep on it before you go back and buy. Remember, you have pleanty of time, no matter how in demand the car you want may seem.
• Know how much you are willing to pay before you arrive. Use a website like TrueCar or Edmunds to find out how much the car you are buying is really worth. It is best if you can find out how much the dealership paid for the car, so you can use that as a starting point for your negotiation, and make them work for their profit.

Haggle Your Way to Savings

Here are a few haggling tips for the actual haggling:

• Never say yes to the first offer, even if it is what you are willing to pay. The salesman is expecting you to haggle, so probably has some hidden costs to throw on at the end. If you say yes right away, you will end up paying more than you want.
• Make sure to flinch. Always act like the first offer is much, much (oh my god, so much) more than you were expecting. Keeping a poker face may just make the salesman think you are really ok with the first offer.
• Invoke a higher authority. “I love the car, but my wife will kill me if I pay that much for it.” The the standard of this tactic that salesmen use is the “I have to talk to my manager.” If this is used on you, always return to your original offer.  The pitch goes like this: You offer 10,000, and the salesman says “10,500, but I have to talk to my manager.” Then the manager comes out and says “I understand you are offering 10,500.” Your response should be “No, your salesman is offering 10,500, I was offering 10,000.”
• Squeeze you opponent. Say something like “You’ll have to do better than that,” and shut up. Humans are socially programmed to dislike silence, so they will likely give you another offer.
• Never offer to split the difference. Always let your opponent do that: it gives them the feeling of winning, and gives you the opportunity to split the difference again later.
• Save a small concession for the end, whether in price or features (like lojack or something). It gives your opponent the feeling of winning.
• Bring snacks and water. A favorite tactic of salesmen is to have their customers wait in their office for hours, while they eat lunch, chat with their co-workers, or have coffee. After waiting for a long time, you will be tired, hungry, and ready to be done with the process, so you will be more pliable. To prevent this, be prepared to wait as long as you need to. Pack for an all day expedition, with drinks, food, and something to read, so that waiting will not be a problem.  Alternately, be prepared to walk away and come back another day - “Give me a call when you are actually ready to sell a car.”

It may seem like a lot of work, but going through this process can save thousands of dollars. If you are having a hard time getting motivated to do all this preparation, it might help to think about it this way. If someone was going to give you several thousand dollars to do a few hours of research about car prices, would you do it?

I thought so.

Here are some helpful links:

TRUECAR.com

Edumunds.com

HowToHaggle.com