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How To Negotiate the Best Price on a New Car

By Edited Feb 20, 2016 1 3

Getting a fair price on a new car can be a stressful process.  And since a car purchase is usually the second largest purchase that you’ll make (buying a home is usually the biggest one), it makes sense to get the best deal.  Good news!  The following 10-step process will take you through a stress-free way to get the best deal possible on the car of your choice.  I’ve used this multiple times with different dealers and it works well.

  1. Select your desired car make and model.
  2. Identify the two closest competing cars to the car you want.
    1. The goal here is to know what else is on the market and have other options that you can use to have more negotiating power.
    2. For this approach to work, these alternate vehicles should be less expensive than the car you want.
    3. Also, these two alternate vehicles must be from two different manufacturers.
  3. Determine the realistic best price in your local market for the car you are looking to buy.  
    1. You can use tools like True Market Value calculator to see the MSRP, Invoice, and actual prices others are paying in your area.
    2. Online forums like Edmunds Town Talk will let you see what types of deals others are getting for the car you want.
    3. Pay attention to the specific trim levels and other vehicle options so you can determine the best available price for the exact car you want.
    4. Saturday newspaper ads will give you another reference point.  Remember that these even though they are promoted as sales, these prices are usually higher than the best possible deal that you can find.  
    5. Identify any manufacturer-level promotions being offered. (interest rate promotions,  rebates, loyalty awards, etc.)  Many manufacturers will rotate through several types of promotions continually during different months of the year (e.g. $0 down $299 a month  lease specials in March, 0% financing in April, $2,500 down $199/month lease deals in May, etc.)  Watch the pattern over several months if you have the luxury of waiting.  
  4. Visit three dealers and perform test drives at each dealer.
    1. Test drive a different trim level of the car you want at each dealer to help narrow your decision down to the exact trim level and options that you desire.
    2. After each test drive, you will probably be asked “What can I do to put you in a car today?”  Tell each dealer that you are just starting your research and have other cars to drive.  Indicate that you never make a purchase before looking at all of your options.  If you continue to get pressured, just thank the dealer for their time and leave.
    3. When asked what other cars you are considering, tell them the other two cars identified in step 2
    4. Give out a Google Voice number to control the flow of sales calls you will receive once you leave the dealer.  Instead of receiving calls at work or home, I prefer to have all my calls from dealers go to my free Google Voice account.  I then receive an email when I have a message.  I can even listen to the message from my computer.
    5. Get the dealer’s email address if possible.
      1. Even if you can’t get the email address of your sales rep, you can always email the dealer’s main “Contact Us” link on their web site (they’ll all have it) and indicate that “I was in a couple of weeks ago and went on a test drive with Mark Stevens.”  This will usually get you in touch with the right person.
  5. Wait two weeks to see what type of follow up you receive from each dealer.
    1. You will first receive calls asking you to come down because there is a sale going on, etc.
    2. Then you may receive calls offering a specific offer (selling price, interest rate, etc.)
  6. Follow up with each dealer by email or phone and ask for their best offer on the specific car you are seeking.
    1. Email is the best contact method because it lets you communicate specific deal terms without having to rely on a vague voice mail or conversation.
    2. Make sure you list the exact options you want.
    3. Tell the dealer you are narrowing down your options and you want to see what their best offer is.
    4. You should be able to get the same (or lower) price identified in step 3.  You will initially receive an offer below MSRP, but above the realistic best price in your market.  At this point, ask each dealer if you can get the car for the realistic best price (or below if you want to press for a lower price.  But realize that the dealers need to make a profit on the deal to have a viable business.)  
  7. For the dealer with the best price, ask for a final breakdown on all of the deal parameters in an email before you come down to sign the paperwork:
    1. Request that the dealer provide you with the following:
      1. Car model, color and options:
      2. VIN:
      3. Mileage:
      4. MSRP:
      5. DISCOUNT:
      8. ANY OTHER FEES:
      9. TAX:
      10. TOTAL COST:
      11. INTEREST RATE: (if financing from the dealer)
      12. MONTHLY PAYMENT: (if financing from the dealer)
      13. MONEY DOWN: (if financing from the dealer)
      14. PAYMENT START DATE: (if financing from the dealer)
    2. If a dealer won’t provide this information in advance of you coming back to the dealership, indicate that you are ready to make a deal if you can get everything agreed upon in advance.  I have done this multiple times and have always been able to get the deal defined before going back to the dealer.  This avoids a lot of the classic back-and-forth that goes on if you try to negotiate at the car lot.
    3. Some dealers will want to fax you the material instead of emailing it.  That is fine.
    4. If you can’t get this level of detail from the first dealer, then move to the next one.  After you disengage with the first dealer, they will come back to you in a few days and be more willing to provide the information you request.
    5. Once you get the agreement on terms that meets your goals, schedule a time to come down to the dealership to take the car for a test drive and then sign the paperwork.
  8. Print out this list and bring it to the signing.  Reference this list if anything is different at time of signing.  Make sure you’re getting the exact car and deal terms that you specified.
  9. This guide assumes that you are financing through the dealer.  You can use the same approach and bring your own financing to the table (cash, bank loan, etc.)  The key here is to agree upon the best price for the vehicle, regardless of how you will pay for it.
  10. Note on used car trade-ins: Do not combine the trade in discussion with the purchase price discussion for your new car.  Treat these as two separate transactions.

Good luck and enjoy your new car!



Apr 20, 2011 6:15pm
Great tips for negotiating the price on a new car. I particularly like tip #10 about not combining the trade-in discussion with the new car's price negotiation, something people often overlook.
Apr 21, 2011 2:52pm
Good information. Thank you!
May 18, 2011 1:25am
Great detailed tips.
I'd like to summaraise with a few of my own.
#1. First Test drive the car you want. Do not talk about price - just say i'm just test driving different cars - not even sure if this is the one i want. or say I will talk to wife.
#2. research edmunds.com forums to see what others are paying in your area and from tips above - note down the lowest price.
#3. call dealership and ask to talk to internet sales mgr and ask for an email quote on same car. Do this for all dealers in your area.
#4. Via email lowball them all about $500 on the lowest price from #2.

Save money and be happy!

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