7 Tips To Get the Best Deal On a New Car
Written by
Ann Herro has been writing about insurance and employee benefits for over 15 years. She covers topics ranging from car insurance to healthcare costs.
Reviewed by
Cara Carlone is a licensed P&C agent with 20 years of experience. She has her P&C license in RI and TX and holds CPCU, API, and AINS designations.
Buying a new car is a major investment, and haggling over price and other details is stressful for most people. The dealer wants to hit its own profit goals, and you need your car to fit your budget for the long term.
If you're not a master negotiator, the whole process can be daunting. We've compiled some tips to help you prepare and get the best deal you can.
And don't forget: you'll need new or updated car insurance for your new vehicle. It's a great time to shop around for new coverage and make sure you're getting the best deal there, as well. A local independent insurance agent can help you with all of your personal insurance needs.
What's Negotiable On the Price of a New Car?
Some elements of your new car's price are locked in and not up for much debate. That allows you to focus on areas where you can negotiate down, including:
- Vehicle price: The overall purchase price is the biggest and most important thing you can negotiate. Dealers base their price on the Manufacturer's Suggested Retail Price (MSRP), which is the amount the manufacturer recommends selling the vehicle for. The dealer may also include other markups. Negotiating a lower purchase price should be your number one priority.
- Interest rate: You can usually negotiate the terms of your car loan. Don't rely only on the dealer's financing options. You can often find better rates from an outside lender.
- Fees: Your invoice will likely include a list of fees like document fees, advertising fees, inspection fees, and so on. You can always try to convince the dealer to waive fees or lower the purchase price to compensate for them.
- Trade-in value: Know the value of your trade-in before you go to the dealer. Only accept a fair offer from the dealer, or sell the vehicle on your own.
7 Tips To Get the Best Deal On a New Car
Here are some ways you can prepare for your visit to a car dealership, with negotiating the best as your top priority.
1. Research dealerships
Research several dealerships in your area and learn about your local market. Read customer reviews from each dealership you're considering. They could provide a lot of information about the dealership's sales and negotiation practices.
2. Focus on the invoice price
The invoice price is the price the dealer pays to the manufacturer to get the car. However, this isn't always the bottom line price for the dealer. Note that:
- The dealer may have paid more or less than the invoice price.
- The dealer can get holdback payments (not included in the invoice price) from the manufacturer after the car sells.
Your best bet for the best new car deal is to ask local dealers to bid based on invoice price. For example, a dealer might bid $500 above invoice if the car is desirable, but not too desirable. Or maybe, a dealer would bid $1,000 below invoice if that particular model has been on the lot for some time and hasn't sold.
Never start with the sticker price (MSRP) in negotiations. Work up from the invoice price.
3. Shop at the end of the month
Car salespeople usually have monthly sales quotas that they need to hit. They'll often be desperate to hit their quotas and may be more likely to drop prices to make a sale.
4. Research incentives
Manufacturers are always offering incentives on certain models or packages. Before you go, research to see if there are any incentives on the models you're interested in. Common incentives include 0% APR for the first year or cash-back incentives where you can earn a rebate on your purchase.
Certain group members might also be eligible for discounts. Military members or students, for example, might qualify for an additional amount off the purchase price.
5. Keep the numbers separate
You can negotiate the:
- Price of the car
- Terms of your loan
- Value of your trade-in
If you let a dealer roll these into either a monthly or total price, you're probably going to overpay. You can avoid this by focusing on each number separately.
Here are some simple steps to follow:
- First, agree on a price for the car.
- Next, agree on the value of the trade-in based on online price listings.
- Third, agree on the terms of the loan, if any.
Keep any rebates or incentives separate from the overall price you're negotiating. You can always tack them on at the end.
Rule of thumb: Never tell a dealer your monthly budget.
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5. Selling can be better than trading in
Most dealers will offer you a similar trade-in price for your car. The trade-in price is the average price dealers in your area pay for similar cars. It is almost always less than what you could get for your car if you sold it yourself.
If you do plan to trade in your old car, make sure you receive a fair price for it from the dealer. If the dealer rolls it in quietly, like a discount on the overall price of your new car, you may not be getting a fair shake. Definitely take into account that the best new car deal might be a product of the best trade-in or selling price of your old car.
6. Shop midweek, not on nights or weekends
The middle of the workweek is the least busy time for car dealers. This is because:
- You'll probably be the only potential buyer on the lot.
- You'll get more attention.
- It's more important for the dealer to make a sale to you when there aren't lots of other potential buyers.
Shopping midweek might seem like a pain, but it's worth it for your bottom line.
7. Don't be afraid to walk away
Set your boundaries before you step foot into the dealership, and be prepared to walk away if the dealer refuses to negotiate.
Be sure to keep your expectations realistic, however, which is why you need to be well-informed on the market price for the car you want and the value of your trade-in before you ever walk in the door. That way, the salesperson can't convince you that your boundaries are unrealistic or unimportant.
How To Get the Best Deal On Car Insurance for Your New Car
While you're negotiating the price of your new car, be sure to include the cost of car insurance for it in your budget calculations. Your insurance premium will certainly change with any new vehicle, so get in touch with an independent insurance agent who can help.
Independent insurance agents work for you, not an individual insurance company. They can get quotes from multiple insurance companies, so you can make sure you're getting the best deal on the coverage you need.