I now remember why I haven’t bought a new car in years.
Buying a new car is a giant pain in the butt.
Unless you love negotiating, chances are you hate buying new cars, too.
We Just Bought a New Car – Here’s How It Helps You
My wife and I just bought a brand new 2018 Honda Odyssey. The 2018 model year was a complete refresh for the Odyssey. The car had only been on the market for less than two months when we made our purchase.
I spent weeks reading over information on how to get the best deal buying a new car. While I knew we wouldn’t get an amazing deal because the car was so new, I did know I wanted a decent deal to pull the trigger.
What I learned saved us thousands of dollars and can save you thousands, too. Here’s what you need to know.
Know Exactly What You Want
The first step to buying a new car is knowing exactly what you want. Take some time to familiarize yourself with the cars you’re leaning toward. Then, visit local dealerships and test drive the cars.
Let the salespeople know you’re just conducting research and won’t be buying today. The sales associates should still answer any questions and allow you to test drive the models you are interested in.
For an even faster experience, schedule a test drive before heading to the dealership. If you’re comparing multiple cars, schedule test drives on the same day so you can really compare the cars to each other.
Once you figure out which vehicle you prefer, dig into the details of that vehicle. What level trim do you want? What accessories would you want? Do you have to have a certain color?
If multiple combinations would suit your needs, that’s fine too. Whatever decision you come to, make sure you write a detailed list.
Here’s what my wife and I came up with when we decided on a 2018 Honda Odyssey.
- 2018 Honda Odyssey
- White exterior with beige interior
- EX trim level
- No accessories
Research The Price Others Are Really Paying
Now that you know exactly what car you want, you can start researching the price you should pay.
Old School Research That Doesn’t Work
You may think you can research prices based on invoice pricing, invoice pricing minus holdback or even via car buying services that USAA, Edmunds and other companies offer.
While all of this information is nice to have, it is rarely accurate. Yes, invoice price is a real number. So is invoice pricing minus holdback. But those numbers aren’t the prices people are paying.
Car buying services actually do you a disservice. They claim to offer you some of the best prices around. What they don’t tell you is car dealerships pay them for sending car buyers to the dealership.
I can’t verify this, but I’ve heard these sites can earn hundreds of dollars for sending a sale to a dealership. That’s money that won’t end up in your pocket.
The Real Way To Research Pricing
Rather than rely on numbers created by car manufacturers (invoice and holdback) or by companies that earn money by sending you car pricing information (USAA and Edmunds), you can do a simple Google search that will usually give you the answers you want.
Simply google the car you want and the words price paid. Usually, you’ll find a forum full of enthusiasts of the particular car you’re looking to buy. You may have to add the word forum to your search to find these sites, but it is worth it.
These sites have a wealth of information for a new car buyer. While you should keep in mind every transaction is different, but the prices you read are normally real prices.
Not everyone is a great negotiator. Some of the prices paid are rip offs while others are great deals. You’ll also want to keep in mind different areas of the country sometimes offer better prices than others.
That said, the information provided will give you a good starting point to finding a realistic price to pay for the car you want.
When browsing these forums, you’ll want to pay special attention the prices people say they paid.
If they simply state an out the door number, it is useless to you. Out the door numbers include state and local specific fees and taxes that you may or may not have to pay in your locality.
The Price You Should Look For
Instead, look for prices that are broken out as follows.
- Car price – $20,000
- Dealer Fee – $599
- Accessories – $1,900
- Taxes – $1,000
- Tag and Title – $250
- Total Out The Door Price – $23,749
The car price, dealer fee and accessories are all different places for the dealership to earn a profit. Taxes, tag and title fees are usually mandated by your state.
Since we didn’t want any accessories, we simply added up the car price and dealer fee of transactions without accessories to find the price we should pay.
You also want to avoid transactions with trade-ins.
Dealers also make money by paying less for a trade in but lowering the sales price of the car or vice versa to make the buyer feel like they’re getting a good deal. Transactions without trade-ins don’t allow dealers to shift profit around.
We searched 2018 Honda Odyssey price paid and found the OdyClub forums. They had a topic that listed the prices people paid for their specific cars with details such as trim level and accessories bought listed.
Based on this information, we realized we should be able to find a car for about $400 under invoice before tax, tag and title fees in the best case scenario.
Have A Price In Mind You’re Willing To Pay
After you complete your research, it’s time to come up with the price you’re willing to pay for the car you want. Realize the absolute best price you find via your research may not be repeatable. Instead, look for the best prices that seem to occur multiple times.
When we did our research, the $400 under invoice number was the absolute best price we could find. However, we saw multiple other purchases that were at invoice price, so we figured invoice price would be acceptable for us to make a purchase.
Get Quotes From Multiple Dealerships
Now that you have a price in mind, it’s time to start the dealership dance. There are two ways to go about this. The first is the way to get the absolute best price possible. The second is the way to keep the process as short as possible while still getting the price you want.
Getting The Best Price Possible
First, decide how far you’re willing to drive to get a good deal on a car. Then, locate the dealerships that sell the car you want and are close enough to you.
After you have a list of dealerships, contact them on their websites by email. You’ll want to let them know you’re in the market to purchase a car.
Give them the exact information of the car you want from the earlier exercise. State you’re contacting multiple dealerships and will purchase from the dealer with the best price.
In order to compare quotes, you’ll need what is called an out the door quote. Make sure to ask for an out the door quote in your email and specify it should include any and all fees, sales tax and other costs to purchase a vehicle.
State you want the number that will be on the bottom line of the contract you sign. Dealerships rarely send you their best price in the first email, but it does happen occasionally.
Wait to get quotes back from as many dealers as possible and compare the quotes. Some dealers won’t give you an out the door number the first time, so you’ll need to respond and ask for a real out the door number.
After you compare quotes, email back every dealership but the one with the best price. Tell them your current best price quote and list the out the door number.
Let the other dealerships know you’ll be buying from the other dealership unless you get a better price quote by a certain time.
Chances are, you’ll go through this exercise a few times before you find a couple dealerships that really want your business. Go back and forth until you find the dealership with the best price.
Getting The Price You Want
Go through the same process as above. However, once dealers hit the price you’re willing to pay, pick the dealer you want to make the purchase from. Then, tell the dealer you’re ready to make the purchase.
Make sure the number you were quoted will be the final total then head to the dealership to wrap up your car purchase.
How This Worked For Us
My wife and I wanted to get the best deal reasonably possible. We looked for dealerships within travelling distance and contacted each one that had the exact car we wanted in stock. None of the prices came anywhere close to our researched number.
Rather than give up, I contacted the lowest price dealer in the nation and received a quote. It was $2,000 better than every other quote I had received. I decided I’d fly to Chicago to get the car.
However, first I wanted to view the exact color and trim of the car I wanted to buy before making the trip. Unfortunately, that car was 90 miles away. We took the trip and decided to try to negotiate one last time before flying to Chicago.
Due to travel costs to Chicago and back, we decided we needed the dealership to come down $1,000 to make the purchase that day. The dealership dropped their price $1,250. We bought the car and avoided a flight and a 14 hour trip home from Chicago.
Don’t Be Afraid To Pick Up The Phone
When shopping for the best price, many dealers will want to contact you by phone. While I was initially resistant to this idea, it usually makes sense to grant the dealer’s request.
Dealerships get many price quote requests by email that go nowhere. They want to make sure you’re a real live person that will actually buy a car if they give you a great price.
That said, never agree to a price by phone. Ask the dealer to send a detailed quote by email after your phone discussion for your records. This will help in your negotiations with other dealers and will serve as backup if you actually make a purchase from that dealer.
Shopping At The End Of The Month Can Sometimes Get You A Better Deal
The time you shop for a car can make a huge difference in the price you end up paying. Manufacturers often offer incentives to help sell cars.
Sometimes it is a cash discount, other times it is special financing. Research special offers that occur with the car you want and wait until incentives you want are offered.
That’s not the only way to save. Specific dealerships often have monthly or multi-month sales goals to reach. These sales goals can result in huge paydays for dealerships.
If you’re lucky enough to buy a car right before a dealership hits one of their goals, you may be able to save even more money.
Dealerships don’t care if they lose a little bit of money on one car to hit a sales goal that could pay them thousands or hundreds of thousands of dollars.
The longer you can wait to buy a new car, the better chance you’ll be able to score a good deal.
Why We Didn’t Wait
The car my wife and I purchased was a brand new design and had only been on the market for two months when we made our purchase.
The manufacturer likely wouldn’t offer any incentives for months, if not a year or more, so we decided it wasn’t worth it to us to wait for incentives.
Additionally, we could have saved a few hundred or maybe a thousand dollars by waiting six months to a year to make our purchase as supply gradually increased above demand for the vehicle.
We decided the extra savings weren’t worth the wait because we had added a child to our family and wanted the extra space.
Factor In Your Time When Shopping
Shopping for a new car isn’t always about getting the best price. For many, the goal should simply be to get a good deal. In order to get the best price, you may have to spend countless hours emailing dealerships, calling sales managers and negotiating.
If you spend 40 hours negotiating and only end up with a price that is $500 less than the acceptable price you were willing to pay, you’d theoretically get paid $12.50 an hour for your time.
For some people, this is a good use of time. For others, they’d rather spend that time making memories with their family or earning more money from a side hustle.
Don’t forget to include your time when negotiating. Sometimes good enough is better than the best price.
Buying A New Car Is A Giant Pain In The Butt
As you can tell from this guide, getting the absolute best price on a brand new car is a giant pain in the butt. You can do it, but it will take a bit of work on your end.
Many people aren’t willing to do the work and end up paying thousands of dollars more than they have to. People either feel uncomfortable negotiating or want to get in and out of a dealership quickly.
If you follow the method listed above, you’ll never negotiate at a dealership, which hopefully lowers the pressure on you.
Your dealership experience shouldn’t be too difficult, either, because the paperwork can be ready for your when you show up to purchase your car.
I’m definitely glad I spent time researching our new car purchase. I estimate we saved at least $5,000 compared to showing up at our local car dealership and purchasing the same car. It’s amazing how much money you can save by putting in a little bit of work.
Have you ever used any of these strategies when buying a new car? How did it turn out?