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Last spring I wanted to buy a used motorcycle from a dealer. I walked into the showroom and a sales associate directed me to the model I was looking for. I asked for the price and he said, "$5,000. But there's probably some wiggle room there." Let the dance begin.

In some cultures, bargaining is a way of life. It's not so pervasive here. We often leave money on the table and, ahem, Canadians have a reputation for being polite. In Latin America there is even a colloquialism attributed to this phenomenon: the "Gringo Tax." Depending on what you are buying, this theoretical tax can add an average of 50 to 300 per cent over regular prices.

But you don't have to travel to get shortchanged. Many Canadians simply do not haggle at home either. And it's costing us hundreds, and perhaps thousands, of dollars every year. Think about all the people who blindly renew their mortgage at the end of their term. They receive a notice indicating the rate at which the mortgage can roll over into the next term and lots of consumers just let it happen. For many Canadians, a difference in rate of 0.5 per cent can translate into saving nearly $1,000 per year. Extrapolate that out to the life of a mortgage, and some people are giving up tens of thousands of dollars in interest.

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Negotiating isn't left to the realm of the financial services. Vehicle buyers obviously haggle on price, but sometimes you can negotiate on other related products or services such as free oil changes for a few years. While it might cost you $50 out of pocket to get your oil changed, it doesn't cost the dealership $50 to provide that service.

Going to a large nation-wide retailer does not exclude negotiating either. Some retailers have an advertised policy on price matching that encourages consumers to comparison shop for things like mattresses and electronics. But those people who bargain because these policies are advertised may not initiate the dance elsewhere.

Paradoxically, some of the places we might get the best results are where we'd feel most reluctant: local mom-and-pop stores and other very small businesses. We might feel for the little guys, even though they may be the most flexible on price.

But some of the best deals I've had were from small-business owners who are able to work out lower prices on the spot because they have the authority to make executive decisions.

Until you learn the tactics of becoming a killer negotiator, simply start by getting into the habit of asking, "Is this the best price you can offer me?" Then pause and wait as long as you need for a response.

They might say no, but chances are they'll be very polite about it.

Preet Banerjee, B.Sc, FMA, DMS, FCSI, is a W Network Money Expert, and blogs at You can also follow him on twitter at @PreetBanerjee

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About the Author
Personal Finance columnist

Preet Banerjee is a consultant to the financial services industry. You can follow him on twitter at  @PreetBanerjee. You can find his conflict of interest disclosure on his website. More

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