The Ultimate New Car Buyer’s Guide: Insider Tips to Help You Avoid Getting Ripped Off
We don’t work on a profit-based commission model, so we can tell you how to beat the system. To learn how to buy a new car for the best price, start.
Buying a car is expensive. And getting the wrong one — or at the wrong price — can be painful.
We know this because we’ve been analyzing car deals and helping thousands of customers find the right make, model, and price for the the past 20 years. And if there’s one thing we’ve learned, it’s this: doing even 10 minutes of prep work upfront can save you thousands of dollars and plenty of headaches over the long haul.
Here’s a comprehensive guide to buying your new car that’s packed with research-backed tips, surprising stats, and money-saving tactics that come directly from the car sales veterans at our dealerships. We don’t work on a profit-based commission model, so we can tell you how to beat the system — and get the ride you want at the price you deserve.
Think Big Picture: The Difference Between A Car’s Price and What You Really Pay
The number one mistake car shoppers make is taking a narrow look at price. There are actually four factors that determine what you’ll ultimately wind up paying for a car. Those factors are:
- Value of your trade in
- Financing of the vehicle
- Any additional warranties or extended service contracts
Those also are the four ways that a dealership can make money off you — which means they can lower the price and make it seem like you’re getting a great deal, but in reality they’re making up all of that money (and more) in other places.
For example, one dealership might list a car for $500 less than another dealer down the road. But when you go to buy, and that dealership pays you $1000 less for your trade, you actually wind up paying more, even though the sticker price appeared lower.
In this article, we’ll explain how you can account for all four of these factors to ensure that you’re getting the best possible deal.
Is it Worth Buying a New Car?
While it might sound like extra work, the first step is getting clear on why you want a new car, and a sense of what cars might best fit your needs. This matters because some less reputable dealers may try and steer you in the direction of a car that has a higher markup (and therefore a greater profit margin) on it.
So the first question to ask yourself is: Do I need a new car, or do I just want one?
About 39 percent of total new car shoppers are driven purely by want, according to a study commissioned by Cox Automotive. And there’s nothing wrong with that — new cars are shiny, clean, and packed with the latest features.
If you’re in the other 61 percent, however, it means you’re a little more torn about the decision. You’re not sure if you want a new car, but you think you might need one. A good question to ask yourself going in, then, is: “Why do I need a new car?”
Take a few minutes to jot down your three biggest reasons for snagging a new set of wheels. It might look something like this:
- Lifestyle change: Your family is growing, which means your car should similarly expand. Goodbye sedan, hello minivan.
- Outdated tech: You’re tired of eyeballing your parallel parking jobs and craning your neck to see if it’s safe to switch lanes.
- Fuel costs: Your gas-hungry V8 is making your morning commute too costly. Time to downsize and give your wallet a break.
Though safety and fuel efficiency rank as U.S. car buyers’ two biggest priorities, per Statista’s Global Consumer Survey 2018, everyone’s needs are different. It’s your job to carefully weigh each factor:
- Can you fit your four-year-old in that four-seater for a few more years?
- Would you feel better knowing that an automatic braking system will take over in case there’s a sudden stop you didn’t see coming? (Automatic brakes currently only come in 10 percent of new cars. But 20 manufacturers have pledged to make them mainstays in all new-model cars by 2022.)
- Is driving without a backup camera getting too dangerous with all of those kids in your neighborhood? (Backup cameras, meanwhile, are now mandatory in all cars manufactured after May 2018.)
Jot down all of your reasons for buying a new car on a piece of paper. Consider along with them the pros and cons of your three main options:
- If you buy a new car, you pay more upfront, but will spend less on maintenance for the next several years.
- If you buy a used car, you’ll have a lower monthly payment, but may come run into costly repairs.
- If you lease a car, you get a new car and a lower payment, but you’ll be car shopping again in about 3 years. (And check out this article on how to handle lease negotiations.)
Once you’ve put in the prep, gotten clear on your motivations, and considered which option is right for you, it’s time for the fun part.
How Do I Search For a New Car?
Today’s car buyers are better informed than ever before.The average shopper spends between 13 and 19 hours online doing car research, according to J.D. Power’s 2017 U.S. New Autoshopper Study. There are literally thousands of third-party sites from which to choose, but ones most people regard as solid, reliable starting points are:
- Kelley Blue Book
- Consumer Reports
- National Automobile Dealers Association (NADA)
Some of these hubs do sell cars, but unless you’re explicitly looking to buy online, treat the sites like your personal Pinterest boards. Browse around for fun cars that fit your qualifications, bookmark the ones that stand out, and put together questions about each option for when you finally book your first date with a dealer.
How Do I Find the Right Dealer?
Now that you have several car options, it’s time to take the next big step: finding a dealership that can satisfy your needs.
On average, consumers visit 2.7 lots along their quest to buy a new car, finds an Autotrader study. With more than 18,000 car dealerships in the U.S., per Statista, it might seem daunting to dwindle them down to a handful.
The easiest first cut? Based on your preliminary research, figure out which manufacturers you like best, and focus on the showrooms in your area that carry them. Then find out how those dealers operate.
Every Ford dealership, for example, sells the same new F-150. But how those dealerships operate could be totally different — and those differences will have a major impact on what you wind up paying for the vehicle.
For example, traditionally, most car dealerships operated on a commission-based model. That means the salesperson had an inherent incentive to get you to pay a higher price for the car. After all, the more you paid, the more money he or she took home.
This structure turned shopping for a car into an elaborate game. Dealerships listed prices well above what they actually could charge. Salespeople, and their managers, tried to defend as much of that ground as possible, so that they — and their dealership — could take home more of your money.
Not all dealerships operate in this manner. For example, within the Apple Autos, we discount our vehicles as much as we possibly can right upfront — so you never have to worry about whether you paid more than someone else for your car. Our salespeople are paid the same no matter what car you buy, so their only objective is making you happy.
Other “one low price for all” dealerships do exist. And at them, purchasing a car is pretty simple: You get a transparent price, right up front. You don’t have to go through the hassle and headache of back-and-forth negotiating.
At a commission-based, negotiating dealership, things are more complicated. And unfortunately, it may not be obvious which dealerships are which — especially when you consider that many negotiation-based shops will advertise low prices that not everyone qualifies for (numbers that may only apply to veterans, or first-time buyers, or so on). Your only way to know for sure if a shop operates on commission is to ask them. If they say “yes, we negotiate,” and you decide to proceed, here’s how to beat the system.
When Is the Best Time to Buy a New Car?
The first rule of car buying is: Never go into the dealership on the day you need the car. When you’re wrangling with a negotiating dealership, you need to plan strategically — and expect to make multiple visits. Mark your calendars for the following times.
The Best Time of Day to Buy a New Car: Before 2 p.m.
Skip the afternoon rush and you’ll fend off long lines. Mornings are typically slower, so you’ll have more time to negotiate. Also, there’ll be fewer other customers to compete for attention.
While commission-based salespeople usually must hit monthly quotas, no one wants to whiff an entire workday. The closer you get to close of business, the more the crowds thin out. Plus, your salesperson could be more apt to strike a deal and go home after a slow day, according to sales data from Capital One.
The Best Day of the Week to Buy a New Car: Monday
Spending your Saturday at a showroom might sound like fun … until you realize everyone else had the same idea and you can’t find a place to park. Most dealers say it’s their busiest day of the week, and Saturday discounts only reach 7.77 percent off MSRP, according to buying data from TrueCar.
Wait until Monday and you’ll land an 8.1 percent discount. Thursdays offer the second-best savings at 8.08 percent — and because weekdays are less busy, you’ll have more time to negotiate on those days.
The Best Time of the Month to Buy a New Car: The Last Few Days
Remember: Most salespeople at commission dealerships work on monthly quotas. If the calendar’s about to flip and your rep is in danger of missing the mark, he or she could be willing to make a discount and take a loss if it means clearing enough inventory to get a bonus. When new month starts, however, the pressure subsides.
The Best Month of the Year to Buy a New Car: August
Dealerships start getting next year’s models during the dog days of summer. That means they make a push to get out the old inventory, per U.S. News & World Report. Sometimes you can score a car for 15 percent less than what it would have gone for in previous months.
The Best Day of the Year to Buy a New Car: December 31
If you think your salesperson feels pressure to clear cars off the lot at the end of the month, add a yearly sales goal to the mix and the tension mounts even more.
Automakers dangle bonuses over dealers’ heads if they can move last year’s cars before January 1, according to U.S. News & World Report. Plus, sales slow down in the early winter months. You’re likely to fetch a big bargain before the ball drops — presuming you’re ok with car shopping on New Year’s Eve instead of spending the holiday with family and friends.
How Do I Negotiate Buying a New Car?
Negotiating with salespeople might sound like a nightmare — and rightly so. In any car buying situation, you are coming in at an inherent disadvantage.
You buy a car maybe once every five or ten years. The salesperson you’re going up against does this dance all-day, every day. Plus, no matter how much homework you’ve done on the Internet, the dealer will have access to more information than you do.
Here’s the simplest way to level the playing field: Remember that you’re the one they’re trying to please, and not the other way around.
(Again, at a dealership that’s not on a profit-based commission system, employee incentives align with this reality, but we digress.)
At a dealership where they’re going to haggle with you over price, your overall strategy should be to make them deviate as much as possible from their tried-and-true tricks.
The first and biggest time-saving tip: Before you meet anyone face to face, email the dealers you’ve already deemed worthy of your business. Ask them each to give you their best quote for the car you’re eyeing, with all the features you want.
While they’re crunching numbers, use a tool like Kelly Blue Book to find a price range based on what other buyers in your area have paid for that car.
Once you hear back from the dealers, compare the best quote with the KBB price. Next, feed that figure to the rest of the dealers and ask them if they can beat it. Keep playing the email game until you land on a starting price you like. Then book an appointment with the winning bidder.
Your salesperson’s initial move will be to let you take the car for a spin. Resist the urge to get behind the wheel. If you test drive right away, you’ll build an emotional connection to the car that much quicker. And you’ll be in more of a hurry to say yes to a bad deal.
Even though you were enticed by the email price, the first offer isn’t the best one—especially as you inevitably consider other cars. (Dealers say only about one-third of customers actually drive away in the car they came to see.)
Commission-based salespeople want to make the most money possible, so they’ll start as close to the sticker price as they can.
Don’t settle for the sticker. Rebuff them by saying, “That might be what the average customer would pay, but I’m not the average customer. How can we get closer to a price that fits within my budget?”
Your salesperson will then offer a deal designed to make you feel special. For example:
- Are you a new customer? “Great! Here’s a $400 first-time discount.”
- Have you bought from the dealership before? “Awesome! Enjoy your $400 repeat customer discount.”
You get the drift. In both cases they’re finding ways to “give” a little. But the numbers they’re using are likely still more than what you need to pay.
Your next move: Be ready to walk. Say, “I’d love to buy this car, but I don’t need to. So if the numbers work, that’s terrific. If not, that’s okay. I’ll just keep driving my old car.” Right on cue, your salesperson will ask about your trade-in.
What About Your Trade-in?
Dodge this question at first. You don’t want to mention that you’re selling your old car until after you’ve negotiated the final price of the new one. Otherwise, your salesperson might start shifting the numbers to make it seem as if you’re getting a better deal. But in reality, you’re about to fall victim to a tactic called “underallowing.”
Let’s say you’re trading in a car you bought 10 years ago, and the dealership determines its actual cash value (ACV) is $5,000. But most dealers won’t actually show you the ACV. Instead, the salesperson will come back and offer, or “allow” you, $3,000.
If you accept that offer, it’s just like paying an additional $2,000 more for the car than you should, because your deal is going to be the total minus $3,000, when it should have been the total minus $5,000. The dealer gets to pocket that additional $2,000 in profit.
You might battle back and negotiate your way to a $4,000 trade-in value, and feel like you’ve won the deal. In reality, you’re just getting back $1,000 of your own money — and you’re still losing out on a grand that should be yours. The dealer has successfully made you think you’ve struck gold—and screwed you over in the process.
Your move: Wait until after the dealer has settled on what they say is their absolute lowest price before talking trade in. (You might need to make multiple visits for them to get there — more on that in a moment.) When you do start the trade in discussion, ask to see the dealership’s ACV sheet for you car. The ACV sheet is something all dealerships use for accounting purposes. It will tell you what the car is really worth.
Find more tactics for getting the absolute best value for your trade-in here.
Watch Out for “The Closer”
Ultimately, in any car negotiation, your two best weapons are your legs. If your salesperson isn’t budging, threaten to leave and you’ll win back leverage. This is why we recommend that you don’t wait until the moment you actually need to buy a car to go shopping. If you’re able to walk, time is on your side — especially when the end of the month nears, and the dealership is looking to close deals in order to meet a benchmark.
Say, “I’m determined to get to XX dollars. Either we get there now, or I’ll have to find another dealer.” As long as your quote isn’t drastically lower than market value, he or she will relent … but not before bringing in the ringer.
Salespeople usually enlist their all-powerful managers in the late stages of negotiations to help steal (ahem, “seal”) the deal. This is when customers typically fold the most.
You might think you have the confidence to successfully swing a bargain because you’ve bought a couple of cars in the last 10 years. But you’re going up against sales veteran has negotiated 20 deals a day for the last two decades. They are professionals who are trained to answer virtually any question and overcome any objection you may have. They’re also schooled in techniques designed to make you “feel” as if you’re winning — even though you aren’t.
The solution is simple: Tell your salesperson you’d prefer not to meet with the manager. Then walk.
That’s when you can truly discover whether or not you got their absolute lowest price. If you did hit their bottom line, they won’t call you.
Why? Because they’re banking on the odds that someone else will come and buy that same car for a little bit more.
If you didn’t strike rock bottom, what will happen next is that you’ll probably get a phone call in a day or two (or near the end of the month) from a sales rep, looking to see if they can “put together the deal for you” — i.e. give you the price they should have given you all along.
(Or you could avoid all of this hassle by going to a dealership that gives you their best price right upfront. Just sayin’.)
As we mentioned at the beginning of this article, getting a price, and a trade-in value, are just two parts of the equation. How you finance the vehicle, and whether or not you add on an extended service contract, also influence how much you’ll actually pay — especially at a negotiating dealership, where they can pull some pretty sneaky tricks with the math. Don’t worry, we’ve created guides to help you avoid those pitfalls too. Here’s what to look for when it comes to financing a car, and here’s a quick primer on warranties and extended service contracts.
When you do go to close, here’s what you’ll need to bring with you.