What Can You Negotiate When Buying a Car?

Written by Ray Shefska

My career in the retail automotive business started in 1977. Buying a car doesn’t have to be anxiety inducing, stressful, or painful. Instead it can be confidence inspiring, fun, and convenient. Let me show you how.

June 24, 2020

If only buying a car was simple and easy … If only! There are so many moving pieces involved in a car deal, the price of the car, the taxes, the fees, what about your trade-in? The list goes on and on. Knowing what you can negotiate when buying a car is easier said than done.

Fortunately for you, after spending 43 years in the car business, I know the laundry list of items you can (and can’t) negotiate when buying a car. This list is long, but then again, like I said before, there are a lot of moving pieces in a car deal!

Let’s jump in.

Is the MSRP negotiable?

No! The Manufacturer’s Suggested Retail Price (MSRP) is not negotiable. This is the factory’s recommended selling price for a vehicle. The actual selling price (as discussed below) is negotiable, but the MSRP, the suggested value the manufacturer sets for their vehicle, is not negotiable.

Is the destination charge listed on the window sticker negotiable?

No! The destination charge is not negotiable, it is a component of the MSRP. The manufacturer charges the dealership a fee (that you will see on the monroney label), and this fee is non negotiable.

Is the additional transportation fees on a dealer exchange negotiable?

Sometimes, but most likely not. If a dealer needs to dealer trade to get the vehicle you want to purchase, odds are they are going to charge you an additional fee for the transport of that vehicle. In some cases they won’t (if it’s local), but if the transport is substantial, don’t be surprised if the dealer adds a charge to your buyer’s order. That being said, is this negotiable? You can try, but nine times out of ten, the dealer will stick with the fee.

Is the selling price negotiable?

Yes, absolutely! The selling price is entirely negotiable, and you should read some of our guides on how we negotiate the best price possible on a car.

Dealers do not expect to sell most of their vehicles for MSRP, instead most expect their vehicles to sell considerably below that. Your negotiating skills will determine how low you’re able to get the dealer to go.

Is the selling price negotiable for a lease?

Yes! You can negotiate what the selling price for a lease is (known as the capitalized cost). My recommendation is to negotiate the selling price of the vehicle and then let the dealer know you want to lease instead of buy. This way you have already negotiated a fair selling price and there is less likelihood of “games” being played.

Is additional dealer mark up (ADM) negotiable?

Yes! Additional dealer markup is absolutely negotiable. If a vehicle is in short supply, or in high demand, dealers may increase the selling price of a vehicle above and beyond the MSRP. When dealers do this, they are essentially selling “air.” I mean that in the sense that they are charging more for nothing, except for the scarcity of the vehicle.

ADM will be shown on an addendum sticker attached to the vehicle, and if you aren’t visiting a dealership in person, you can ask for the addendum sticker in addition to the monroney label via email. The dealer will share it with you.

Are dealer installed accessories negotiable?

Yes! Dealers install accessories on nearly all of their inventory in an effort to increase the amount of gross profit they make on each vehicle. If you’ve ever had a dealer tell you, “We add LoJack to every car. Sorry, we can’t take it off yours.” That may be true (the fact that they install it on every car, but that doesn’t mean you need to pay for it (or at least all of it). You can, and should negotiate accessories.

Dealers do not expect all of their sales to include the full selling price of each accessory. With that in mind, you can play hardball on accessories (especially egregious dealers that add thousands of dollars onto the selling price of a vehicle), and work to get them to discount, or remove the line items from the buyers order all together.

Are Doc fees or Processing fees negotiable?

Yes … sort of! Doc and processing fees are negotiable in the sense that you can get the dealer to remove their value from the selling price of the vehicle, but they will not actually remove (or discount) the line item from the buyer’s order. When it comes to answering the “What can you negotiate when buying a car?” a question, doc fees have one of the strangest answers.

It’s odd, but for legal reasons dealers will not entirely remove (or even discount) a doc or processing fee for any customer, but you can get them to negotiate the value of the doc fee off of the selling price of the vehicle.

Are the state, county and city tax fees negotiable?

No! State and local taxes are not negotiable. Dealers can’t “mark up” these line items, and unless you know someone in your local government, you’ll be hard pressed to negotiate these!

Are the title and registration fees negotiable?

No! Title and registration fees are set by the state and are not negotiable.

Are electronic filing fees and bank lien fees negotiable?

No, but also maybe! I say no because in every dealership I have ever worked in, we simply charged the customer the flat fee we paid for electronic filing fees. In theory though, a dealer could mark this up, and in that case you can consider negotiating it down, however, like I said before, I have never seen that in practice.

Are interest rates negotiable?

Yes! It’s well known in the industry that dealers add “pack” or “margin” into interest rate quotes for customers. Ask the dealer if you are getting the “buy rate,” and always be prepared to go with outside financing if the dealer doesn’t want to negotiate the quoted interest rate on a loan.

Are lease money factor rates negotiable?

Yes! Money factor (the interest rate you pay on a lease) is negotiable as well. Again, ask for the “buy rate” when talking to the dealer.

Are credit tiers as determined by the bank negotiable?

Yes! If a dealer runs your credit and it comes back at tier 3 you can try and get a “tier bump” up to tier 2. This is entirely dependent on the relationship the Finance Manager has with the lender, and how hard they want to try to get you to the next tier.

Are prices of products sold in the Finance and Insurance negotiable? 

Yes! All of the products sold in the F&I office are negotiable. Extended warranties, tire and wheel protection, etc, etc. Each of these items is negotiable. If a Finance Manager shows you a price of $2,500 for an extended warranty, do not hesitate to offer less than that.

Finance Managers, just like Sales Managers, have volume incentives. That means Finance Managers may take a “short deal” to hit their monthly incentive threshold.

Like I said at the beginning of this article, answering the “What can you negotiate when buying a car?” Question is easier said than done! It’s my hope that now you feel more confident negotiating the best possible car deal with the dealer.

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