How to Negotiate Car Prices: A Step-By-Step Guide

Author: Jeo George•Published on: 12/29/2025•7 Minutes
Overview:The overall experience of buying a new car is an exciting event for all of us, and to some, it can be overwhelming. In recent years, the internet and social media have made researching a particular model much easier than ever before. However, when it comes to the actual process of buying a car from a dealership, many people are unaware of what goes on behind the scenes. There are several unknown aspects of the entire car-buying experience that people should be aware of, from the moment they enter a showroom to the moment they drive out with the car of their dreams. In this car buyer's guide, we'll help you with all the necessary aspects and information, making the buying process much easier and saving you some much-deserved money.
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Key Highlights:


  • Be aware of all the ongoing official offers from the car manufacturer for your chosen model.
  • Try to avail of the maximum possible discounts from dealer margins on the ex-showroom price, insurance, and accessories.
  • Never hesitate while negotiating, and stand firm on your decision, based on the market awareness and sentiment for the car model.




Step 1: Know the Bifurcation of On-Road Prices


Car companies catch your attention by mentioning the ex-showroom prices of their models, which may deceive you into thinking that they are the actual and complete prices. However, there are some essential add-ons, which form the entire break-up of a car’s on-road price:


  • Ex-showroom – The actual price of the car, including the factory price, taxes, transportation charges from the factory to the dealership, and dealer margin.

  • RTO – Road tax registration charges that have to be paid to the Regional Transport Office (RTO). This charge varies from state to state, as the percentage of tax on the ex-showroom price differs for every state.

  • Car insurance – The essentials of a car insurance policy include a three-year third-party insurance and a one-year own-damage cover. The majority of new car dealerships now offer zero depreciation add-on coverage as a standard option. Still, there are also optional add-ons, such as return-to-invoice coverage, engine damage coverage, and accessories coverage, which you can opt for.

  • Accessories – An optional package, this includes some authorised accessories that car dealerships offer for every model.

Step 2: Know the Types of Offers and Discounts


When a car company advertises the maximum benefits of a car, there is usually an asterisk at the end of the numerical figure, which denotes the term “conditions apply”. This figure typically represents the cash discount available for that particular model, but it can be a combination of two or more types of benefits. The following are some commonly available offers and bonuses that car companies can offer on a particular model:


  • Cash discount – Offered by the car company, this is a discount deducted from the on-road price of a car.

  • Loyalty bonus – This can be availed if you are upgrading from an old car to a new vehicle from the same manufacturer.

  • Corporate discount – Car companies also offer a corporate discount to those people who are enrolled in a government or corporate job. In case you are working in a private job, your organisation should be listed among the eligible companies by the car company.

  • Exchange bonus – This can be availed if you trade in your old car with the dealership in exchange for a new one.

Step 3: Negotiations with the Dealership


Here comes the final drill. After selecting the car of your choice and becoming aware of all the possible terms and conditions, offers available, and bifurcation of the on-road price, it’s time to close the deal. Following are the pointers to keep in mind while discussing the final amount you need to pay the dealership:


Sound confident

When buying a new car, always give yourself the upper hand and speak confidently without hesitation or fear of judgement. The more you hesitate while bargaining, the lower your chances of a successful negotiation.


Stay calm

The car buying process should not be in a hurry, as making a hasty decision while closing the deal could cause you to miss out on some hidden benefits that the dealerships do not offer to every customer.


Speak to the point

Unnecessary conversations with the dealership’s salesperson have to be avoided. Till you sign the deal, speak less than the salespersons, as their entire focus is only on closing the deal. Don’t reveal information that can weaken your chances of getting more benefits.


Quote low

Regardless of the car model's popularity and market demand, always quote a low price. You can start with your expected price, which should be reasonably lower than the figure the dealership has. For this, you must be aware of the market value and demand of the model of your choice - the lower the popularity of the model, the lower your quote should be.


Compare deals of multiple dealerships

For those living in metropolitan cities and bigger towns, compare the deals of a model from two or more dealerships of the model’s brand. Choose the dealership that offers you the lowest quote, but without any hidden charges. For those living in smaller towns, you can compare the prices of models from dealerships in your surrounding cities.


Know about hidden charges and benefits

For budget cars under 30 lakh, the dealer margins are usually between 2-6%, which generally increases if you consider an even more expensive car. Besides this, there are hidden dealer margins in insurance, authorised accessories, extended warranty packages, and even finance schemes. While negotiating, discuss these margins with the salesperson and try to extract more benefits.


Negotiate more on an old car

Authorised dealerships usually quote a lesser price for your old car than its market value, if you are buying a new car in exchange for your old car. In such a case, first understand the actual market value of your old car by comparing it on multiple portals, and then negotiate with the dealership based on your research to get the maximum possible price.


Stay firm

While you sound confident during negotiations, there is a chance that you will receive a dismissive response from the salesperson. However, if your demand is reasonable and in sync with the market response of the model and brand, stay firm in your decision and do not back off from the deal. If you want to buy from a particular dealership, you can also talk about the deal you got from other dealership(s) to settle for a lower quote.


Master the Deal, Not Just the Model

There’s more to the car-buying process than just researching a car model on the internet, visiting a showroom, taking a test drive, and signing the final cheque. India is a country where the car buying process is still heavily dependent on the brick-and-mortar model, which involves dealing with an authorised dealership and its sales personnel. To get the most benefit from your choice of car model from them, all you need are good negotiation skills, a pinch of confidence, and good market awareness.


FAQs


1. How to get a discount on a car purchase?

To obtain the maximum possible discounts on a car model, first research all the official ongoing offers on it, and then negotiate additional benefits from the salesperson, such as dealer margins on the ex-showroom price, insurance, extended warranty, and accessories.


2. In which month is the car price low?

The benefits of car models are usually on the higher side in March (due to financial year closing), May-June (due to low buying sentiment), the festive season of September and October, and December (due to model year change).


3. Can dealers reduce ex-showroom prices?

Dealers can reduce the ex-showroom prices on a car model if there are ongoing official manufacturer offers for that particular model. Besides these offers, you can also negotiate for a lower final price by asking for more discounts on dealer margins.