How to Get the Best Price on a New Car
Last updated October 2023
First, Decide What to Buy
There’s a lot to think about. What’s your budget? SUV, truck, sedan, van, or hatchback? EV, hybrid, plug-in hybrid, or gas? Heated seats? All-wheel drive? Towing capacity? Compact or big enough for third-row seating?
Decide on a make, model, and style of car (for example, a Toyota Camry SE), and research options you do and don’t want. Several websites, including Kelley Blue Book, help with this by letting you “build” a vehicle—you select packages of options or individual ones and see how each added option affects the list price. Use these sites to see which options you get or can add with various trim lines—and at what costs. For example, you might find you can’t add heated seats unless you also select a “comfort package” or “XE” style.
Then, Force Dealers to Compete for Your Business
The only way to ensure that you get the lowest price for a new car is to take control of the transaction and collect bids from multiple dealerships. This forces dealers to compete for your business and eliminates the hassle of having to visit dealerships for lengthy negotiations.
Collecting prices this way is not complicated. We find most dealerships are willing to quote prices via phone or email so long as they know that bidding is the only way to make a sale.
The exceptions are new EV manufacturers such as Tesla, Fisker, Lucid, Polestar, and Rivian, which have menu pricing for their vehicles and sell them via their websites or retail stores. Why don’t other manufacturers offer similar retail buying experiences? Laws in all 50 states and the District of Columbia prevent older car manufacturers (Ford, GM, Toyota, Honda, etc.) from directly selling cars to customers. Unless state lawmakers enact new laws, “legacy” manufacturers must continue to sell through local dealerships and can’t insist their franchisees charge set prices.
You may not find much price flexibility for some EVs and other in-demand models with long waitlists. After all, dealerships won’t be inclined to bid on a car at a discount if they have other customers waiting for delivery and willing to pay a huge markup for it.
Here’s how to get bids:
1. Contact fleet managers or sales managers.
Once you have decided on a make, model, and style of vehicle, call dealers located near you and ask to speak with the “fleet manager” or request their email address. If you can’t reach a fleet manager, insist on talking to the “sales manager.” Your goal is to reach someone with the authority to offer the dealership’s best possible price without checking with a boss (or pretending to!).
Many dealers will respect your businesslike approach and respond in kind. Others may not be so helpful. You may get responses like “I’ll beat any price you get. Call other dealers and then call me back,” or “Tell me what you think is a fair price. What do you want to pay?”
Make sure these dealers understand that if they don’t bid, they have no chance of getting your business. Be businesslike and persistent, but if a dealer refuses to provide a serious bid, move on.
2. Get several bids for the car.
We recommend getting bids from at least five dealers.
Explain to the fleet or sales managers that in the next few weeks you will buy a car (or place an order for it), that you are contacting multiple dealers and asking them for bids, and that you will buy from the dealer offering the lowest total price, including all required fees. Tell each that it has only one opportunity to bid.
Ask each dealer to provide its price as an amount above or below MSRP. By asking for pricing relative to MSRP, you can easily compare the bids you collect: If one dealer bids $500 above MSRP and a second bids $500 below MSRP, you’ll know the second bid is $1,000 lower than the first. Since all dealers are pricing options at MSRP, you don’t have to decide on all the bells and whistles (Sunroof! Heated seats!) until later.
3. Get costs for any freight and advertising fees.
To avoid surprises later on, find out if each dealer’s quote includes freight and advertising association fees. Freight charges are usually listed on vehicles’ window stickers. Not all carmakers and dealers charge ad fees; when they do, they’re usually baked into the overall asking price.
4. Ask about other required fees.
Find out about document fees, required add-ons, and any other charges. Most dealers—and websites promising low prices—neglect to mention extras until the end of the transaction. Some dealers add pinstriping and wheel locks to every car they sell, and most dealers impose mandatory document fees. These overpriced extras add up fast.
5. Ask about dealer-installed options.
On most cars, popular options are installed at the factory. Since you’ll be asking dealerships for prices reflected as markups or markdowns from MSRP, any factory-installed options will in effect be priced at MSRP.
But for some makes—particularly Honda, Acura, and Volvo—some popular options are installed after cars arrive at dealerships. And some manufacturers expect dealers to add rear spoilers or fog lights. If you are interested in any dealer-installed options, ask each dealer you contact to price them.
6. Ask about rebates and other incentives.
Check whether a manufacturer-to-customer rebate is available for your car. If there is one, make sure the rebate is not reflected in the dealer’s bid. You can get current rebate information from many websites, including KBB.com.
7. Check charges to locate the car you want.
If the dealer that offers the best price doesn’t have a car with the options and color you want in stock, it should be willing to locate it for you. While there usually is no charge to acquire cars from another nearby dealer, it doesn’t hurt to ask. If you want to factory-order your car, find out if there is an extra charge.
8. If you want to lease, nail down several additional details.
Many additional variables determine pricing for leases. Although getting bids for leases is far more complicated than collecting pricing for purchases, it can be done. Click here for more info.
9. Get confirmation.
Once you have your bids, ask the lowest bidder to send you an email confirming all pricing details, including markup or markdown from MSRP, its price commitments for options you want, how long it will stick to that pricing, and how much it will charge for a factory order or to acquire the vehicle from another dealer if it doesn’t have what you want.
10. Treat your trade-in as a separate transaction.
Don’t discuss any trade-in until you have a firm agreement on the new car price. Mentioning it while you are still working out your purchase puts too many balls in the air, and car dealers are better jugglers than you.
You can sell your car via trade-in to a new car dealer or to a used-car lot. If you do, you’ll get wholesale pricing.
If you sell your car to another private party, you’ll get more for it (typically $1,000 to $2,500 more for a late-model vehicle).
Before attempting to sell your car, make any necessary minor inexpensive repairs and clean it up. A spiffed-up car is more appealing to buyers and suggests that you have taken care of it.
To sell your car via trade-in or wholesale, contact several independent used-car dealers and dealership used-car departments. Explain you are shopping the car around for the best offer.
If you want to trade in your old car, after collecting pricing from other buyers and getting bids for your new car from dealers, ask the dealer you plan to buy from what it will give you for the used car. Don’t reveal your other offers; the dealer may offer you more than anyone else. If the dealer offers less than others, ask them to price match.
If you plan to sell on your own to another driver, check what similar cars are selling for and then advertise it at a price in line with those.
11. Also deal separately with financing.
Get preapproved for a loan. This might simplify the buying process by taking financing considerations off the bargaining table. Check the annual percentage rate (APR) currently offered by banks and local credit unions. Several institutions offer auto loans nationally. Sites like Bankrate.com can help you identify lenders with low rates.
The dealer might still offer you a better rate than what you secured on your own, but it’s better to be armed with your own financing option to ensure you get a competitive rate. Small differences in interest rates mean big cost differences. Total payments for a 48-month $40,000 loan, for example, are nearly $2,700 higher with a nine percent interest rate than a six percent rate.
Avoid loans that last longer than five years. Longer-term loans mean you’ll pay thousands more for your vehicle.
12. Just say “no” to vehicle service contracts and other “protection” plans.
As we often advise, these plans are terrible deals for most consumers. They yield big profits to dealers and other companies that sell them, but the average payout for claims—if they honor them at all—is small. Many new cars are very reliable and require little service. Also, new cars often carry lengthy manufacturer warranties covering many common service problems and leaving little for extended service contracts to cover.
If you are considering buying an extended service contract, shop other sources before discussing it with your dealer. Determine exactly what the contract covers. Almost all exclude maintenance and wear items, ranging from brake parts to air filters; many contracts exclude—or fail to include—electrical devices like power windows and entertainment systems and even air conditioners. Some cover parts but not all the labor necessary for diagnosis and repair. And most contracts require a “deductible” for each repair before the service contract company pays anything.
Find out where you can get repairs under the service contract: At only the selling dealer? At any authorized dealer for your make of car? At any new-car dealer? Or at any new-car dealer or independent repair shop? Consumers tend to be more satisfied with repairs performed by independent shops.
Still want an extended warranty or service contract? You don’t have to buy it from the dealer where you buy your car. For example, you can buy a Toyota from one Toyota dealer, buy a Toyota-backed service contract from a different Toyota dealer, and have still another Toyota dealer fix your car. We have found cases where one dealer was selling a contract for under $2,000, while another was selling the same contract for more than $4,000.
You don’t even have to buy your service contract when you buy your car. Many contracts are available from dealers for a year or more after purchase. So take your time.
Want Help Getting a Good Deal? Tread Carefully—and Consider Costco
Scads of websites claim to provide buyers with easy-to-obtain offers from multiple dealerships. But most don’t deliver good deals; instead, they just sell your info to dealerships and other third parties looking for sales leads—who then put car buyers through the usual hard-sell-and-negotiations wringer.
For example, TrueCar promises low, upfront vehicle pricing, and partners with companies (Allstate, American Express, GEICO) and even consumer groups (AARP, Consumer Reports). TrueCar makes money by collecting a fee for every sale it arranges for dealerships that participate in its network. But TrueCar’s dealership clients aren’t paying it for the right to serve up consumers the best deals. For many years we compared pricing available from TrueCar with the lowest prices we could obtain by collecting competing bids from dealerships; on average, TrueCar’s best offers were more than $1,500 more expensive than what we got on our own. In many cases, we found our strategy of collecting competitive bids from multiple dealerships saved buyers more than $3,000, compared to TrueCar.
TrueCar and most other websites like it also offer horrid buying experiences. When our researchers requested pricing from TrueCar, they were immediately inundated with hundreds of calls, texts, and emails from hungry car salespeople. After six months, they were still receiving nearly daily emails and texts.
The only way to obtain the best possible price on a new vehicle is by collecting competitive bids. But to save time, avoid hassles, and pay a lower-than-average price, we think Costco’s auto-buying program is a well-conceived, well-managed effort.
Costco offers its car-pricing service as a free member benefit. It offers no-haggle pricing, and it provided consistently good deals when we tested it over several years.
To ensure its members pay well-below-market rates, Costco says it conducts price surveys of dealerships, analyzes transaction and inventory data, and shops for the best deals using secret shoppers. For each vehicle make and model, it identifies an exclusive dealership in areas near its stores that’s willing to sell vehicles for (or for less than) preset rates to Costco members.
Costco also works out members-only discounts with manufacturers. For example, at the time of this writing, Audi was offering Costco members incentives between $1,000 and $5,000, depending on model, and Volvo was providing savings of $1,250 or $1,500. These incentives are effectively point-of-sale manufacturer rebates in addition to any discounts dealerships offer Costco members.
Costco’s program doesn’t offer special pricing on every make and model in every region. If Costco can’t identify a dealership willing to sell a vehicle at or below Costco’s target price, then it removes the car from its program until it can find a seller willing to offer a good deal. And even if a vehicle model is in high demand, Costco doesn’t permit its dealers to sell it for more than MSRP. At the time of this writing, Costco told us it was able to secure special pricing in most regions for about 80 percent of new models.
Costco’s program is popular—about 100,000 to 120,000 pricing requests each month, with about 40 percent resulting in sales. That means there’s a big incentive for dealers to participate—and to behave. Costco also monitors its program by surveying customers about their experiences and sending its shoppers to dealers to test whether they are abiding by their no-haggle agreements. And it says it has about 20 customer service reps who customers can call with questions or to report problems.
Unfortunately, when you submit a make and model of car on Costco’s website, or provide it in-store, you won’t receive detailed pricing immediately—Costco only provides contact information for the dealer that has agreed to offer the special pricing. You must get in touch with that dealer, which will supply its price commitments. But, unlike other companies that promise to provide a hassle-free experience, Costco actually delivers and if you encounter a problem, you can call its dedicated auto-buying team (800-755-2519) with questions or to verify that the dealer supplied you with accurate pricing.