There are 3 simple steps to getting the best price on a new car:
- Choose your make and model (or narrow it down)
- Request online quotes from 3-5 local dealers using one or more of the following services: Edmunds.com, TrueCar, Automotive.com, and CarsDirect. (Different quote services represent different dealers so you may need to use more than one service to get 3-5 quotes from dealers in your area. All of these services are free and there is no obligation to purchase anything.)
- Make your best deal.
The process of buying a new car has changed a lot in the last several years, but here’s the “secret” to finding the lowest price from a local dealer without a lot of hassle and wasted time. Okay, it’s not really a “secret.” It’s just a smarter way of using the power of the internet to get a great price on a new car. You would be shocked by how many people spend hundreds or thousands of dollars more than they have to because they didn’t follow these simple steps.
Step 1: Figure Out What You Want
Choose your make and model and figure out the extras you want and need. A great place to do research and compare makes and models is Edmunds.com. They have an easy to use site that allows you to read reviews, compare specifications, and learn the real costs of buying and owning a specific car. If you can’t make up your mind about a single make and model, try to narrow it down to 2 or 3. There are many high quality cars out there and being open to more options can save you a lot of money.
Step 2: Find the Lowest Price
Get 3-5 local dealers to tell you their lowest price. How do you get dealers to tell you their best price? You ask them! Just get their internet pricing by using the following services:
These services are free. You tell them what you want and how to contact you. They ask local dealers in their network to email you a quote within 24-48 hours. There is absolutely no obligation to purchase anything when you use these services. Each price quote service represents different dealers so you may need to try more than one service to get quotes from 3-5 local dealers.
Step 3: Make the Best Deal
Depending on popularity and availability of the car(s) you chose, your quotes should come in well under MSRP and be very competitive. You may also notice that there are hundreds or thousands of dollars difference between the range of quotes. This is why it is so important to get at least 3-5 quotes. You can see if you are getting a better than average price by looking at Edmunds. For each car they will show you the average price people in your area are paying. If your best quote is lower than this average price then it is a better than average deal. If you are happy with a quote for the car you want, then buy the car! Reply to the email or call up the internet sales person and make the deal. It is important to complete the sale with the internet sales person, manager, or team from your chosen dealer. You may not be able to negotiate the same deal with a “regular” sales person even if it is from the same dealership.
Even if you are not satisfied with your quotes, you are now armed with superior information about pricing and are in a much better position to negotiate. Use the quotes you have as leverage to find a dealer that will play ball with you. You would be amazed at how effective the phrase: “Is that the best you can do?” can be. If you plan to do more advanced negotiation, you will need to figure out how much the dealer paid for the car. Look up the invoice price, consumer and dealer incentives, and dealer holdback. You won’t always be able to figure out exactly what the dealer paid, but you should get a good ball park figure (and yes it is lower than invoice). Once you have this information, add back an acceptable profit margin (5%-7% is fair) and see if a dealer will accept your offer. If you’ve made a fair offer, they will generally accept it. If you find you can’t negotiate a better deal (or don’t want to deal with the hassle), you still have your internet quote to fall back on. Remember, no dealer is going to lose money on a car and they do deserve to make a profit.
Why Does This Work?
This technique works because smart car dealers have figured out that well informed car buyers make great customers. They know that people contacting them through the internet are smart, have done their research and don’t want to waste a lot of time. Smart car dealers take advantage of the efficiency of the technology to sell more cars quicker. This efficiency allows them to make more money even if they are making less profit on each car. It’s a win/win situation.
Some Final Money Saving Tips…
Make sure you know how you are going to pay for your car before you go to the dealer. You will get the best deal if you shop around for the best loan rates ahead of time. Here are some reputable financial services firms that offer secure online applications and quick rate quotes. The trick is to get several quotes and make these companies compete for your business.
- My Auto Loan – Rate quotes from multiple lenders for consumers with fair, good, and great credit.
- Your local credit union – If you are a member of a credit union, don’t forget to check their rates too!
The Business Manager
Even after you have reached an agreement with the salesman, you still need to deal with the business manager. He or she will try to sell you a bunch of add-ons at exorbitant prices. You don’t want to buy any of it from the dealer. Let him or her know immediately that you will not be taking any of the add-on options. They will still have to offer you each item because it is their job, but if you show resolve at the outset, this process can go much quicker. Politely decline it all so you can get out on the road in your new car.
The Extended Auto Warranty
Extended warranties are funny things. The dealer – who just worked very hard to convince you of the high quality of their cars – is now trying to convince you to give them more money in case the quality isn’t as good as they promised. If you purchase a warranty from the dealer, you are rewarding them for this dubious behavior. If you purchase a warranty from the dealer you may also be paying way too much. For many people, an extended warranty is an excellent idea. It’s like insurance. If you think you may want to purchase an extended warranty, get a quote from a reputable third party like Warranty Direct before you go to the dealer. Bring this quote to the dealer so you know if they are trying to gouge you. Remember, when you shop around, you get the best price.
One last thing… Everything written above is designed to save you money at the point of purchase. However, after you own your new car you are required by law to keep it properly insured. Insurance payments will go on as long as you own your car, so you owe it to yourself to get the best deal possible. You can use the internet to get an insurance quote directly from an insurer or you can use an aggregation site to instantly get several competitive insurance quotes from some of the top names in the insurance business. Enter your zip code and either site walks you through a simple multi-screen process to gather the required information. At the end, you receive accurate quotes direct from the insurance providers. You can choose to purchase one of these policies on-line or walk away with no obligation, no fee, and no guilt. This is just another quick and easy way to use the internet to shop around for the best price.