Many people feel intimidated when it comes to buying a new car. We’ve all at least seen the stereotypical pushy cars salesmen and how they can often take advantage of unsuspecting buyers. A car isn’t a small investment. In fact, for most people, it’ll be the 2nd or 3rd priciest thing they’ll ever spend on after a house, student loans, and perhaps a wedding.
In order to help save you some money, here are some tips on how to get the best price on a new car. This works best if you already have decent credit and aren’t in a rush to buy a car.
In the days before the internet, shopping around for the best price was a big time investment. You’d either have to visit each dealership one at a time or call them and hope they’ll actually give you a price over the phone. From there, you had to negotiate the price in person and for many, this can be a scary process.
Think about it. The sales person knows the ins and outs of the car, its price, payment options, and will have an answer to just about any objection you may have for not buying the car that day. So unless you did your research and knew what to do to get the best deal, you’d likely end up paying more than you could have.
Fortunately, these days, shopping around is much, much easier thanks to the internet. At minimum, you’ll want to contact 5 dealerships to see who can offer you the lowest price. If you’re comfortable with calling them, then you could call them. However, you can also just email them as well. In fact, this might be a better approach since the price they give you will be in your email which you could print out as proof rather than taking someone’s word over the phone.
Once you have done your research on the exact car you want, it’s time to contact dealerships.
Getting the Best Deal on A New Car
So what do you ask when you contact the different dealerships? Instead of asking how much they’re selling the car you want costs, ask them what the lowest out of the door price they can give you.
The “out the door price” is the final price with everything included such as taxes and fees. The reason you want to ask this is so they don’t add on any unexpected costs when it’s time to sign the paperwork.
A tactic a lot of car salesmen will use is asking you how much you would be comfortable paying a month. What they’re trying to do is work the numbers based on your auto loan so that the monthly payment will be within your comfortable range. By doing this, they can play with the numbers. They could increase the price while decreasing the interest or even extending the loan so you end up paying less each month but over a longer span of time resulting in a higher price. This is the reason for asking for the out the door (OTD) price.
Email them saying something like:
I’m interested in the “Color/Year/Make/Model” and would like to know what the lowest out the door price you would be able to offer me. I could drop by your dealership this week if the price is low enough. Thanks.
Some will respond with the OTD price. Others may respond by asking you what your budget is or if you’ve gotten any other offers. Some might even say they can’t give you that price until you come into the dealership (that’s a lie). You could respond however you want but the goal is to get the OTD price. Don’t waste your time with dealerships who just try to get you to come in so they could use their sales tactics on you. Also, sometimes you’re just talking to the wrong person. You could ask them to direct you to someone who has the ability to give you an OTD price.
Let Them Fight For Your Business
Once you get an answer from the different dealerships, it’s time to get them to compete with each other for your business. Take whatever the lowest OTD price you received and ask the other dealerships if they could beat it. Some will say no while others might come in with an even lower price. If one of the dealerships can beat it, email that price to the dealership who gave the first lowest price to see if they can beat your new lowest price.
You would then go back and forth until one of them refuses to beat the lowest price. From there, you could either decide to go with the winning dealership or use that price and find another 5 or so dealerships to see if any of them would be willing to beat that price.
When searching for dealerships to contact, take a look at their ratings online just to make sure they aren’t terrible. If you can’t find that many dealerships with the car you want, you may have to expand your search further away. Sometimes, it would be a good idea to drive 1 or 2 hours to buy a car if you would save enough money to make it worthwhile.
Reconsider Buying The Newest Model
As you probably already know, the newest model is always more expensive than an older model. If you want to save money, buy an older model, 2-3 years out. Now if the newest model has the look and features you really want and is much better than the older models, then go for it.
To save even more money, consider buying a used car. It’s a bit harder to find and get dealerships to compete with each other with a used car simply because all the cars will have different mileage and conditions. You will still want to shop around but the dealers may be less responsive.
If you’re not in a rush to buy, keep track of the prices. With used cars, dealerships tend to drop the price every 2 weeks or so. The longer the car sits on their lot unsold, the more money they’re losing. Of course, if you wait too long, some other buyer might get it.
When Is The Best Time to Buy A New Car?
Typically, the best time to buy a new car is at the end of the month, toward the end of the day. Dealerships and salesmen need to hit their monthly quotas. They will often sell a car at a lost because they want to hit those quota numbers in order to get the bonus money from the manufacturer. Toward the end of the month is usually when they’re a bit more flexible because of the pressure of having to close sales.
If you come toward the end of the day, they’ll be more rushed to give you a deal so they can make a sale because they know once a customer walks out the door, the chances of making the sale greatly decreases even if the customer says they’ll come back the next day.
The timing is usually good if you go negotiate the price in person but what if you already found the lowest price online by emailing the different dealerships and getting them to compete for your business? You could either choose to pay that price or you could play the waiting game.
You could tell the dealership with the lowest offer that you’re still waiting for 1 or 2 other dealerships to email back to see if they could beat that price and that you’ll contact them by (choose a day that goes into the next month or even the last day of the current month). Sometimes, they’ll lower it a little more if you come in today and buy the car if they’re desperate to sell the car before the month ends.
Instead of emailing them, you could also wait toward the end of the day and call them, asking them to make sure they have the car in stock. Once they confirm they have it in stock and ask you when you’ll be coming in, you could tell them you’re still waiting on 1 more dealership to contact you and that you’ll let them know by Friday (or whichever day is toward the beginning of next month or the last day of the current month).
So to recap:
- Decide on the car you want to buy.
- Find and contact at least 5 different dealerships.
- Ask for their lowest out the door price.
- Email lowest OTC price to the other dealerships to see if they are willing to beat it.
- Buy toward the end of the month, a few hours before closing time.
Once you choose the dealership, go in for a test drive to make sure the car is okay. Since you and the dealership agreed on the out the door price, the financing should be straight forward. Usually, on new cars, unless your credit is bad, you could get 0% financing. If not, just make sure you know how much you’ll be paying over the life of the loan. If the interest they’re offering is too high, you might have to shop around for a better loan.
These tips on getting the best price on a new car works best if you have good credit and aren’t in a rush to buy a car. This process can take a few days, a few weeks, or even a few months depending on how much you’re willing to pay for the new car.
With the internet, buying a car has become a lot more convenient and buyers now have a lot more negotiating power compared to before.
If you’re Costco member, they have a car buying program that you could take advantage of. They have deals with various dealerships to give Costco members a “special” price. They will tell you to only talk to one of the specific sales people on their list since those people will have a sheet with the special price on them. Sometimes, you’ll have to go to the dealership to see what the price is. Other times, the sales person will tell you over email or the phone.
It could be a good starting point in terms of price. Find out what the Costco member price is the particular car and then email a bunch of dealerships to see if anyone can beat that price. Now just because it’s a special price, it doesn’t mean you can’t negotiate that price. Some sales people will say it’s the lowest price they could offer while others will actually lower it even more if they’re desperate enough.
You can find more about their auto buying program here: https://www.costcoauto.com