How To Get the Best Deal on a New Car

A new car is a high-cost purchase, but it's possible to get a great deal, even on a higher-priced new car. Feeling good about your purchase requires up-front effort, research, budgeting, planning, timing and perhaps a bit of luck. 

Here's a step-by-step guide to getting the best deal on a new car, with advice from financial experts, an auto dealership salesperson and consumer advocacy organizations.

Takeaways:

• Understanding savvy strategies can help you get a good deal on a new car.
• Next-year releases can decrease costs for this year's auto models, while inventory shortages can increase auto costs.
• Doing your research can help you negotiate at an auto dealership.

Electric Vehicle Costs

Your auto research might lead you toward an electric vehicle, or EV, now making up about 10% of all auto sales. Making a strategic EV purchase may require further research into incentives versus costs.

Start by reviewing the Washington State Auto Dealers Association's guide that notes the fine details on how federal and state EV incentives work, then do a little more investigating.

For example, only some EVs and plug-in hybrid vehicles qualify for exemptions from state sales and use tax until July 31, 2025. You'll need to review Washington state government's list to ensure the EV you want is listed.

Another income-based incentive was available in Washington — but the rebate program's funds have run out for 2024.

Balance any price incentives you find with the car's cost, and the cost to install an electric charger in your home. This installation can run up to $2,000 depending on your charger type and your current electrical panel.

Tax credits or other incentives may help decrease the cost for any EV charger installation. But eligibility is dependent upon being in the right census tract. Getting an electrician's bid and doing plentiful research before buying may be wise.

Prequalify or Research Auto Loans

Most new-car buyers finance their purchase with an auto loan. Check your credit score and apply for car loans when your score is good or apply with a cosigner who has good credit. Find out how much of a car you can buy by shopping around at credit unions, online lenders and other financial institutions for a preapproved car loan.

Auto loan preapproval requires an application for credit, which appears on your credit report as a hard credit inquiry, but getting various quotes should only count as one hard credit pull if you shop within a 14-day window.

Your auto loan preapproval will include your estimated interest rate, term length (how long it takes to repay your loan) and monthly payment. The best loan terms will lower your monthly payments and allow you to get more car for your money.

In the past, whether you paid with cash or with a loan might have affected the new auto's price, but that is no longer the case, Wilson said.

Time Your Purchase

If you're looking for a 2024 vehicle, the dealer will likely mark these down near the end of the year or whenever the dealership receives 2025 models. Call the dealership and ask, "Do you have older years to clear out?" suggested Wilson. Car dealers pay to store cars sitting on lots and may be more likely to cut you a deal.

However, there is a caveat: Waiting to buy a car is much like shopping for what's left on the clothes rack at an end-of-season sale. You may not get your desired interior color or a heated seat.

"You may not have as many options as 2024 production lines shut down," Wilson said.

Traditionally, you could get a better deal at the end of the month, quarter or year, Wilson said, as salespeople sought to hit sales quotas by cars sold. But this can vary by day. So, it can be challenging to "time the market" for your purchase.

Be Ready to Negotiate

Negotiation is an uncomfortable facet of the car-buying process for many. But you can reduce stress by moving slowly, considering choices and knowing what you want.

Don't shop when in a hurry so you make a considered decision. Only shop when well-rested, well-fed and not stressed. Bring snacks and water for research and negotiation days at dealerships.

"When you go into a dealership, it helps if you feel prepared and you know what your needs are," Wilson said. "Relationships are everything to us. We want you to have a great experience, so you'll want to come back and refer your friends and family to us."

How To Get the Best Deal on a New Car

1. Set Your Car Price Budget

First, determine how much you want to spend on a new car, and remember that a vehicle isn't a true asset, as it depreciates yearly. You have several ways of considering your new-car purchase budget:

You'll see sticker prices in the new auto's windows. This generally lists:

• A base price
• Standard equipment included
• Optional equipment included with that specific vehicle
• A price including all optional extras
• Fees
• Annual fuel costs based on a 15,000-mile-per-year estimate

However, the window sticker likely does not show the sales tax, licensing, registration and other add-on option fees.

In 2024, a new Federal Trade Commission (FTC) rule took effect and could save consumers as much as $3.4 billion overall. The Combating Auto Retail Scams (CARS) Rule limits a dealership's ability to make misleading claims regarding car costs, financing terms and rebate or discount availability.

For example, if a rebate is available, a dealership will disclose up front who that rebate is for, such as for service members only. So, the auto sticker price displayed should be the actual price any consumer can pay, with information about the total payment when sharing information about monthly car payments.

3. Research the Vehicle You Want and Compare Prices

If you've narrowed your auto choices to a new vehicle, it's time to understand the price of the car, truck or SUV you hope to buy. Research vehicle prices using websites like Kelley Blue Book.

Ensure you've selected the correct year, make, model and trim level. Pricing may also differ greatly depending on your ZIP code, so enter the ZIP code where you hope to buy.

The manufacturer's suggested retail price differs from the "invoice price" or how much the dealership paid for a car. You'll see that the invoice price is the lowest and the MSRP is several thousand higher. A fair price might be between the two.

However, dealerships don't need to offer a lower sale price when demand is high for a particular vehicle. You may also notice a "market adjustment," Wilson said. This is a price increase over MSRP when an inventory shortage or consumer demand drives up prices.

Visit the Kelly Blue Book site to find an invoice price. You can even shop by price on the Kelley Blue Book site to ensure you stay within your budget. JD Power offers an "average price paid."

4. Get Dealer Quotes and Discounts for a Purchase Price

Call, email or visit dealerships to get an out-the-door price quote without mixing in financing or options. As Consumers' Checkbook points out, you want dealers to compete for your business. The publication suggests getting at least five bids. 

Quotes should include:

• MSRP: This is the manufacturer's suggested retail price.
• Fees: Dealerships may charge delivery, handling and processing fees. You might be able to negotiate other fees, such as documentation fees.
• Legal fees: State sales tax, title and license may or may not be included in an advertised price.

Discounts could include one or more of the following:

• Discounts and offers: May consist of dealer discounts offered to everyone, or only provided if you purchase specific vehicles.
• Incentives: Some dealers offer incentives for rideshare drivers.
• Conditional rebates: Rebates for specific populations such as military service members, college graduates or people with disabilities who need adaptive equipment.

5. Watch for Options

Consider which options or add-ons you want. Options can dramatically raise auto costs if you hope to customize your vehicle, or already be included in a car's price, or something you negotiate. Options might include:

• Warranties: Such as an extended warranty or service contract beyond the manufacturer's warranty.
• Interiors: All-weather floor mats or liners, electronic seat adjusters, high-end speakers, adaptive equipment.
• Electronics: Electronic lane-change alerts, parking assistance, remote start, theft alarms.
• Exteriors: Splash guards, chrome-surround grill, tinted glass, bumper protectors, trailer hitch.
• Subscriptions: Subscriptions to entertainment, navigation or other services.

Dealerships and manufacturers often bundle options into a package focused on an aesthetic or functional theme, such as an interior protection package, car safety feature package, trailering package or sports features package. As with the vehicle itself, two prices exist for packages — the invoice price a dealership pays for an option and the MSRP. You may be able to add options ala carte.

The new FTC rules state that add-on costs, such as extended warranties, must be shared in advance and are optional. Add-ons must benefit the consumer. For example, a dealership can't charge for oil changes on an electric vehicle.

6. Estimate the Trade-In Value of Your Current Car

Research the value of your current vehicle. The difference between what you still owe (if anything) and the amount you accept for your vehicle can be used toward your down payment.

When researching, you may note two prices — how much you could get if you sell the car to a dealership and how much you could earn by selling it privately. If you sell the car privately, you may earn more, although you'll likely need to deal with more hassle regarding paperwork and negotiations.

You have negative equity if you owe more money on your vehicle than you can get for a trade-in or sale. You must review other options, including paying off your loan first or rolling the still-owed amount into your new car's loan.

7. Head to the Car Dealership To Negotiate

Before you visit dealerships, have a good idea of low, high and fair pricing. First, focus on negotiating the price of the new car, using pricing you've collected from various dealerships. You can use this Consumer Reports guide to negotiating a new car for the next step of price haggling.

The guide suggests negotiating each step separately, such as your trade-in or any financing offers.

Enjoy Your New Car

With patience, research and informed negotiation, you could drive away from a dealership feeling satisfied that you got the very best deal on a new car for your needs, budget and goals.

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