Negotiating with car salesmen over prices can be one of the most challenging and unpleasant parts of the entire car buying process. Salesmen and sales managers will try to rip you off at every turn and, if you’re not careful you could end up paying much more than you should. If you are new to the art of negotiating car prices, here are some basic tips to prevent salesmen from getting over on you.

Once you have selected a make and model for the car you want to purchase and have test driven a few to make sure; it’s time to do some additional research before you make your purchase. Use reliable Internet sites to find out crucial information about the cost of the car you are looking at including the MSRP and the typical cost a dealer pays for that car. You may also want to consider communicating with others who have purchased your vehicle to find out what they have paid for it. Remember, no two people will pay exactly the same price for a vehicle, so It’s your responsibility to make sure you are getting the best deal.

Before you visit the dealership to begin negotiations, crunch some numbers and establish a price range that you are willing to offer the dealership for that car. Many people don’t realize that car prices are negotiable and the sticker prices on these vehicles is often thousands of dollars higher than what you could be paying. A good rule to remember when coming up with an initial offer price is that the dealer has to make a profit -- but it doesn’t have to be substantial. The best way to establish your offer price is to take a look at the numbers you found for typical invoice cost for dealers and make them an offer that gives them a 5%-7% profit on their cost. Also, make a note of the price you don’t want to exceed. Keep all your calculations in a folder so that you can have them handy during negotiations.

Many car salesmen make their commission profits off of buyers who don’t understand the difference between invoice price and MSRP.  Invoice price is the exact price that the individual dealer originally purchased that vehicle for. MSRP on the other hand stands for “Manufacturer’s Suggested Retail Price” which, in layman’s terms means the price that the manufacturer estimates the car is worth. These two prices are usually very different with the invoice price being dramatically lower. In many cases, when you begin to negotiate prices they will attempt to offer you the MSRP price and haggle downward. If you are a conscientious buyer, however you will remember that if you pay any amount over invoice, the dealer is making a profit. Start at the 5% over invoice price you came up with during your research and use that as a first offer. If the sales manager declines, move up slightly. Do not exceed the maximum price that you decided on. Once you reach that number, tell them that is your final bid and if they can’t do it, you will take your business elsewhere. Be polite, but firm.

Negotiating a fair price for a new vehicle can be a bit of a challenge but if you are knowledgeable and proactive during the process you will often come out with the better deal. It is up to you to make sure you are getting a fair price, so if you don’t agree with their offers, ethics or process; simply leave the dealership. There are plenty of other establishments ready to do fair business with you, so don’t settle until the price is right.