How to negotiate effectively?

How much should I pay and negotiate for 2010 Toyota Corolla XLE, 2009 Honda Civic EX-L?

• My girlfriend and I were recently in a car crash, and the insurance considers the car totaled. We expect, based on Kelly Blue Book, approximately $12k-$13k back. We've begun to look at cars to purchase, but neither of us are well versed in negotiations. We’ve bought a Consumer’s Report (CR) book on 2010 cars, and it seems to suggest we should be able to negotiate below the manufacturer’s MSRP (not the dealer’s retail price that includes the dealer’s markup). How do I get below that? What are the strategies or angles that I should work? The two cars I’m looking at are the 2010 Toyota Corolla LE automatic 4-door and 2009 Honda Civic EX-L automatic 4-door: (1) ON THE 2010 TOYOTA COROLLA, dealer wants to sell it at $17,950. MSRP is $16,750. CR says dealer invoice is $15,326. Dealer was willing to negotiate to $16,500 w/ 0% interest rate on 36 months, but saving $250 doesn’t seem like much. He also seemed willing to sell at $15,000 if we paid off in full with cash, but we never finalized that as an option. This was my first dealer that I visited, and first attempt at negotiation, which I attempted with the best of my abilities. (2) ON THE 2009 HONDA CIVIC, dealer wants to sell it at $22,365. MSRP is $20,885. CR says dealer invoice is $19,203. Dealer was willing to negotiate down to $20,646. While I know I could have put more of an effort in this one, I did not as this was the last visit of the day and I was tired. I simply asked what the best price they could do was and I told them I would shop around to other Honda dealers. I am confused with their offer, as this is a 2009 car and their 2010 fleet is coming in a week or two. I figured they should be offering a much lower price on 2009. What are your recommendations? How much should I pay for these cars? How do I negotiate down? CR seems to suggest negotiating up from the dealer invoice, but how do we do that if the conversation always seems to naturally go towards negotiating down from the dealer’s price? Finally, any suggestions on how to max out the money from the insurance company is also welcome. Please, kind, thoughtful and helpful responses. THANK YOU EVERYONE. Date: August, 2009 Location: Boston, Massachusetts, USA

• Answer:

  You can beat them down a lot more that the prices that they are offering you. They get holdback and advertising rebates after the so called dealer invoice and many times there are factory incentive programs. I wouldn't pay more than $200 over factory invoice. Look at Sunday Boston Globe automotive classified section and you will get an idea of how much to pay. Lots of new car dealers advertise there and the prices will be low. Just be patient they will negotiate. Also don't buy any of their extended warrantys or other stuff that the finance department will try to sell you.