How To Negotiate THE BEST Deal With The Car Dealer (Step By Step) In 2025

[00:00] How do you negotiate the best deal with the dealership? That's what we're going to find out. Welcome to Car Help Corner, where we help you the consumer master the process of car buying and car ownership. For this video, I'm going to take you step-by-step

[00:14] on how to negotiate the best deal when shopping for a new car that will save you time, save you money, and make you feel confident that you scored an outstanding deal. As a consumer advocate and a professional car buyer

[00:27] for over 10 years, I've helped thousands of consumers using these strategies. And after watching this video, you'll be able to do it too. But before getting into it, a huge thanks to Ombic, Ontario's vehicle sales regulator

[00:39] for sponsoring a portion of this video. So first off, any car purchase has a shopping phase and a buying phase. We're going to skip over the shopping phase where you're doing your research,

[00:51] you're going for test drives at different dealerships, and you're basically figuring out what kind of car you want to buy. Once you've made that decision, you're now ready for the buying phase. Now, the buying phase has three pillars

[01:04] that you need to understand. The first pillar is the price of the car itself. The second pillar is the financing or leasing parts of the deal. And the third pillar is your trade-in vehicle

[01:18] if you happen to have one. Now, each of these three pillars needs to be treated separately in order to get the best overall deal. We're gonna start things off with the first pillar, which is negotiating the price of the car you're buying.

[01:32] A great place to start here is to visit the car manufacturer website where you can build your car and get an idea of what a baseline price should be, including the mandatory charges

[01:45] and any rebates or incentives that you may be entitled to. When you build a car on a manufacturer website, the final step or summary is usually where you can see the price breakdown

[01:57] with the mandatory charges, any available rebates or incentives, and the out-the-door total price. Essentially, with a new car on top of the MSRP, the only mandatory charges are a delivery and destination fee,

[02:13] also known as freighter PDI, a few small levies, which include your licensing and registration, and your sales tax. That's it. Now, just because this is the price that you see on the car manufacturer website,

[02:27] that doesn't necessarily mean that's the same price, that you'll see on a dealer website, or the price that the dealership will offer you. Many dealerships have all kinds of additional charges and fees, which you might not be expecting.

[02:41] These can include an administration or a dock fee, a security etching or antithet fee, and a wide assortment of protection products or packages which inflate the price.

[02:54] Take a look at this example. The dealership has automatically added an antithet, wheel-entire nitrogen fee for $637. They've added wheel locks and mats,

[03:06] undercoding for $988, and an extended warranty for almost $3,500. None of these charges should be mandatory, and you should have the ability to negotiate them

[03:18] out of the deal, if the dealer attempts to charge them. Over and above the dealer's advertised price. Another benefit of the manufacturer website is that you can go to the offers and rebate section

[03:31] to get a better understanding of the incentives that may be available, and make sure to note them down. You should also make sure to note down whether any of these rebates or incentives are part of the price breakdown when you build your vehicle.

[03:46] At this point, you should have a really good idea of what your baseline price should be without any additional dealer charges or add-ons. This should be your starting point for negotiation.

[03:58] Another really useful tool, which you can use for negotiating a price, is a dealer invoice price report. This will show you the invoice price or dealer cost

[04:10] for the car, which is the price the dealer pays so that you can compare this to the MSRP and see how much profit margin the dealer has. This is a tool which we offer through our service,

[04:22] and it is a very useful one to have so that you have an understanding of how much negotiating room there is. Normally, most new cars have a profit margin of around five to 10%,

[04:34] which means that if a car has an MSRP of, say, $40,000, that means the invoice price or the dealer cost should be around $36 to $38,000,

[04:46] which means you have approximately $2,000 to $4,000, worth of negotiating room. So let's put this all together in an example, using an invoice price report, which I prepared based on a 2025 Honda pilot.

[05:00] We can see in the price breakdown, we have the MSRP, we have some options, which is a paint charge, we have our destination charge, which is $2,000, and just below that, we have some mandatory levies,

[05:13] which only add around $150 total. Now, below that, we have the important part. Here we have our customer cash rebate, which is an incentive from Honda, this is $2,000 off the total price,

[05:27] and below that, we have our dealer discount, which we've negotiated, which in this case is an additional $1,000. Now, this is a pretty reasonable discount for this particular model, because as we can see

[05:41] from the invoice price, the invoice price is around $2,500 below the MSRP. So with a $1,000 discount, that means the dealership is still making around $1,500 profit,

[05:56] pretty fair and reasonable, and that's about it. Below that, all we have is our sales tax, which brings us to our outdoor price. Pretty straightforward. So now that we have our target price, and we know what we want to pay for the car we're buying,

[06:10] it's now time to approach dealerships in our area by email to get a price quote. Now, it's really important that you contact dealers remotely by email, because this will give you a really good idea

[06:23] of how professional and transparent they are. Anytime a dealership refuses to give you a price by email and tells you that you need to come into the dealership before they can discuss any pricing,

[06:36] well, that's typically a major red flag. Once the dealers send you the quotes, you can compare them and see which one has the best offer. I would recommend contacting at least three to four dealers

[06:48] in your area so that you can see competing offers and can compare them. You'll want to take the best dealer quote and compare it to your target price. How much higher is the dealer quote?

[07:00] Are they charging additional fees? Have they added any products or add-ons that you did not ask for? This is when the negotiating takes place. Tell the dealership what your target price is and that you're ready to buy if they match the price.

[07:15] Telling the dealership that you're ready to buy shows how serious you are. And they're more likely to work with you on the price. And just basically go with whichever dealership either matches the price or at least comes closest to it.

[07:29] I should also mention that you need to be reasonable with how much you try to negotiate. For example, if you're trying to buy a car that is very difficult to get and has a long waiting period

[07:41] because dealers have no inventory, well, you're probably won't be able to negotiate a discount close to the invoice price. But if you're trying to buy a car that has plenty of inventory,

[07:53] dealerships are going to be a lot more motivated to move them and they're more likely to work with you when negotiating and it's far more likely that you'll be able to get closer to that five to 10% discount closer to the invoice price.

[08:08] But remember, any rebates that you're eligible for should be added on top of any dealer discount that you negotiate. The dealer is not giving you the rebate. The manufacturer is.

[08:20] So don't let the dealer let you believe that they are already giving you a deal just because you're getting a rebate. Okay, now that we've covered the price, it's now time to talk about the second pillar

[08:32] of the car buying process, which is financing or leasing. We always begin by negotiating the price of the car first because when you get the price of the car as low as possible,

[08:45] this will ensure that you have the lowest payments possible whether you're financing or leasing. A lower vehicle price means lower payments. It's as simple as that. Now, when buying a car that you plan to finance or lease,

[08:59] doing so through the dealer with the manufacturer financing is often the best way to do it. Manufacturers often have incentivized interest rates, especially on models that they're trying to aggressively move

[09:13] or clear out, sometimes with close to zero percent interest, which you will not get from a bank or credit union. Now, by all means, you can certainly shop around and check with your local banks or credit unions

[09:26] to make sure that you're getting the best interest rate possible. But typically, when it comes to new cars, manufacturers have the lowest rates because of the incentives. And it's also worth remembering that these interest rates

[09:39] are fixed and non-negotiable, which makes the whole process a lot simpler. Now, used cars are a different story and that's where shopping around and checking different banks or credit unions

[09:51] does make a lot of sense. Now, it's important to understand that borrowing money to buy a car does come with some risks attached. So here are some valuable tips from OMVIC that you should keep in mind.

[10:03] If you contact your financial institution, ask about your credit score and the financing options available to you based on your score. Know that if a dealer is arranging the financing,

[10:15] they may submit your loan application to multiple lenders. So make it clear that you do not want your credit checked by multiple lenders as this can negatively hurt your score. To protect yourself, ensure that you know exactly

[10:28] who your application was submitted to and ask about each lender's offered terms and rates and always verify the accuracy of the information provided on the application before it's submitted

[10:40] and the accuracy of all the information on the contract before you sign. And always make sure that you read the contract very carefully before you sign. Remember in many locations,

[10:52] including here in Ontario, there is no cooling off period. So once you sign that contract, the deal is final. To learn more about your car buying rights and to access free car buying resources,

[11:05] just visit the OMVIC website. More information can be found in the description below. Okay, we've discussed negotiating the price of the car that you're buying. We've discussed the financing and leasing terms.

[11:17] It's now time to discuss the third and final pillar of the car buying process. And that is your trade-in car. Now you want to make sure that you negotiate your trade-in separately from the rest of the deal

[11:30] because you want to make sure that you're getting a great price for the car that you're buying while also getting a fair price for your trading car. One of the best ways to get a fair price for your trade

[11:42] is to take advantage of online instant cash offer tools which are available on websites such as Auto Trader, Kelly Bluebook, Carvanna, Clutch, and others. I recommend using all of the ones that are available

[11:56] in your area and save the one that gives you the highest offer. Remember, this is a real offer from a dealer that will buy your car. So use this to negotiate a fair trade-in offer with the dealer

[12:09] that you're buying your new car from. Once you've established a fair trade-in value for your car, this value should be deducted from the price of the new car that you're buying before sales tax is charged,

[12:23] which means that you get a tax savings as well. And this is true whether you decide to pay cash, finance, or lease. Once the step is done, the deal is now pretty much fully negotiated.

[12:35] So all that is left for you to decide are the remaining factors such as whether you want to make a down payment, the length of the loan or lease terms, and whether you want to purchase any additional dealer products.

[12:48] If you are financing the car, I always recommend making a large down payment, at least 10 to 20%, and going with a shorter loan term, up to 48 months.

[13:00] The higher the interest rate, the shorter the loan should be, so that you minimize the amount of money that you spend on interest. If you're leasing the car, you should go with a loan term of around 24 to 48 months at the most,

[13:14] and go with a zero down payment. You should not be making a large down payment, anytime you're leasing a car. And as for dealer add-ons and additional products, well, that's ultimately up to you,

[13:26] but it's really important that you do not feel pressured to pay for any dealer products that they might try and sell you. Now, some of these products such as an extended warranty might have value to you depending on your situation,

[13:41] but they could also be extremely overpriced or just unnecessary. So you need to evaluate all the dealer products extremely carefully on your own time, do some research, and make a decision whether it's worth it

[13:55] to purchase them or not. Do not feel pressured to purchase anything without knowing what you're buying. And remember, only sign the contract when you're 100% certain that you want to buy the car,

[14:08] that you've read everything extremely carefully, and that you're happy with the deal. Because more often than not in many locations, such as here in Ontario, the deal is final once you sign. There is no cooling off-grade.

[14:21] So, safe to say buying a car is not always an easy or a straightforward process, but if you follow the strategies in this video, chances are you will save yourself a lot of money,

[14:33] and you will avoid having buyers or more. So if you found this video helpful, make sure to like and subscribe. You can also take a look at my other videos by clicking these links over here. Make sure to follow me on Instagram,

[14:45] and if you need additional car buying advice, recommendations, or help with getting a great deal on your next new car purchase, make sure to visit carhelpcan.com. Thanks so much for watching, and see you next time.