How to Get the Best Deal on a New Car: Do Your Homework First

Here’s a quote from a friend of mine who owns two car dealerships: These days we get two kinds of new-car and truck buyers: those who do their homework by researching our costs online before walking in the door, and those who walk in cold. The buyers who do their research end up paying close to our invoice cost, get the best financing terms and get the best trade-in prices for their existing car. We love the ones who walk in cold because we make a lot more money on them.”

If you enjoy paying more than you have to for a new car, skip this story. But if you want to get the best overall deal on a new car or truck with the least amount of painful negotiation, follow these tips.

Do Your Homework Online

Research the trim packages and options: Once you decide on a make and model, head to the carmaker’s website to learn what’s included with each “trim” package. Then check out the optional accessory packages available. Finally, see if the manufacturer is offering any incentives such as low financing or rebates, and read the terms of those incentives.

Check out the dealer’s invoice cost and selling price: Head next to edmunds.com, truecar.com or consumerreports.org. (Edmunds and TrueCar are free, and Consumer Reports costs $30 for a one-year membership.) Enter the model, trim and option package you want, along with your zip code. Then get a report showing the retail price, dealer’s invoice cost, and what most people in your area are paying for that vehicle.

Discover your existing car’s trade-in value: Go to nada.com and kbb.com. Enter your vehicle’s information on both sites and get the values for trade-in and selling it yourself. Here’s a tip: No vehicle is in “excellent condition” if it has scratches, stains or any signs of wear. “Excellent” means flawless. So be realistic when rating your car’s condition.

Check out other financing options: Contact your bank, credit union and even your credit card company to find its best rate and term lengths for new car financing. You’ll be offered financing at the dealership, so it would be wise to know your options before getting there.

Get competitive bids on aftermarket options: Dealers make a huge profit on add-ons like an extended warranty, paint protection film, floor mats and fabric protection. Get competitive quotes on all those add-ons from online retailers. For example, if you want a factory extended warranty, search for “Ford OEM extended warranty,” and you’ll get dozens of listings from Ford dealers around the country that are willing to sell you a genuine Ford extended warranty at a discount. Do the same for accessory add-ons like floor and cargo mats and bumper guards. If you want items like paint protection film, bed liner or paint sealant, get quotes from local vendors.

Bonus Buying Tips

1. Don’t buy from a dealer simply because you’re offered free lifetime oil changes. Those “free” services may require you to have all your maintenance done at that dealer. And the dealer’s list of (often costly) “recommended” services may not match or even be part of the carmaker’s maintenance schedule.

2. If you made only a small down payment on your new vehicle, it’s very smart to buy “gap insurance” to cover the difference between what you owe and what you’ll get if the car is wrecked in the near future. That’s especially true if the new car is putting you under any financial strain. Get quotes on gap insurance from your car insurance agent before you go to the dealer. Dealer gap insurance prices can be two to three times higher than the ones your agent may offer.

— Rick Muscoplat, Contributing Editor