Step 11: Learn how to haggle.
Make your first offer the car’s invoice price, including any options and the automaker’s mandatory destination charge (but not including any direct-to-consumer cash rebate, which should be considered as part of your down payment). The salesperson will probably make a much-higher counter-offer for you to consider. You should then raise your initial bid by an incremental amount, say, one or two hundred dollars; the salesperson will likely lower his or her price in the same manner. This may continue back and forth for a few rounds, and when the two proposals become close, the salesperson will typically go and “present your offer to the sales manager” (in reality he may be just grabbing a quick cup of coffee or a drink of water). Chances are he’ll return with a higher bid. If it’s still close to your last offer, try standing firm; if it’s considerably higher, continue negotiating in the above manner.
If you’re trading in a vehicle, be sure to let them know that you’re already aware of your old vehicle’s fair-market wholesale price. If you’ve gotten a prior bid from the dealership’s used-car department, there should be little room for discussion.