- The sticker price is only a starting point – you can negotiate the final cost down from there.
- Timing means everything because dealers are eager to sell toward the end of the year.
- Understand dealer invoice basics to help you whittle down the price even more.
One of the best things about car shopping is that the sticker price is only a suggested price. In fact, it’s really a starting point from which you can negotiate to reduce the cost by hundreds or even thousands of dollars.
To help you reduce that sticker price by as much as you can—and pick up on other smart shopping tips—we asked for advice from Dealertrack.com, which helps dealers manage their finances, in part, by knowing what to charge for cars. As a business that advises dealers, Dealertrack knows the ins and outs of buying an automobile. That’s why the following tips are so valuable—it’s like getting great “inside information” so you can easily navigate the negotiations and buying processes.
Here’s what Dealertrack shared with us, along with additional recommendations/resources we found:
1. Choose the right time to buy. From the fall through the end of the year is the best time to purchase or lease a new car. The reason: The current-year inventory must get cleared so dealers can make room for the newest vehicles. If you’re buying or leasing a new one, you’ll get the best deals on last year’s models, so focus on getting the dealer to lower those prices.
2. Do the math before committing to a used car over a new one. Dealertrack wisely suggests doing some simple math to help you calculate the true cost of a used vehicle, to compare it to that of a new model:
- Get the manufacturer’s extended warranty. Add that to the sale price. Focus on certified, pre-owned vehicles, because they’re considered “a safer bet” for lower maintenance costs.
- Calculate your annual mileage based on recent driving habits. Figure out how many miles you’ll put on the vehicle in the coming ownership period and that can let you ...
- ... Calculate scheduled maintenance and when it’s required. You can find most owner’s manuals through a quick Google search. See what maintenance may be expected for the car (such as a timing belt change) and ask a qualified mechanic or the dealership’s service department what that maintenance costs. Now add that amount to the sticker price.
- Now that you have this higher number, go shop for new cars and especially new-car lease offers, and calculate how much more they might be a used one. If you’re even close between new and used, the new car probably is the smarter buy.
3. Decipher the dealer invoice. The invoice is what the dealer paid for the vehicle. The sticker price is the “suggested” retail price of the car. The dealer sets the latter, but he or she is stuck with the former by the manufacturer. That difference is the dealer’s potential profit. And since the dealer needs to move inventory, you can counteroffer a price that still allows for some profit, while substantially lowering the sticker amount.
Websites such as Edmunds.com show the invoice, which – unlike the manufacturer's suggested retail price (MSRP) on the site—does not vary from dealer to dealer. Knowing the dealer invoice and MSRP should give you some sense of what the transaction price should be. That price might go somewhat higher if you’re shopping for a popular car. You also can look up transaction prices for new cars on a site such as KBB.com, which gives you a “fair market price” based on actual sales of the make and model you’re shopping for in your area.
4. Get great deals from your NEA membership benefits. Through the NEA Auto Buying Program, you’ll find great, hassle-free deals on new and used models from TrueCar-screened dealerships near you before you head to the lot. NEA members have seen an average savings of $3,383 off MSRP on new cars. In addition, many of the dealers offer an extra member-only discount off the final negotiated price, and a free CARFAX report is available on some of the listed vehicles.