What is the #1 mistake car buyers make when negotiating car price? In this video post I explain how to buy a car without making this #1 mistake.
Negotiating car price in my opinion, reminds me a bit of poker.
“In poker, you can win with the worst hand and you can lose with the best hand. In every other game in a casino—and in games of perfect information like chess and Go—you simply must have the best of it to win. No other way is possible. And that, in a nutshell, is why poker is a skilled endeavor rather than a gambling one.”
— Maria Konnikova (“The Biggest Bluff”)
You can win with the worst hand. And lose with the best.
Your ability to negotiate is proportional to your ability to walk away. In new and used car price negotiation a buyer has two options:
- Bluff
- Create better alternatives
In the example of the two (2) new Jaguars I discuss in this video, the timing and supply and demand conditions of the broader market enable one model to sell for full sticker price, and the other model for as much as 27% off MSRP.
But relative to each model there is still a range of prices paid for the exact same car. In the case of the 2021 Jaguar F-Type, some buyers paid full sticker price. Others paid 5% off MSRP. That range of new car price is the game to be played between the dealer and buyer.
The #1 mistake negotiating car price is to not create better alternatives. A buyer can always bluff, of course. But a bluff in car negotiation should be reserved as a last resort as there is simply a better way.
Shop around offers to multiple dealers. In my blog and YouTube channel I explain exactly what to say to negotiate by email. When dealers enter into a bidding war against each other, they race to the bottom while the buyer sits back and waits. This has become easier than ever in the age of high speed internet and smart phones.
There’s no way for a car buyer to know what particular financial position a car dealer or private seller is in at any given moment. Some may be able to comfortably reject offers while they wait confidently for a higher offer to come along. Others might need to make a sale today, perhaps to hit a goal, or cut their losses and move on. Taking this for granted and resting on the results of just one seller’s offer can cost buyers hundreds to thousands of dollars they didn’t even realize they were leaving on the table.