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How to Get the Best Price on a Brand New Car

Updated on February 19, 2015

When it comes to buying a car, there are some pretty negative stereotypes about sleazy salesmen and hidden fees, so how exactly do you negotiate for the best price? For starters, don't be so worried! You will need to educate yourself on the car or cars you are interested in buying. If you know more, you naturally have an upper hand. Just be familiar with the most important terms and concepts so that you can find a deal that works for you at the best price. Don't be intimidated by all of the horror stories that come with the process of buying cars. If you know how the car buying process works, you already know what to expect.

Mind the Invoice Price

The invoice price is the price the dealership paid to the manufacture when they acquired the vehicle in particular. After this, they will mark the price up to the MSRP (Manufacturer's Suggested Retail Price) which is generally 10%-15% above the invoice price. This is to give them a little bit of wiggle room to negotiate and still make profit instead of having to deal with any losses.

Do Your Research

One of the most important things when it comes to getting the best deal for your car is to do some research beforehand. Invoice prices are the same for every dealership, which is great because you already know how much the dealership paid for the vehicle. Invoice prices can be found on the internet and you should always know this price before stepping foot in the dealership. You can always get free quotes from dealerships on the internet that can help you along the way.

Some Vehicle Options

You'll see that some vehicles have packages and options available to you, so you will need to see which options you want on your new car and which ones you can go without. Don't choose a car with way too many options, especially if you won't use them often. Some cars offer a package that includes the heated steering wheel option, but if you live in an area that's relatively warm like Southern California or Florida, is the cold weather package really necessary? Many people choose the technology package which involves an integrated, high tech navigation system and other technological features, so if you want to add that technology package, make sure to include that in your budget.

Whip our Your Calculator

Whip out your trusty calculator and try to calculate to see how much the dealer is making on the sale in order to see how big of a deal you can get. Take note of the holdback, which is a few percent of the MSRP. The pricier a car is, the higher the holdback will be. The dealers get the money back in a few months so you can use this to lower the amount you're paying for the car.

Set the Bar

After your number crunch of calculating the MSRP and invoice price, you have to set a price that is close to the utmost maximum that you will pay for the car. Give yourself a little bit of wiggle room that's reasonable and stick to the general vicinity of that price.

What's the True Dealer Cost?

You will need to be able to calculate how much the dealer paid for the vehicle, and also calculate other factors like destination charges, options, holdback, and all sorts of things that can add up the price of the car. After you calculate these factors, let the dealer know that you're in on their little secret by bringing a copy of the Kelley Blue Book printout. You can even take a competitor's ad because many dealers offer a price match and this can save you a little bit of money as well.

Don't Forget to Negotiate:

Fleet rates are available discounts to large corporations that buy hundred of vehicles and is often one to two thousand dollars below the invoice price. Of course you can't buy one vehicle at fleet price, but some dealerships may be desperate to close a deal that you may get an offer of $500 below invoice. Make sure you deal with the Internet sales manager because they are the most in-tuned with internet savvy customers.

End of the Month Deals:

Dealerships have to meet sales goals at the end of the month and retail salesmen have a cash bonus incentive so you get the upper hand when you visit the dealership at the end of the month. You should contact various dealerships and see what kind of deals they offer before finding the best deal available. With the money you save from negotiating, you could totally get some new extras for your car. Factory cars often come with stock incandescent lighting, so some new LED lighting could fit your fancy here. LED daytime running lights would be a great upgrade from the stock and you could use that money you saved to invest upgrade to other car mods that would otherwise have cost a huge sticker price from factory.

Stand Your Ground

Make sure to be firm because the retail sales people will try to sell you the car at the highest price, naturally. If you manage to get them to sell you the car at invoice, they're still making a 10% profit. You just have to say that you want so-and-so car for this-amount-of-price and be firm. Start low and you can get an even better deal. Sometimes you may even be able to get a car below invoice if they are desperate enough to sell you a vehicle. Good luck and enjoy your new car! It may seem like an ordeal to get to the price you want, but the effort is well worth the result in the end.

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