Due to the countless number of resources available, the pricing component of a new car purchase has become the easiest to research but it is truly one of the hardest to fully understand. Dealers are typically willing to advertise a very low price on a new car since they have the ability to increase their profits using your “Trade-In”, financing and/or through the sale of various “F&I Products”.
Being an informed consumer is your greatest weapon. You must understand dealership profit centers and continue to negotiate each portion of your deal independently to maximize your savings.
The simplest way to get a fair no-haggle price on a new car is to utilize a great program like TrueCar for a predetermined price quote. Costco, Credit Unions, AAA and even your employer may also offer similar pricing services free of charge to their members. These services will not only save you money but they will make your new car buying experience less stressful and much quicker. Most of these programs however require you to actually visit a participating dealership before the discounted price is revealed.
If you enjoy haggling and want to negotiate your own deal, establish the Average Paid amount from TrueCar as your maximum price. It includes the most common available “Rebates” and that price is usually less than the “Invoice Price”. Your starting offer should always be several hundred dollars lower than this amount (below the TrueCar Great Price) to allow room for negotiations.
Since each car can be equipped with many features and options, make sure that you are comparing the exact model that you desire. Also, remember that many of these websites are lead generating sites for dealers, so utilize them carefully and do not provide them with your email address or phone number until you are in the final stages of the purchasing process.
- (Expert Tip) Do not get influenced by abnormally low online car buying service pricing. Some dealers quote low prices on these sites due to the inclusion of high margin dealer-installed add-on products on all their cars. A $30,000 car may be quoted for sale at $28,000 by one such dealership. You’ll then go in and find out that they have installed $2,000 in “OFIP” items (nitrogen in tires, paint protection) requiring you to pay the same $30,000, if not more, for the vehicle. Since these products only cost the dealership a few hundred dollars, they essentially create an illusion in pricing to draw customers in.
- (Expert Tip) Be aware of each “Rebate” and “Rate Incentive” that may be available to you by visiting Edmunds and Cars.com. A manufacturer may also offer you an additional “Rebate” for first-time buyers, college grads, military personnel and many others. Alpha CBA’s “Expert Buyer Report” (available in Level 2 and Level 3 services) will include a summary of all such incentives as published by AISRebates. Qualifying amounts should be deducted from the best price researched online.
- Don’t be afraid to visit or request online quotes from many dealers for the best price. Many dealerships have Internet Sales Departments specifically for customers researching for a vehicle online.