How to Get the Best Price on a New Car
Last updated September 2023
First, Decide What to Buy
There’s much to consider. What’s your budget? SUV, truck, sedan, van, or hatchback? EV, hybrid, gas, or diesel? Heated seats? All-wheel drive? Towing capacity? Compact or big enough for third-row seating?
Dozens of websites provide advice and recommendations. Among the best are Consumer Reports and MotorTrend, which conduct the most rigorous testing and analyses. But you should also take your own test drives.
Decide on a make, model, and style of car (for example, a Toyota Camry SE), and try to get an idea of options you do and don’t want. Several websites, including KBB.com, can help with this by letting you “build” a vehicle—you select packages of options or individual ones and see how the list price is affected by each added option. These sites are helpful in that you can see which options you get or can add with various trim lines—and their cost consequences. 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 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, rather than forcing customers into lengthy negotiations, so long as they know that bidding is the only way they can make the sale.
The exception are new EV manufacturers such as Tesla, Fisker, Lucid, Polestar, and Rivian. These companies have menu pricing for their vehicles and sell them via their websites or retail stores, rather than working with local franchised dealerships. 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; their customers must continue to buy from dealerships unless state lawmakers enact new laws.
It’s also possible you’ll find little price flexibility for some EVs and other highly-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. But the only way to find out is to try to collect bids.
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 for their email address, if they have one. If you can’t reach a fleet manager, insist on speaking with a “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 to the next one.
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 to bid on the car, and that you will buy from the dealer that offers the lowest total price for it, including all required fees. Tell each that it has only one opportunity to bid for your business.
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. And with this approach, 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.
Find out if each dealer’s quote includes freight and advertising association fees. Freight charges always appear on invoices. Not all carmakers and dealers charge ad fees, and if there is an ad fee it might be baked into the overall asking price. Asking in advance about these fees might mean avoiding a surprise later on.
4. Ask about other required fees.
Find out about document fees, required add-ons, and any other charges. Most dealers—and websites that promise 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 a fee to do that.
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 on leasing.
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 and 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 price of the new car. Mentioning it while you are still working out your purchase could confuse matters. There will be 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 not only looks and smells more appealing; it also 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 to get 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 the dealer to match them.
If you plan to sell on your own to another driver, check what similar cars are selling for and then advertise your car at a price roughly 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 for more 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 ACs. 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 done: 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. You can buy a Toyota, for example, 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 contracts for under $2,000, while another was selling the same contract for more than $4,000.
Also, you don’t have to buy your service contract at the same time you buy your car. Many contracts are available from dealers for a year or more after purchase. So take your time making a decision.
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 with 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 could get 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.
As we advise in this article, we find the only way to obtain the best possible price on a new vehicle is by collecting competitive bids. But if you want 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) pre-set rates to Costco members.
Costco also works out member-only discounts with manufacturers. For example, at the time of this writing, Audi was offering 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 agree to offer to 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 doesn’t provide it as an option until it can find a seller willing to do so. And even if a vehicle model is in high demand, Costco doesn’t permit its dealers to sell them for more than MSRP. At the time of this writing, Costco was able to secure special pricing for about 80 percent of new models.
Because Costco’s program is popular—it says it receives about 100,000 to 120,000 pricing requests each month, and about 40 percent of them result in a sale—there’s much 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 immediate—Costco provides only contact information for the dealer that has agreed to offer the special pricing. It’s then up to you to get in touch with that dealer’s sales staff, who will email or print out (if you visit the dealership) Costco’s certificate, which lists prices. But, unlike other companies that promise to provide a hassle-free experience, Costco actually delivers, and if you encounter a problem you can call Costco’s dedicated auto-buying team (800-755-2519) with questions or to verify that the dealer supplied you with accurate pricing.