In December, my husband and I decided to become a one-car family. This decision was long overdue. Ever since moving to downtown Minneapolis, I used my car maybe once or twice a week. Throw a pandemic into the mix and I had to start intentionally driving my car occasionally just so it didn’t die in the parking garage. Plus, we had to pay for parking each month. Certainly not a good investment! However, since I had leased the vehicle in the winter of 2018, we had to wait out the lease.
When it came time for me to return my vehicle to the dealership, we realized we might be in a position to negotiate. My vehicle was in exceptional condition, with very little mileage, and car dealerships were running really low on used cars. We knew that if I purchased my leased vehicle and sold it used on the private market we would be in a position to make some money. Before we decided to go that route, though, we decided to see if we could negotiate with the dealership to take the car back a month early and allow us to make some money out of the transaction.
The steps we followed are ones you can use to negotiate just about anything in your financial life:
Get Clear on The Why: Begin by anticipating what might motivate the person on the other side of the table. In our case, we knew that car dealerships would likely make a lot of money on the sale of my vehicle. Then, ask yourself what a positive outcome of this negotiation would mean for you, your loved ones, and/or your financial goals? In our instance, we knew that this extra money would move us closer to one of our savings goals: saving up for our next home and move.
Tip: One of the most common negotiation mistakes is that people get these two distinct “whys” confused. Your “why” should be your internal motivation, particularly if the negotiation gets tough. But since it’s unlikely to matter to the person across the table from you, it shouldn’t be brought up in the negotiation. Remember, your argument should be framed around their “why,” not yours.
Do Your Research: The internet is a marvelous tool to see what financial outcomes others are receiving in the same circumstances. Don’t bypass this step! This information will be key to helping you build a case based on the market, not your personal circumstances. In our instance, my husband did research to see what my car was selling for, both by private owners and by used car dealers. We also took a look at my car’s “residual value” (in other words, the value of the car at the end of the lease term) and compared this to the expected sale price of the vehicle.
Tip: Negotiating a salary? Take a look at this moneyunder30 article for a list of sites with the best salary information as well as the different criteria (job title, career field, education, experience, etc.) that you should consider during your search.
Outline Your Outcomes: One of my favorite negotiation gurus, Emilie Aries from BossedUp, suggests mapping out your “like it,” “love it,” and “leave it” scenarios. Your “love it” scenario is an outcome that would make you very happy. Your “like it” scenario is an outcome that isn’t ideal, but you’d be okay with. Your “leave it” scenario is the number or conditions at which you’ll walk away from the deal outright. It’s important that you get really clear on these possible outcomes before you begin the negotiation so you don’t get swept up in the heat of the moment.
Tip: This is a great time to start thinking about your “Plan A” and “Plan B” scenarios, especially in situations where you have more than one item to negotiate. For instance, if you’re negotiating with an employer, your variables might be a salary raise, an increase in vacation days, or a remote work arrangement. You’ll want to be ready with your second “ask,” particularly if the answer to your first question is “no.”
Invite the Conversation: When you make the appointment, be clear about what you want to discuss. While that may feel uncomfortable, bringing it up out of the blue is unlikely to get you the outcome you want. If you’re asking for a raise at your job, you might use language like “I’d like to talk more about my future with the company.”
Tip: If at all possible, try to sense the other person’s position before you enter the negotiation. My husband had a conversation with the dealership via phone to gauge how they were handling leases and the sale of used vehicles. If you can get the person across the table to make the first offer, you’ll be in a better position to negotiate.
Start the Negotiation: Once you’re in the room, you’ll want to be calm and confident. State your intention and then move into your supporting information. In our situation, that sounded something like this: “We’d like to sell our leased vehicle back to you a month before our lease is due. We did our research and know that the car’s residual value is $8,000 and you’ll sell the car for $12,000. We could sell the car on the private market for about the same price. Given the low inventory of used vehicles, we wanted to give you the opportunity to purchase the vehicle from us for $10,000. What would it take to make that happen?” In the instance of asking a credit card company to lower the interest rate on your card, it might sound something like this: “I’d like to lower the interest rate on my credit card. I’ve been a loyal card member for 5 years and have consistently paid my monthly payments on time. I’ve done my research and I qualify for a card with a 6% interest rate. I’d like to lower my interest rate to 6% for six months so I can pay off my remaining credit card balance. I intend to keep the card after the balance is paid off. Could you look into that for me?”
Tip: Three important things to keep in mind: First, don’t give a range. That gives the person on the other side of the table permission to choose the lowest number. Second, if you have more than one thing to negotiate, take it one at a time, starting with your first priority. Last, be sure to end your negotiation with a question and then silence. That keeps the pressure on them to respond. If you need to, count in your head so you don’t speak too soon.Be Prepared to Walk: Hopefully your request was met or you were able to find an equitable middle ground, but if not, you may need to walk away. In the situation with the car dealership that was just what we did. They gave us an offer below our “leave it” scenario. We let them know the minimum offer we would accept for the deal and walked away saying we would be talking with another dealership. As a negotiation novice, I was really nervous about walking, but my husband encouraged me to stick to our plan. About three minutes after we drove away from the dealership, we received a call to come back. They were willing to accept our offer. While walking away can be scary in the moment, it can sometimes make the deal happen. But if it doesn’t, you’ll know what to look for in the next opportunity so you can feel good when things do work out.
Tip: I fully realize there are situations where you can’t walk away, such as asking for a raise at a job you love and don’t want to leave, or negotiating for a repair that has to be made ASAP. In that instance, spend a little more time building your case, expressing your commitment, and potentially negotiating the easiest thing on the list (if you have more than one thing you want to negotiate) so you can gauge their reaction.