Step 1. Get the Best New Car Price
First, Before We Begin...
I'm assuming you've already narrowed your choice of vehicle down to one or two very specific models, and are ready to make the purchase. The process I've outlined below works best if you give yourself at least one week to go through all the steps. This is to ensure enough time for thorough price comparisons.
By now, you should have already test-driven a variety of vehicles and know the exact trim, colors and options you want. If you're not at this stage yet, or you're wanting to buy a used vehicle instead, don't worry - you'll still get plenty of useful tips from reading this. The further ahead you know about the process, the more time you'll have to prepare and comparison shop every portion of your deal, new or used.
Most car shoppers have tunnel vision when it comes to getting a great deal. They tend to focus on the price while ignoring other areas such as their financing, trade-in, extended warranties, and car insurance. One of my main objectives is to get you to see that buying a car is way more than just negotiating the price. That's actually the easy part - companies like TrueCar practically gaurantee you'll end up with a great price. It's really the other areas that trip up most car shoppers, but we'll get to those later. Right now, I'm going to teach you how to get the lowest possible price for any new vehicle of your choice.
The Real Secret to Negotiating the Lowest Price
The secret can be summed up in two words: DON'T NEGOTIATE. Sounds counter-intuitive, but it's actually very simple. The golden rule you need to follow is to get prices from at least 7 different dealers. Notice how I didn't say negotiate prices. Most dealers will offer you deeply discounted prices with zero negotiation as long as (1) they know you're getting prices from the competition, and (2) you contact them online or via phone - you should never discuss pricing while you're physically at a dealership.
The more dealers you collect prices from, the better your chances of landing an incredible deal. During my experience as an auto broker, I often received similar prices from the first 3 to 5 dealers I contacted, and it wasn't until the 6th or 7th that I would recieve a bid undercutting the competition by a large margin- sometimes by as much as $1,500. The lesson here is: Don't be discouraged if you get similar pricing from the first few dealers you contact. Most car shoppers will usually stop after contacting only 3 or 4 dealers - that's not going to cut it. Getting price quotes from at least 7 dealers is what I've found to be the magic number.
Note: in order to actually collect 7 different prices, you're going to have to contact way more than 7 dealers. Not every dealer will have your choice of vehicle in stock, and some will just not even respond to you - most likely because they're not price competitive.
Warning: If one of the dealers gives you a price quote that seems too good to be true (we're talking thousands lower than any other dealer), this could be a "demo car" scam. The dealer is trying to sell you a demo car without letting you know (you'll find out only after driving to the dealership and wasting your time). This usually happens with leftover models (last year's models). If you suspect this is happening, ask the dealer for the mileage on the vehicle - if it's more than a few hundred miles, it's likely to be a demo car.
Another common situation is where the dealer is quoting you a price based on rebates you don't qualify for. Some dealers include what's known as "qualified rebates" into the price, such as rebates reserved for Military or College Grads. The dealer knows it's shady to do this, but a lot of people see the low price and get enticed. Make sure to ask if the price includes any qualified rebates.
Why This Negotiation Technique WorksCar dealers don't want you to realize new cars are commodities. A brand new Toyota Camry being sold in New York is essentially the same as a Camry sold in California. If you're in a market where 7 merchants are selling the exact same product, it would be foolish to buy from the first you come across WITHOUT knowing what the others are willing to sell it for. It's the EXACT SAME situation with new vehicles. Why would you get pricing from just one or two dealers when the exact same product is being sold at dozens of other locations at varying prices?
Catching the Right Dealer at the Right Time is Key
Car dealers will sell you a vehicle below cost if you catch them at the right time. It may be because they're trying to meet a sales quota and only need one or two more sales, or perhaps the car has been sitting on their lot too long. If you happen to contact the dealer during one of these times, you're going to land a great deal without much effort, guaranteed! By casting your net far and wide, your chances of finding one of these buying opportunities increases dramatically.
Follow These Exact Steps:
1. Gather Automated Price Bids First
Everyone is looking for a quick and easy way to get a good deal. Unfortunately, it does take work and effort to guarantee the best price, but this first step is really easy and will take you 80% of the way towards getting the lowest price on a new car. There are many services that let you get free price quotes, but most are not worth your time. I've included only my top recommendations below. Most car shoppers will stop after this first step, because the rest of the steps require manual work and can take a few hours to complete. This is fine if you just want a fair deal and not spend a ton of time to get it - and in fact you may still get the lowest price just by getting automated bids. However, if you want the guaranteed lowest price on a new car, you need to complete all of the steps I've outlined.
Top Price Quote Services I Recommend
1. TrueCar is one of the few car price quote services I recommend. You've probably heard of them or seen their commercials. They actually do provide good upfront prices most of the time; so much so that dealers started a backlash against the service, pressuring state legislatures to outlaw it. They were afraid TrueCar was going to take all the profit out of new cars. Anything that gets dealers this upset is a good sign for car shoppers.
To see the TrueCar price (which is free), you'll need to select the vehicle you want, then click on the orange button that says "Locate Dealers". You then fill out your information to see which dealers are offering discounted prices through TrueCar.
2. NADAGuides is powered by Detroit Trading, one of the largest dealer price quote providers. They have been around for over a decade and have a huge network of dealers who compete on price.
3. CarsDirect is also another reputable free service that's been around for decades and has a large network of dealers ready to provide price quotes.
2. Locate All Nearby DealershipsWhile TrueCar is a fantastic service that save you time and money, it's not guaranteed that all dealers in your local area are participating. You want to make sure you have at least 7 price offers from different dealers. If you don't, you'll need to locate and contact additional dealers. Depending on where you live, you may only have one or two within an hour's drive, so you're going to have to increase the distance until you get a list of at least 15 dealers to contact. Yes, some of those dealerships may be hundreds of miles away, but you still want to get prices in order to use them as leverage against local dealers.
You can find each dealer's contact info through the manufacturer's web sites. Look for links that say "Find a Dealer", or "Locate Dealership". They're easy to find. Here are links to all the major manufacturer web sites...
Some manufacturer sites only allow you to get a list of dealers within a small geographic area. That won't be enough, so the alternative method I recommend is to search Google with the following term "_____ dealers near me". Put in the name of the brand, such as Chevrolet dealers near me.
3. Get Price Bids From Remaining Dealers
Up until now, I've given you the low-hanging fruit. It's quite possible the best deal may end up being through TrueCar, but if you want to be positive that you're maximizing savings, you need to do some more work.
Although TrueCar has thousands of participating dealers, not every single one is currently using their service, so you're going to have to contact the remaining ones the old fashioned way.
Earlier, you should have printed a list of all relevant dealers near your location. Now's the time to start checking the TrueCar dealers off that list. See which ones responded, and make note of their price bids. As for the rest, you're going to have to manually contact them until you have a total of at least 7 different prices.
Start with the dealerships closest to you and work your way out. I recommend calling all dealerships within 200 miles. If the list is extremely long, then call only the dealers that have a large inventory of vehicles (see the Cars.com video above).
All you need to do is call and ask for the internet sales manager. These salespeople typically do not work on commission and will usually offer the best deals. If the dealership doesn't have an internet manager, ask for the fleet manager instead.
The goal of each call is to get the internet manager's email and let them know you will be sending them a bid proposal (I provided you with an email template below). The calls should be quick and easy, and don't try to get pricing over the phone, you'll just end up playing a lot of phone tag. Here's how an ideal conversation will go:
You: "Hi, I'd like to speak to the internet sales manager" Receptionist: "Hold please..." Internet Manager: Hello, how can I help you?" You Hi, I'm interested in a (Year/Make/Model). I'm ready to purchase in the next couple of days, so I'm calling around to see who can offer me a good deal. I'd like to send you a bid proposal via email outlining the options I'd like along with some additional questions. Can I get your email address? Internet Manager: Sure. (gives you email address) You: Thanks.
That's all there is to it. Most will give you their email address without any fuss. Every so often, you'll get one that will try to ask you questions or get you to come down to the dealership. Just tell them you're short on time and you will outline everything through email. Make sure you jot down the following for each dealership you contact:
- Dealership Name
- Name of Internet Manager
- Phone Number
- Email Address
It's best if you keep track of everything on a spreadsheet, or use index cards - one for each dealership. Otherwise, it can get confusing pretty quickly with all the different prices, vehicle options, colors, and other details to keep track of .
When calling the majority of dealerships, there's no need to be anxious or nervous. From my experience, most internet managers will not try to use high-pressure sales tactics. For the most part, they're professional and realize you're an informed consumer. However, just so you're prepared, here are some obstacles that might come up:
Problem Solution No Internet Manager Ask for a fleet manager instead. If they don't have one, just ask for a sales manager No Pricing Over Phone/Email Some will try to pressure you to come to the dealership before they give you a price. Tell them you're only taking bids via phone/email. If they can't give you a bid, they won't be able to participate. Vehicle Not Available Ask them what the closest match is in their current inventory. If it's a vehicle you're interested in, send them the email bid proposal, otherwise, just skip that dealer and move on to the next one. Voice mail Leave a voice mail telling them you're interested in buying a car and you would like them to give you a call back. When they call, just go through the same phone process above to get their email. Email Not Working If they're having email problems, give them your phone number and go over the fees and options referenced in the email outline above. Make sure they answer all the questions when giving their bid.
Tip: The best time to make these calls is near the end of the month when dealers are trying to meet sales quotas. Don't wait till the very last minute - you need to give the process a few days to finalize. The best days are Tuesdays, Wednesdays, and Thursdays, when dealerships are not as busy.
Here is the email you should send to each internet manager:
Copy and Paste the following. Don't forget to change the sections in brackets [ ]:
4. Follow Up With Dealers
For the dealerships that you had to manually contact, you should start receiving responses the same day (At least from dealers who have a good follow-up process in place). But like all of us, internet sales managers are human and do make mistakes, or get lazy. Some forget to send you a price. In fact, about half the time you may not receive a bid at all. You should follow up with the ones who don't send a bid. It doesn't mean they won't give you a good deal. A likely reason is they simply forgot, or thought you weren't a serious buyer.
When you don't receive a bid, follow up the next day with the following email:
If you still don't receive a price bid by the end of the day, follow up with a phone call and see if they received your emails. Either way, try to get a bid from them on the phone or try to get them to agree to send you a bid via email as soon as possible.
In addition to not receiving bids from some dealers, you will often receive bids with missing or incomplete information. Sometimes the internet manager will just send an "out the door price" without any other information. Sometimes they will only quote you a price and not the amount over or under invoice. You need to standardize their bids so you can compare fairly. Follow up and let them know you need more clarification on their bid. They will usually respond accordingly - it just takes a bit of prodding sometimes.
5. Give Dealers Chance to Beat Lowest Bid
After you receive at least 7 price bids, including the ones through CarsDirect and TrueCar.com, compare and determine which dealer offered the best deal. First, see who offered the lowest price in relation to the invoice. Then look at the additional fees such as doc fee that you'll be required to pay for that dealer. Add it all up and figure out who offered the lowest price after taking into account all additional fees.
Keep in mind that some dealerships will charge a different amount for doc fees or other fees. You need to take this into account when determining who offered the best price. Let's assume your lowest bid was $500 over invoice but the dealer charges a $100 doc fee. Another dealer also offered $500 over invoice but their dealer doc fee was $50 less. In this case, the first dealer would have to lower their bid to $450 over invoice to match the 2nd offer even though they originally bid the same price over invoice.
After determining the lowest overall price, you need to contact each internet manager and offer them a chance to beat it. Start with the worst bid and work your way down. Each phone call or email will have to be customized to that specific dealer to take into account the different fees you have encountered.
But here's the juicy part, you're going to offer each dealer an incentive to lower their bid! The incentive is your promise to give them a 100% rating on the Customer Satisfaction Survey you'll receive after purchasing. The CSS is a survey sent to each car buyer by the manufacturer. It's their way of keeping tabs on dealerships and determining which dealerships are treating their customers right. Customer Satisfaction Surveys are very important to dealers and can result in large bonuses for each car they sell (as long as the ratings are good).
Another juicy incentive you can offer is the promise to service your car at their dealership after the sale. Car dealers make a large bulk of their profit on parts and services so this is a big incentive. To keep things fair, only promise this if you really do intend to service your car at that dealership. Obviously, no dealer will believe you if you live 100 miles away.
It's best to call each internet manager starting with the highest bid and see if they will beat the lowest price. This way, if one does offer a lower bid, the next call you make will include this lower bid, and so on. (If you really hate calling, email will still be effective but will take a bit longer)
Here's how the conversation should go:
It's pretty simple. You just go down the list until you have called all dealerships. Remember to include the dealers from RydeShopper and TrueCar when you're doing this.
You: "Hi, this is [YOUR NAME], thanks for sending me the bid for the [YEAR/MAKE/MODEL]. You had quoted me [$ Number] under invoice. The best offer I got was [$ Number] under invoice. Now, before I give you an opportunity to beat that bid, I did want to let you know that I'll be giving a 100% score on the Customer Satisfaction Survey. Also, if I buy from you, I will be servicing my car at your dealership. Taking that into account, what's the best price you can offer if I come down and purchase today?" Internet Manager: [Offers lower bid] You: "That's great. Thank you. I still have some more calls to make, but I will call you back with my final decision." [If dealer can't offer a lower bid, thank them and move on]
6. Finalize Deal in Writing and Pick Up Your Car
After calling all dealers to get a final bid, you will now have in front of you the lowest price being offered for the car of your choice. But there's just one more trick: For the dealer who has offered the lowest price that no one else can beat, you will want to call or email them with the following message:
"I'm very close to making the purchase, and I do prefer working with your dealership. But I do have a bid that is $300 lower. If you match it right now, I will come down and buy from you today"
Through my experience as a professional price negotiator, $300 is the magic number to use in this case. You won't get them to agree every time, but some will drop the price another hundered or two. If they don't budge, ask them to give you a year of free oil changes (of course, only if they're conveniently close to where you live). If they don't budge at all, just tell them the other dealer was located further away and it wasn't worth driving that far for the small savings.
If you try to bump them down more than $300, they tend not to believe you. The only way to get a better price than this is to time your purchase when demand for the vehicle goes down. That could be 2 weeks from now, or several months.
So now that you have your lowest price, call or email the dealership and get everything in writing before you actually go to the dealer. Sometimes, you'll get a dealer who places a low bid just to trick you to come to the dealership. When you get there, they'll come up with some story about how the car you wanted is no longer available. They'll try to sell you another car at a higher profit, banking on the fact that since you're already at the dealership, it would be too much hassle to go home.
What you're going to request from the lowest bidder is a signed purchase order detailing everything you agreed to. This should include the vehicle identification number, the MSRP, Invoice Price, all additional fees including tax, title, registration, and doc fee, plus the final OTD (out the door) price. Go to the dealership with a printout of the deal, sign the paperwork, pay and you're on your way home with a new car knowing that you got a great deal. If the dealer is less than 50 miles away, you can request they deliver the vehicle to you. This makes the process even more convenient, and better yet, you won't have to deal with the finance manager.
If for some reason the dealer comes up with an excuse why they can't sell you the car, even with written proof, explain that you're not there to play games. If they are not willing to give you the deal they promised, be willing to walk away, and let them know you will be posting negative reviews about your experience online, and will be filing a complaint with the State Attorney General. If this doesn't jolt them into completing the deal, simply walk away, and choose the next lower bidder.
That's it. You now have the knowledge to get THE LOWEST price on any new car. Good luck
Frequently Asked Questions:
Can this method be used for leasing as well?
Absolutely. It's very important to negotiate the price (capitalized cost) of the car when leasing - every $1,000 you negotiate down, your monthly lease payment will be $28 cheaper on a 36 month lease.
Just remember a simple rule: Always seperate out the negotiation of the car with any other factors such as leasing, insurance, financing, warranties, and trade-in. When you do this, the dealer doesn't have any room to move around numbers and confuse you.
Why do I want to get information about prices above and below invoice price? Wouldn't it be simpler just to request an "out the door" price?
Requesting a price based on invoice allows you to compare apples to apples. There is no guarantee that every dealer will have the EXACT same car you're looking for (with all the same options, colors, etc). Chances are, the invoice prices will be a little different. If you were to just get the "out the door" price, your lowest price could simply be the car with the least options (although the deal wouldn't be the best).
Can I request prices on multiple trim levels and/or model years at the same time?
Absolutely! A good dealer will have no problem providing you with pricing on multiple trim levels or models.
What if all the local dealers are owned by the same person/company?
In some areas, there are dealership groups that own multiple franchises. This can make it more difficult to get competitive pricing but you have to realize they are still in competition with each other. Each dealership wants to be the top performing franchise within their ownership group.
That being said, if you feel this is hampering your negotiations, we recommend you expand your target area to include dealers up to 250 miles away. See what prices you can get - if they can't beat the local dealers, than you know you're getting the best deal regardless. If they do beat the local dealers, use that as ammunition or be willing to drive the distance to get the best deal.