how to buy a new car, buy new car, new car buying tips, dealer cost, dealer invoice
MENU . . . Click Here For Full Website

How To Buy A New Car

NEW! Be sure to read How I Bought A Popular New SUV for $3,611 Below Dealer Invoice.

If you're just looking for free discounted price quotes on new cars and trucks, you can find them below under New Car Price Quotes. But getting dealer quotes without first reading Negotiating The Best Deal could be a big mistake because you need to learn the negotiating strategy that will help you get the best possible price. And the best possible price is usually lower than all the dealers' price quotes, sometimes a lot lower. So keep reading, or you might miss out on a really big discount!

This page should be titled, How To Buy A New Car Below Invoice Price, because that is the goal of the smart car shopper. If you have never done this before, you might not believe this is really possible, but it is. Under normal conditions, smart car shoppers buy new cars and trucks below the new car invoice price all the time, in every state. The only time that this is not possible new car dealer, new car sales is when the shopper lives in an area with no com- peting dealers, or the shopper is trying to buy a brand new model that just came out and there is a huge demand with limited supply. The limited supply situation is almost always temporary, which means that prices for that model will usually drop within 3-6 months when production increases, and the "no competing dealers" problem can be solved by traveling to the nearest big city to pick up your new car. So keep reading, as we reveal the secret to buying a new car below invoice price. Just be sure to read and follow all of these steps in the order they are listed. Skip one section and it could cost you $1000 or more!

NOTE: Be sure to see our Car Buying FAQ page for answers to common questions that people have about buying and leasing.

Should You Finance Your New Car? If you are able to pay cash for that new car or truck, by all means do it. Your family budget will breathe a sigh of relief and you'll be able to start saving towards your next new car, which you will also be able to buy without a loan. Don't listen to car dealers or salespeople claiming that you're better off financing the car and investing the money -- they're just saying that because they make lots of money off the financing. No one can guarantee an investment yield higher than 3% or 4%, and the interest rate you will pay on a car loan will certainly be higher than that, so pay cash if you can.

Your Credit Score. For the rest of the people who will need financing, be sure to get a copy of your credit report and credit score at least 60 days before you plan on buying. Why? Because you might need time to correct errors in your credit file that could lower your credit score. Errors are very common, and the best loan rates go to the people with the highest credit scores. Warning: Do not start negotiating for a new car without pulling your credit first, because unscrupulous dealers will claim that your credit score isn't good enough for a decent interest rate on a loan. You can get your credit score for free at CreditKarma and you can get your complete credit report (for free) at AnnualCreditReport.

Which Car Should You Buy? This is the "shop around, research and test drive" stage where you figure out which car to buy, whether you can afford the car you want, and what the new car will cost. (You can use this online car loan calculator to calculate monthly payments. Use the invoice price plus sales tax for the purchase price, then subtract your down payment to get the amount financed. Your down payment should be at least 20% and the length of the loan should be 48 months or less. If you buying a new car can't do that, you should find a cheaper car or wait until you have saved more money.) Do you need a car, truck or SUV? Sedan, coupe or minivan? Consider how much time you spend in your car, how many miles you drive per month, and how many people you might need to carry at one time. Research the fuel economy, the costs of maintenance and repairs (see Consumer Reports), plus the costs of registration and licensing. Finally, decide what to do with your old car: keep it, sell it yourself, or trade it in (look up trade-in values using Kelley Blue Book). If you're thinking about trading it in, remember that dealers will be offering you the wholesale value (or less), while you may be able to sell it yourself for a lot more. Either way, be sure to detail it first, change the oil, replace that bald tire, etc. so your car makes a good first impression on the dealer or the retail buyer.

Should You Buy or Lease? Leasing is simply a long-term rental agreement with no ownership or equity at the end of the lease. Leasing usually costs a lot more than buying long term, and many people get stuck with a bill at the end for excess mileage and/or wear and tear. Warning: If you're thinking about leasing, be sure to read our Auto Leasing Secrets page first. Lots of car shoppers have been fleeced by lease deals that sounded good, but were really bad deals. In fact, auto leasing is the easiest way for unscrupulous dealers to get away with thousands of dollars of overcharges in one transaction. Be smart, learn their dirty tricks, don't be a victim.

Insurance. The cost of insurance for some new models can be a lot more expensive than other models, so be sure to call your insurance agent for rate quotes on the models that make it to the semi-finalist stage. Don't let your new car experience be ruined by a really high insurance bill after you've already bought the car. You can shop around for the best insurance rates online by using Esurance. One application will usually get you quotes from multiple insurance companies. You could receive quotes from as many as four different companies, depending on which state you live in.

Auto Loans. Be sure to shop around for auto loans before you start getting new car quotes and negotiating with dealers. Too many car shoppers fail to do this, trusting dealers to give them a fair deal. This is a huge mistake! Many dealers will take advantage of these people by telling them their credit is bad so they have to pay 10%, 12% or even 18% on a car loan when they were really qualified for loans at 8% or less. (This is why you need to pull your credit report and shop around for car loans first, or you won't know the dealer is trying to overcharge you.)
   We've found several  online lenders that can finance new cars, refinance existing loans to lower your  interest rate, make loans on used cars and private party car sales, and provide financing for a lease buyout. Apply online during normal business hours and get a decision within 1-2 hours. Car shoppers with all types of credit (good or bad) can get quotes from CarsDirectAutoLoans and myAutoloan Those sites  have free, no-obligation quotes and online applications, so apply at both to make sure you're getting the best deal.

Learn Common Dealer Tricks. Before negotiating with dealers, take some time to learn the most common dirty tricks that are used to overcharge people on new cars. If you don't learn their tricks, your negotiated discount may be completely canceled out by phony charges, secret price hikes, inflated loan rates, stolen rebates and/or trade-ins. Worse yet, you could be "flipped" from a good purchase into a really bad lease. See our Car Buying Secrets and Auto Leasing Secrets pages for details.

Dealer Cost Information. Once you've narrowed your new car search down to one or two specific models, it's time to get the dealer invoice prices AND the prices that other people are paying for the same model. You can find rebates and incentives at this Rebates and Incentives page. You can find Dealer Invoice Prices at this Edmunds Pricing link. This will also give you the Edmunds True Market Value™ price, which is the average price that is paid in your area for that vehicle. You do not have to enter any personal information here to get dealer invoice prices. Canadian motorists can get information on dealer invoice prices, dealer incentives and rebates at
   Remember that the real dealer cost is usually a lot lower than dealer invoice (at least $1,000 to $2,000 lower), and your goal should be to pay less than the dealer invoice price. How much less? That depends on the car, where you live, how desperate the dealer is to sell that car, how well you have done your homework, and how good you are at negotiating.
   Pay attention to the prices that other shoppers are paying for the same model, as they can reveal secret dealer incentives that lower the dealer's real cost. For example, if you didn't know that other people were buying the car for $1,000 below invoice, you might end up buying at the invoice price or higher, mistakenly thinking that you were buying at a "rock-bottom price."
   The Edmunds True Market Value™ price represents the average price that other people have paid, which means that the smart shoppers paid less than that (a lot less). So your initial offer should be far below the average price, and far below the dealer invoice price. See "Negotiating The Best Deal" below for more details.

New Car Price Quotes. After you've completed all of the previous steps and you are prepared to buy your new car or truck in a week or two, start collecting free new car price quotes from as many dealers as possible. The easiest way to do this is to get free (no obligation) quotes from all of the following car buying services: Edmunds,, and CarsDirect. By completing one short form at each site, you will end up getting multiple written quotes that you can use as a starting point for negotiating lower prices at several dealers. (This is covered in the next section, Negotiating The Best Deal.) Get quotes from all three sites to make sure that you're not missing out on a better deal!

Negotiating The Best Deal. If negotiating is not your strong suit, don't worry. Doing your homework and following instructions will enable most people to act like expert negotiators. For smart car shoppers, it's best to do all negotiating by email. Don't try to negotiate in person, because dealers and their salespeople have extensive training in tricking people into buying now (making it an impulse purchase, not a level-headed, intelligent transaction) and paying too much. Some dealers will refuse to cooperate because they want to control the process and get more of your money. Just cross them off your list and get more quotes from other dealers.
   Here is your negotiating strategy: If you completed the previous section, you should have a pile of email price quotes from multiple dealers. If you only got two or three quotes, that usually means that the zipcode you entered on their form was for a small town that does not have competing dealers, so go back to those sites and submit your info again using a zipcode for a nearby city with a bigger population. You want quotes from at least 4-5 different dealers (6-8 is even better). Set aside the lowest quote for now, and email all of the other dealers. Be friendly and polite.
   Here's your message (change the wording if you want, just make sure the point is the same): "Dear [name]. Thank you for providing a quote on the [year, make, model]. I also received quotes from other dealers and one [or more] of them offered to sell the same car at a lower price. I would rather buy from your dealership because [it is closer to where I live, I would rather have your dealership perform the maintenance and repairs, or some other reason that sounds good], but price is very important to me. The lowest quote was [actual price] from [name of dealer] and your quote was $xxxx higher. I'm sure that you could lower your price and still make a decent profit, so please sharpen your pencil and send me a competitive quote. I have my financing pre-approved at [lender name] and no trade-in [if applicable], so this will be an easy transaction for you. Of course, if you can provide better financing, I would consider using that. I look forward to your response. Sincerely, [your name]"
   Mentioning that you would rather have them do all the servicing on your new car is usually effective because dealers need the business, but this probably won't work if the dealer is several hundred miles away. The dealer knows that you won't drive that far to get your car serviced.
   After you've gone through all the dealers with this approach, you probably won't be getting the kind of prices that smart shoppers are paying - below dealer invoice, without any rebates. (See the Customer Rebate Warning below.) Don't be surprised if their prices are still too high, since no dealer wants to sell below invoice unless he absolutely has to. But you can get them to do just that, using the following secret strategy.
   IMPORTANT NOTE: Be sure to follow this entire negotiating strategy, including the initial quotes from multiple dealers and using the following "Costco price" trick. Failure to do this will prevent you from getting a rock-bottom price.
   After getting the second round of price quotes from all of the dealers, email all of them again. Say that you expected their price quotes to be a lot lower, since people are buying new cars and trucks at or below dealer invoice (all the time) using the Costco Auto Buying Program. Then ask them what their Costco price is for the car you want to buy, and wait for their responses. Don't offer to buy at the Costco price, because you may be able to get a better deal.
   When you do this - asking all the dealers for their Costco price - dealers are put on notice that you are a smart shopper who knows that you can buy below invoice, and that they are going to lose a sale to another dealer if they don't offer you a huge discount. This strategy usually works even if you're not a Costco member, since most dealers won't even ask if you're a member. (You could join Costco for $60 if you had to, but it's not really necessary. The mere mention of their Auto Buying Program is all it takes.)
   If you actually used Costco to buy through their "approved dealer," the dealer's cost on that car goes up because they would have to pay Costco. This means that you should be able to negotiate a lower price by not actually using Costco and buying from a dealer who does not have to pay Costco for your sale. Most dealers are not actually "Costco dealers" but they will pretend to be just to be competitive and make the sale.
   After asking all the dealers for their Costco price, you should be getting multiple quotes that are at or below invoice - without a rebate. Since those prices are still profitable for the dealers, you should try to negotiate an even better deal. Remind the dealers that you are still negotiating with other dealers, and ask all of them, "Is that the best you can do?" Some may go lower and some may say that they can't go any lower.
   If you still want to try for a better deal, you could offer to pay $500 (or $700 to $800) below their Costco price. This might result in a good counter-offer that you could accept, or you could negotiate some more. You can continue to play one dealer against another, until they say that's the best they can do. Or you can stop once they get below invoice - it's up to you.
   Customer Rebate Warning: If the new car you are buying has a factory (cash) rebate, watch out for dealers trying to use the rebate as a "price reduction" off the MSRP. Don't fall for this! The rebate is your money that you can use to pay for the new car, AFTER negotiating the best deal you can - without the rebate. Be sure to tell the dealer that you are keeping the rebate, so they should not include it in their price quote.
   With a rebate, your final price should be thousands below invoice. For example, if the rebate is $2,000 and you negotiated the price down to $500 below invoice, your purchase price would be $2,500 below dealer invoice - NOT $2,500 below MSRP.

New Car Delivery. When you finally have an acceptable quote, make sure that it is in writing, with a complete description of everything you were expecting: year, make, model, colors (inside and out), option packages, etc. Hopefully, the winning dealer will have the car on his lot to avoid having to do a "dealer trade." (Try to avoid this, as dealer trades can be messy, with the buyer putting up a deposit first, then the car arrives in the wrong color, it's missing an option package, etc.) Sometimes the dealer will try to raise the price, even though you had a written quote. If you have to order a new car, make sure every detail is in writing first, including a complete vehicle description with interior and exterior colors, options, the quoted price and a right to cancel with an immediate refund if they can't deliver the exact car you ordered at the quoted price. If they make you put up a deposit before ordering the car, use a credit card. Do not use cash or check, because you might have to cancel your order when they fail to deliver the exact car you ordered. Using a credit card for the deposit will give you the option of doing a chargeback if they won't give you a refund. Be sure to give the new car a complete inspection and road test before accepting delivery, and do this in broad daylight to make sure you can see any cosmetic defects. During the road test, try all the accessories to make sure they are working. Make a list of all items that are not acceptable. If the car is missing any items that the dealer is supposed to install, make sure all of those items are installed and working before you take delivery, and make sure that all necessary repairs or adjustments are done, too.  (It's usually easier to get a dealer to fix things if you haven't taken delivery yet.) After verifying that everything is OK, sign for the car and drive it home.

Extended Warranties. When you're buying a new car, the dealer will usually try to sell you an overpriced extended warranty or service contract "to protect you from major repair bills" (and to line the dealer's pockets with another huge profit). Before you pay those high dealer prices, consider this: an extended warranty might be a waste of money. Here is a great article on this subject: Are Extended Warranties Worth It? If you decide to buy one, don't pay those high dealership prices just to get some peace of mind. You can usually find a good deal at CARCHEX, a 20-year-old company with an A+ rating at the Better Business Bureau.

We hope you enjoyed reading How To Buy A New Car Below Invoice Price. For answers to the most common questions asked by new car buyers, see our Car Buying FAQ page. To learn how to save even more money, be sure to visit our Money Saving Tips page.


[How To Buy A New Car]

Copyright 1998-2019 Technews Corp.