I have purchased three new cars in the past 10 years. Yes, I like buying new cars and driving them forever and sometime in the future we can debate whether that’s a better “deal” than buying used. If nothing else, give me some slack and allow that it’s one area where I treat myself. 🙂
Anyway, on each of those three car purchases I have saved THOUSANDS of dollars by using the methods detailed below. If you want to save a bundle on your next car purchase, I suggest you do the same.
Here’s my method for getting the best possible price on a new car:
Do your research – Head online to Edmunds to review the myriad of cars available today. Consider your needs and budget (including gas and insurance) to find the size car you can afford. Check the site for well-rated vehicles that meet your needs. Also review all the options for the two or three cars that seem to be the best choices for you, noting what each model has available and its prices.
Go offline awhile — Go to the dealerships and test-drive your top few contenders, seeing how you like the driving experience of each. Then, when you’re back home, consider this experience with the information you’ve gathered off the web, and pick your favorite.
Get information — Go back to Edmunds and enter in your potential car and options. You’ll get an estimate of the dealer’s invoice price (his cost) as well as the True Market Value (TMV), the average amount others in your town paid for the car. If you can beat the TMV, you know you’ve gotten a good deal.
Get the inside scoop — Order a new car price report on the car you want at Consumer Reports. (These used to cost $14 but it looks like you need to subscribe to the site to get them now.) This information will verify the Edmunds data and also reveal any dealer incentives (rebates manufacturers pay dealers to sell a car). If the dealer receives $500 for selling your car, for example, his cost is $500 less than the listed invoice price. (FYI, I did this on my first two car purchases and didn’t on my latest one. I don’t think it hurt me at all. If you have enough competition, someone will bid as low as possible including all kickbacks — even if you don’t know about them.)
Identify potential dealers — Search the web for dealerships in your area. The best way to locate all your options is to go to www.google.com and search for the car model (i.e. “Chevrolet”), your city (i.e. “Nashville Tennessee”) and the word “dealership”. This should give you a choice of several options. Record an e-mail address for each one. Get at least four to six of them within a 100-mile radius of your home. Last time I used 10, but that could be overkill.
E-mail them all — Develop a standard e-mail message that tells who you are and details of the car you want. Tell them you’d like to know their price for such a car and that they should respond back by e-mail. All your negotiation will be by e-mail so you can avoid the hassle of negotiating in person.
Here’s the email I used last time:
I would like to get a quote on the following vehicle:
1. Trim: 2011 Highlander (base model), 4 x 4, 3.5L V6 Non-Hybrid engine, 5-speed automatic
2. Options: Cold weather package [CK], Tech Package [TP]
3. Colors: Exterior – Black; Interior: Ash fabric
4. Accessories: Mudguards [33] (MF) and Auto-dimming mirror [33] (N1)
I am aware of MSRP and invoice prices and would appreciate a competitive bid (I’ve received a couple others and they are pretty good.)
Please respond via email to this request.
Thank you.
Go back and forth — As they e-mail you back, keep asking the higher-priced dealers if they can do better. Let them know that they are not the cheapest and are in danger of losing your business. I just respond with something like, “I already have a better offer than that. Can you do better?” They’ll either lower their prices or drop out. No matter what an individual dealership does, by this time you should be below the TMV with a few dealerships.
Keep lowering the price — The bidding will start to slow and dealers will begin to drop out (saying something like, “This is my best offer.”) Tell them that you already have lower offers for the exact same car (most likely the dealerships quoting you are sourcing the exact car from the same dealer). If they can’t go lower, thank them for their time and effort.
Keep looking for savings — As you get down to the last two or three, remind them that you are aware of their costs (including incentives) and encourage them to go lower. Eventually they all will arrive at their lowest price. At this point, ask about what else they can do to win your business. For example, can they throw in free oil changes for two years or give you some added accessories (like floor mats) at cost? Some will jump at this and some won’t. It never hurts to ask.
Close the deal — As one “winner” appears to emerge, offer them a price that allows them to make a couple hundred dollars (with incentives added in) to close the deal. Most dealers will take this offer, especially if it’s at the end of a month and they need to hit a sales quota. By the way, the end of the month is the BEST time to buy. If you can do it at the end of the year as well, you’re going to have a very motivated seller.
Keep them honest — As you near an agreement price, don’t let them throw in extras like advertising fees, special charges, or anything else other than taxes and delivery (which everyone pays). I had a dealer try to charge me an extra $299 for some sort of bogus fees. I told him “no way” and that if he added it I would walk. He removed the charge.
Get your car — Print out your e-mails and bring them to your closing to be sure you get the agreed upon price. Buy your car!
And that’s it! Buying a family car doesn’t need to be intimidating, painful or costly. Just do your research online, take your time, and get the car you need for the best price possible.
P.S. For those who prefer a video version of this post, see the ESI Money YouTube channel.
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Comments
Adam saysThis is basically the method I followed most recently also – so thanks for your advice. One thing I would add that served me well, I asked for the “out the door price” – which means it includes all taxes, fees, etc. It’s easier to compare apples to apples when you do this.
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- Michael Mack says
A great learning experience, TKS. Brainstorming how about joining Costco for $60. and get the price from them. With that info your in a great position to know where to go in the negotiation. My guess is offer different dealership $1000. less the Costco price and see where it goes. Buy the way, I bought a 2016 X 3 BMW on Carvana at a great price given my research. A month later I sold my 2012 Mini to Carvana for almost $3000. over KBB trade in value. Pick up & drop off at my house. I am a happy camper.
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- Coopersmith says
Good to know. I never had to negoitate for a car.
Father worked for GM and son now works for Chrysler. Hard to beat the deals I can get throught them.
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- Noah says
Thanks, this is great information. How much of this, in your experience, also works with used cars? We are likely going to buy a used minivan in the next year or if my current 1999 Saturn suddenly meets its untimely demise.
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- ESI says
I don’t know since I’ve never used it for used cars.
Anyone out there have tips like these that apply specifically to used cars?
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- Crystal says
Pretty much the same process with used cars. I also use the words “drive out price” like Adam does…that way I don’t have to really worry exactly what the sales guy and the finance guy really want to do with the extras versus the selling price – whatever as long as the drive out price is what I’m cool with.
We’re buying a Certified Pre-Owned Prius now since my husband was in an accident last week with our 2007 Prius that we had for 8 years (he’s okay physically). We’re in the research part of the process. Based on what I’m finding, I’m attempting to get a 2013-2015 Prius with 30k or less miles for $16,500 or less drive out.
Also remember two things if you want add-ons at the end (extended warranties, tire plans, upgrades, etc). First, you can most likely get whatever it is cheaper after the fact. Second, EVERYTHING IS NEGOTIABLE – even the add-ons like warranties and upgrades and even interest rates. It’s all negotiable. None of it is set in stone like the finance managers like to make it feel…
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- Noah says
Thanks Crystal! Great tips!
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- Dan says
Attempting this process with a couple dealers now. Never thought it would be so hard to spend $25k! I sent out the emails, no responses. Decided to “chat” with another dealer to try and get some pricing, instead received a weird phone call asking what is important to me when making my buying decisions, etc – I told them again I wanted a quote! Then received an email stating “Unfortunately, we are unable to discuss any pricing information via the phone or Internet, to avoid making any mistakes”. Sounds like they don’t want to compete with each other.
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- Phillip says
Curious what part of the country you are at. I’ve helped relatives negotiate cars following a similar process to what ESI suggests and have hit this type of behavior in the NJ area (for a Camry, can you believe it?). I ended up helping my sister-in-law buy in the Washington DC area since as those dealers were more “normal”. I had somewhat of a non-responsive experice for our 2 Acuras in the Seattle area. Ended up buying one in Fife and another one in Portland since the 3 dealers in our area were not “playing ball”. To save a few hundred to over a thousand dollars, I’m willing to take some time to drive a bit further.
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- Matt says
I am in NJ and I too have hit this kind of behavior, looking at a few different cars (Mazda, Honda, VW). Basically, they are desperate to do whatever they can to get you in the dealership and don’t want to give you pricing you can take somewhere else. I suspect the density of dealerships may have something to do with it — for Honda, there are probably a dozen dealerships within about an hour’s drive from my house. And even the dealers that offered me a “firm” price via email stuck me with dealer add-ons above the quoted price once I was in the building (the all-important “appearance package” and sometimes “vehicle etching”). I still haven’t bought a car because my current car is perfectly fine and I’m not going to give money to people who put me through that nonsense. It’s almost impossible to get anyone around here to quote out the door pricing online, let alone multiple dealers to get them to compete with one another. Still, I found the article a useful summary IF you have dealers in your area who will play ball.
I would add: the auto sales industry is one that is DESPERATE to be disrupted by technology — it’s a cesspool. It only exists in current form because dealers for decades have been able to pay off state legislators to keep restrictive dealership laws in the name of “public safety.” Cars need to become like any other product, where you get the price and then decide whether it’s worth buying. I’m not holding my breath, though.
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- Mollie says
Going to embark on this process next week – wish me luck!
Do you have any advice for the best way to *sell* your old car?
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- ESI says
Sorry, I don’t.
We drive our cars until they are almost dead. We then either donate them to a charity or give them to someone needy.
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- Steve says
The last time I bought a car I emailed 4 dealers and only one replied with an actual price. I even had one, where I had been test driving and appealed to the salesman directly, who told me he couldn’t give me a price or he would lose my business. It made no sense because that is, in fact, how he lost my business. Then I went to another dealer who was very convenient to my home, and got them to match the email price, except they didn’t act very happy about it. And in fact they guessed which other local dealer had been willing to deal over email; it seems that other dealer may have earned themselves a bit of a reputation. Bad for other dealers and good for consumers. I regret taking the matched offer instead of rewarding the internet dealer’s straight dealing.
ANYWAYS my point is, a lot of dealerships know the deal and won’t play, presumably because they can’t compete on price.
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- ESI says
I’ve done it several times and always have five or more dealerships bidding against each other.
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- Victor Rivera says
Planning on trying this out next week. Would you recommend waiting until the absolute final week of the month/year or will next week be a good time to start the process? I’m not sure how long this will take…
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- ESI says
I usually start out mid-month, knowing that it will take a week to 10 days to come to fruition.
And with the holidays upon us, that time frame will probably extend a few days.
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- Dee says
I reached out using your template and got a response, however, they asked for the lowest quote I have in writing so they can try and beat it. Well, I don’t have that yet! What do you think is the best way to proceed?
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- ESI says
I usually do one of two things:
1. If it’s early in the process and you have several dealerships yet to respond (which you should have emailed many), tell them you want to know THEIR best price. If they won’t give it to you, you simply put them on the back burner until…
2. You get an offer and you can share it with them. I usually don’t do this unless I say “if I share someone’s offer with you, I’m going to share your offer with them later.” It’s only fair after all. Most dealerships will want to see someone else’s offer and then make the final (lower) offer, but you want them all to keep bidding lower and lower until they hit rock bottom.
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- Jennifer says
We are looking for a minivan and I had two dealers respond back to me today. Both quotes were below the invoice price listed on Edmunds. I assume they are making money somehow. Can I still negotiate less?
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- Phillip says
Always ask for less. The worst case is they say no. Do your research at multiple sites and counteroffer at the very low end of what people actually paid so it’s a credible offer. My gut says they will counteroffer with at least a slightly lower price. If your research says you are already at the bottom, try asking for $300 less and see if you get something.
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- Mike says
Just curious if anyone has used this methodology for a lease? I normally wouldn’t consider leasing, but I find myself in a bit of an unusual situation at the moment, and leasing makes the most sense right now.
I’m assuming I would do exactly the same thing, but once I get to the dealership, let them know that I wish to lease the vehicle instead of purchasing it.
My understanding is that, the lender will purchase the car outright from the dealer, so it shouldn’t really matter to them whether or not I buy or lease – they are selling the car for the agreed-upon price either way.
Can anyone out there confirm?
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- ESI says
Sorry, I can’t help as I’ve never leased…
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- fiberguyr1 says
I have used this method, but done it in person on the last car I bought. It was the only time in my adult life where I felt that I pulled one over on a car dealership. I walked out the first day, and then they called me back 3 or 4 days later letting me know that they would get to my price. Then I got them to give me 10k on my trade in that they initially wanted to give me 6k for.
I’m in the process of looking for another car now, and I think I will try this email method and see what happens.
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- Gwen Diffey says
How long is “forever” to you if you bought three new cars in 10 years? I have bought two new cars in 16 years, and I’d still be driving the second one if someone hadn’t plowed into me at a red light and totalled it.
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- ESI says
Year 1 — Bought new car for me
Year 5 — Bought new car for my wife when hers died
Year 10 — Bought new car for me (again) when we donated my car
Three cars in 10 years…
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- cliffb says
How much do you typically save off of MSRP and Invoice pricing?
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- ESI says
Here’s a real-life example:
https://esimoney.com/real-life-example-of-saving-a-bundle-on-a-new-car-purchase/
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- Melanie says
Question: How do car buying services via Costco or through a credit union compare to doing the process you suggested? I purchased my minivan 8 years ago via a car buying service through my credit union & the pricing seemed good, was very hassle free, & car was delivered to my home where I signed papers.
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- ESI says
https://esimoney.com/costco-car-pricing-is-good-but-not-better-than-my-method/
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- sal says
Thank you for your advice!
I am old & grey these days and have bought many new cars / trucks. Even though I know the dealers game, I still become anxious & unconfident (a new word) or intimidated. I think differently these days, I want my yes to mean yes and my no to mean no, auto salespersons don’t think this way….they see (what they think) is easy prey, HA HA! I’m a tough old bird… but not a Costco member, (I don’t eat as much as I use to.
But thanks for your insight and advice and know that I’ve bookmarked
your site 🙂
steveReply
- MI-119 says
ESI, I too have only given away my vehicles in the past to someone who needed one…
Not sure yet whose gonna get the Ferrari.
Any takers?
Seriously though, I got the Ferrari on Ebay and the two BMW’s from cars.com. Hate dealerships.
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