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Get the Lowest Price on New Cars with these 3 Tips

last updated November 27, 2013 by

The average new automobile costs more than $23,000, challenging the budget of even the most well-to-do Americans.  Prices for new cars don’t appear to be going down either, as manufacturing innovations are being offset with increased electrical and computing complexity.  Even the simplest of modern cars contains hundreds of individual systems, and this all adds up to a hefty price tag.  With the tips below, you can keep your car dealer from adding additional fees and costs on top of an already expensive purchase, talking him/her down to as close as possible to the manufacturer’s suggested retail price.

Know What the Dealer Pays:

Because of the relationship between car dealers and manufacturers, each dealer is able to secure a certain number of cars per year at a low wholesale rate.  The difference between this wholesale rate and what your dealer charges you is his margin.  Dealers incur some costs as well, so the margin is not entirely profit – they must pay for their employees, their lot fees, and a variety of other capital expenses and recurring costs that all are passed on to the consumer.  That being said, knowing what your dealer pays for a particular car is invaluable when time comes to negotiate a price.  Obviously, the dealer will not sell a car for less than they paid for it (unless the car is somehow devalued by damage or depreciation) but you should be able to bring the price down to close to this floor.

Shop at Cheaper Dealerships

As stated in the above tip, dealers have to cover a variety of costs when they sell cars, including capital expenses like rent and facilities.  Cheaper dealerships, those in less expensive areas without the ornaments and flair of their more expensive counterparts, are able to sell cars at a lower price because they have fewer expenses that they have to cover before realizing a profit.  There is a fine line between a cheap dealership and a fraudulent dealership however, so make sure to look at consumer reviews before you go.  Complete Auto Loans recommends shopping for your car in an area with multiple dealerships, as this also takes advantage of the competition between the dealerships for your business.

Be Prepared to Walk Away

As any experienced haggler knows, the best tool in price negotiation is the willingness to walk away if you can’t agree on a deal.  Walking away sends a message to the dealer that you are done negotiating, and they will either let you walk away (in which case, don’t turn back – just go find another dealer) or they will give you their final offer which you can choose to accept or just keep walking away .  Never show weakness when you are negotiating a deal on a car – don’t let the dealer know your budget, and make sure to do some price research so you know the various prices that you would pay at the dealers’ competitors.