To get the maximum discount on a new car, research the invoice price on Kelley Blue Book, secure pre-approved financing from a credit union, and shop at the end of the month, quarter, or year. Negotiate the total "out-the-door" price via email with multiple dealerships, aiming for 15-20% below MSRP.
TIPS FOR GETTING THE BEST DEAL ON A CAR
For new cars, look at the True Market Value (average price paid not including taxes and fees). We suggest starting at least 2-3% below the TMV.
Tips to get the best price at a car dealership
So, let's explore some practical ways to help you negotiate like a professional at a used car dealership.
The 70/30 rule in negotiation is a guideline to listen 70% of the time and talk only 30%, focusing on asking open-ended questions to understand the other party's needs, motivations, and obstacles, thereby building trust, empathy, and finding collaborative solutions, rather than dominating the conversation with your own agenda. A related concept, the 30/70 rule, shifts focus: 70% on preparation (IQ) and 30% on discussion (EQ) early in a relationship, then potentially shifting to more EQ (emotional intelligence/rapport) as the relationship evolves.
Let's look at some things to keep under your hat while you explore the lot.
Dave Ramsey's core car buying rule is to pay cash for a reliable used car, avoiding debt and new car depreciation; he suggests only buying new if you're a millionaire, and generally, the total value of all your vehicles shouldn't exceed 50% of your annual income. His philosophy emphasizes buying what you can afford outright, viewing cars as depreciating assets that shouldn't trap you in debt.
Car manufacturers and dealers offer incentives like cash rebates, low-interest financing, and lease deals to attract buyers and boost sales. Beyond cash discounts, non-cash perks like free upgrades, extended warranties, and service benefits can add extra value to your purchase.
For years, dealerships have been using a tactic called a “four square”—a sheet of paper divided into four boxes where the salesperson will write down your trade value, the purchase price of the vehicle you're buying, your down payment, and your monthly payment.
The FTC Red Flags Rule requires auto dealerships to have a written Identity Theft Prevention Program (ITPP) to detect, prevent, and mitigate identity theft, especially in financing/leasing, by spotting signs like suspicious documents (altered IDs, mismatched photos), inconsistent application info, or unusual account activity, with consequences for non-compliance including hefty FTC penalties and lawsuits, notes the Federal Trade Commission. Key steps involve identifying vulnerable accounts, spotting specific "red flags," creating detection/response plans, training staff, and regular audits, with a senior manager overseeing the whole program, say Dealertrack and Total Dealer Compliance.
These golden rules: Never Sell; Build Trust; Come from a Position of Strength; and Know When to Walk Away should allow you as a seller to avoid negotiating as much as possible and win.
10 Tips for Successful Contract Negotiation
The best way to negotiate a car's price is to obtain multiple offers from dealerships and use the lowest offer to either improve on the discount or match the sale price at a location closer to home.
According to the National Automobile Dealers Association (NADA) as of 2022, the average gross profit for a used car is $2,337. That same data set puts the average gross profit for new cars at $1,959.2 Breaking out the data between independent dealers and franchise dealers, there is a wider gap.
Car salespeople use various tactics to pressure buyers into purchasing vehicles they may not afford. Staying focused on the total cost of the car, interest rate and fees can help you avoid making a purchase you'll regret. Don't be afraid to walk away if the purchase doesn't feel right.
Unfortunately, it isn't an exact science because it changes from car to car and dealer to dealer. However, you can use the guideline of 2 or 3% on less expensive brands, and 5 to 10% on luxury brands as a rule of thumb.
As for which day of the week to go in, "Monday is usually the best day of the week to buy a car" since "showrooms will be the least busy," said MarketWatch. However, Tuesday or Wednesday can also be a good bet, especially in areas where dealerships aren't open on Sundays, said Edmunds.