New Car Buying Tips

[Andrew Joiner]

Any tips on recent new car purchases? Anything you'd do differently?

I'm looking to buy a new 6 passenger vehicle.
My priorities are:
1-reliability
2- low cost
3- decent mpg
4- longest factory warranty on electronics. The 5 year bumper to bumper on Kia, Hyundai and Mitsubishi looks good.

I bought a car 5 years ago by sending out emails to 20 dealers asking them bid on the exact same car model and specs. That was easy and we got a good price. I'm about to try that again soon.

[Jim Becker]

Know what you want in detail (make/model/trim/options/accessories) and certainly narrow by things that are important to you, such as the warranty period. But also have alternatives that will work for you so you can "walk" if you cannot get an acceptable deal. Know what it costs, both for MSRP and dealer invoice. Understand how sales taxes work on new vehicles in your state relative to trade-in, if you will be trading in. If you have a trade, do your due diligence to determine what the value range is for the vehicle before it's appraised by the dealer...they will always low-ball you...and don't even mention it until you have a price for the vehicle you want to buy. Negotiate the trade just as aggressively. Whether you are expecting to buy off the lot or factory order, be willing to travel to BUY the vehicle. That does not limit you from getting service locally for warranty work. Take advantage of programs like Subaru's VIP program where a contribution to certain charities gets you invoice pricing on the vehicle and any options/accessories you get at the time of initial purchase. Do your initial inquiry and negotiation online and don't accept "you have to come into the dealership to get the price". Make sure you get "out the door pricing" that includes required regulatory fees as well as any fees the dealer charges. Do not discuss "monthly payments". That does not come until you have a price for the vehicle. Do not agree to accept dealer add ons and if they are already installed, don't agree to pay for them. These are high profit things like "protection products", "etching", etc. You will be pitched on extended service contracts (what folks call "extended warranties") and you do not need to purchase them at the same time as the vehicle, particularly if they are manufacturer backed. If you want to consider them, take your time and shop multiple dealers. Avoid third party contracts...manufacturer back is they way to go. (There have already been multiple threads about these contracts; some folks like them for insurance (which is what they are) against failures of expensive electronics and system and some folks will not touch them. Choose based on "you)

Most importantly, and I already sort of mentioned this...be willing to walk out the door (or not walk in the door) if there is any funny business during negotiation or when finalizing your purchase. YOU be in control.

I'm a Subaru guy. I also buy the ESC at this point. It's cheap insurance, at least for me. I don't pay more than dealer invoice for the vehicle and for the ESC, I know what competitive pricing is before I get to that point.

[John M Wilson]

Carmax (and probably other national chain used car companies) will give you a firm price, in writing, for your used car. This number is good for a couple of days, and does not depend on you buying a car from them. Go there first & have this in your pocket for the negotiation with the dealer for your trade in. In addition to being able to spot a low-ball, this gives you confidence to be able to say "I don't need to trade in my car with you, I've got a better offer from XXX". In our state, sales taxes are a little less if you trade in at the same time you purchase your new vehicle, but if the dealer can't come close to the number I have in my pocket, I just tell them I'm not interested in trading my car at a loss.

It helps shift the power dynamic a little, but it's tough when you buy/trade every 5 years, and you're sitting across the desk with folks that do it every day.

[Jim Koepke]

Just curious, how is the car market these days?

When I was looking for a new truck vehicles were in high demand and dealer stocks were low. Are things anywhere near normal now?

jtk

[Jason Roehl]

Jim has great advice above. I've never bought a new car, but I have had a few friends who were car salesmen over the years. Your biggest power is to be able to walk--that is something they try hard to avoid. But you also have to be willing to pay a realistic price that is in the ballpark of the current market--that is, what they can sell the car for to the next guy who wants one. Having multiple bids from other dealers bolsters that price.

Another hard sell is often gap insurance--when we bought my wife's Explorer (a '17, bought in '20), the guy pushed the gap insurance hard because it would have meant a lower interest rate. I did the math right in front of him--$800 more in interest vs. $2700 in insurance over the life of the loan, plus we were putting enough down on the vehicle that we weren't ever going to be upside down. Ended up getting a much lower rate by refinancing with our own bank a year later.

Don't forget to consider what your time is worth. You can spend hundreds of hours researching and shopping to save $1000, and if that's what you like to do, great. Or maybe you hate car shopping and a little extra cost is worth it to get away from the snake pit sooner. (Me)

[Mike Cutler]

Don't believe that you are limited to buying from a dealer within driving distance of your home. Especially if buying new.
Cars dealers have to compete with all other car dealers, not just the ones in the local area. With new cars they have to compete with every other dealer in the US. I saved $3K on a BMW/Mini Cooper just by picking up the phone, prior to negotiations, and got exactly what we wanted. The "hook"? The car was in Pittsburgh, and I live in Eastern CT. I was going to have it shipped, but my wife wanted to fly out, pick it up, and drive it back for fun.
I have purchased cars, new and used, in Pittsburgh, Scranton, DC, Ramsey NJ, Vermont, and have come close to buying them from Texas and Seattle. Don't limit yourself to your local dealers.
I agree with everything Jim pointed out, and you absolutely need to do your research and know the market for the vehicle you're looking for. But when I walk out of a dealership, I walk for good. I do not come back again. There is no "find your best deal, and call us back" with me. A car dealer has one chance to sell me a car, and that's it. If you come back after "shopping prices", you've done their work for them, and surrendered your leverage.
I'm not a jerk about it, I have the offers and prices from other dealers nationwide and I know the cost of transportation to my door. I'm also realistic about what the price should be. I've walked out of a lot of car dealerships in my life.
The used cart market right now is still very tough for specific types of vehicles, so if you end up going down that route, be aware that you may not save big $$$$ going used, and that is a lot more work. New is easy. Find what you want and type in your offer to the website.
the cost for transportation has gone up, so if you do buy and have the car shipped to you, know those prices also, and know how your DMV works.
In CT I run the temp plate from the dealer I bought it from for as long as it takes for titles to transfer from state to state. I don't get a Temp tag from CT unless I have too.
Have fun "shopping". It's not the gut wrenching stress ball experience it used to be.

[Stan Calow]

I was in my Toyota dealer for service earlier this month. I took a look around the sales floor and the lot while there, and I still see a scarcity of new cars. I talked to my trusted salesperson who said that there was still a 6-mo backlog on the most popular models (need to put a deposit down if you want one). She said their biggest problem was a shortage of truck drivers to bring the vehicles in from the West coast. So she could never predict what was coming in and when, as stuff was being sold by dealers while still at the dock. I hope that's not true for other brands.

We have a Ford plant here (F-150s), and the people I know working there still get shutdowns due to part shortages. Nevertheless if you drive around, you'll see vacant parking lots suddenly full of hundreds of trucks staged for shipment. But their priority is their fleet customers.

[Brian Tymchak]

....Make sure you get "out the door pricing" that includes required regulatory fees as well as any fees the dealer charges.....

Yes, this ^^^^. I've always told the sales person at the dealership that my offer is "out the door price" and that I want their offers to be the same. I walked out of my very first negotiation when I was buying my first new vehicle because the saleman kept negotiating the costs of various fees, options, instead of the bottom line price. However, the last 2 new trucks I've bought, the sales people were very willing to work that way.

[Brian Elfert]

Are dealers actually willing to sell below MSRP these days? I know for a few years were simply telling potential customers MSRP take it or leave it.

I wouldn't buy a car simply based on the longest factory bumper to bumper warranty. You may find it a better value to buy a car that has a shorter factory bumper to bumper warranty and then add on a factory extended warranty. Do NOT pay full retail for a factory extended warranty at the dealer where you buy the car. Most, probably all, manufacturers let you buy the factory extended warranty from any dealer in the USA. There are plenty of dealers who will sell a factory extended warranty to anyone in the USA at a substantial discount. You can always ask the selling dealer for a price match on the extended warranty.

[Brian Elfert]

We have a Ford plant here (F-150s), and the people I know working there still get shutdowns due to part shortages. Nevertheless if you drive around, you'll see vacant parking lots suddenly full of hundreds of trucks staged for shipment. But their priority is their fleet customers.

I read about many fleet buyers who had trucks on order in 2020, 2021, and 2022 and had been waiting months, or years, to get their trucks. I don't know if things got better in 2023. The big three had no desire to build inexpensive fleet trucks when they had more orders for loaded $75,000 to $100,000 trucks than they could fulfill. Some fleet buyers ended up buying used trucks to get by until their new trucks finally came in. Companies needed more trucks to handle their booming business. Fleet customers didn't seem to have priority.

The same thing happened with car rental companies. Car rental companies dumped a lot of their fleet in 2020 when travel demand dropped to basically nothing. They assumed they could just order a new fleet of cars once demand picked up. They found that when they needed new cars that they couldn't get any. Car manufacturers were delivering all of their cars to dealers and they didn't have the capacity to supply car rental companies. I heard of some rental companies buying used cars to get by.

[Jim Becker]

Are dealers actually willing to sell below MSRP these days? I know for a few years were simply telling potential customers MSRP take it or leave it..
Absolutely. It was tougher during the pandemic, but the new vehicle market has recovered pretty reasonably. Of course, this is also geographical and competition matters. Even during the pandemic, I could have bought a Jeep product for 5-6% below dealer invoice and my local Subaru dealer continued to participate in the VIP program which gave dealer invoice pricing. That said, there are still dealers out there that consider certain vehicles to be "worthy" of above MSRP pricing in some areas, including for the larger Kia and Hyundai SUVs. Bottom line...shop around as one does not have to 'buy" locally.

[Jerome Stanek]

My daughter and her husband just bought a new SUV and she did most of the work over the internet. They ended up with thier own financing as the 1.9 was only for 36 months and they took it out for 84 but will pay it off in less then 48 by making double payments so the intrest is lower.

[Andrew Joiner]

Thanks for the responses, good information. I don't have a trade in and won't be getting a loan. I'll be paying cash so that makes it easier to get out the door prices.
I guess it's worth getting bids outside of a 200 mile radius. I can't believe the cost of transporting a new car would still make it competitive but it's easy to check out.

[Jim Becker]

Thanks for the responses, good information. I don't have a trade in and won't be getting a loan. I'll be paying cash so that makes it easier to get out the door prices.
I guess it's worth getting bids outside of a 200 mile radius. I can't believe the cost of transporting a new car would still make it competitive but it's easy to check out.
You don't necessarily need to transport...take some form of public transportation to the destination if it's available to get close and then grab an Uber/Lyft for the "last mile" on delivery day. Drive the vehicle home (gently 'cause it will be in the required break in period) and enjoy it. Or do a road trip with a friend and convoy home, paying for their gas and meals.

[Brian Elfert]

You have to consider how many miles you're putting on a car versus how much money you are saving. If you're the type who calls a tow truck to take a car to the scrap yard at the end of its life then it probably doesn't matter. If you tend to trade often it could make a difference.

My brother drove from Minnesota to Florida to buy a late model used minivan around 2012. He said prices he was finding were several thousand less than Minnesota and no salt exposure. The intention was to have the dealer scrap the current car once he got there, but the car gave up in Georgia. He rented a car to make the rest of the trip. He tends to keep his vehicles until the wheels fall off.

[Stan Calow]

Thanks for the responses, good information. I don't have a trade in and won't be getting a loan. I'll be paying cash so that makes it easier to get out the door prices.


Do people find this strategy to be true? My understanding (and one experience a few years ago) was that because the dealers/carmakers make money on the loans, they may make a better deal to get you to sign a loan whether you need it or not. My one experience was getting down to the final negotiations on a new truck, and the sales manager said he could meet my offer only if I agreed to a loan (I was offering cash). He said that I could pay off the loan after a couple of payments and we'd all be happy.

[Jim Becker]

Stan, I think that Andrew was referring to be able to get "a price" simpler because of not having a trade or involving financing. There's only one number to negotiate. Yes, some dealers work really hard to get a commission on financing, although they get less incentive with manufacturer backed financing that is very prevalent today. There's no harm in taking advantage of low rate financing if available if that gets you a better out the door price on the vehicle and then paying it off and manufacturers are starting to get back to low rate finance offers. That lets one consider keeping their cash earning money if the rate of return is higher than the financing. Of course, that scenario also requires a buyer with stellar credit scores...many folks are getting hit with new car financing rates in the 6-8% range because of credit scores.

Now real world, I essentially paid "cash" for the MY23 Subaru Ascent Touring I'm now driving, but that was because I sold a vehicle to a friend since Professor Dr. SWMBO is no longer driving and had a good trade offer for the MY19 Ascent Touring. I still got dealer invoice pricing which at my dealer is normal for repeat customers. The MY19 was partially financed, but at a very low rate and I paid it off in three years. That was more advantageous than pulling money out of investments that were earing far more than the loan interest rate.

[Andrew Joiner]

Looks like the base model Mitsubishi Outlander ES is a really good value for what we need. I'll send out the mass emails to the dealer soon inviting them to compete on a price.
The factory 5 year warranty is included. Surprisingly consumer reports predicts the reliability to be as high or higher than some of the more expensive three row competitors.

[Jim Becker]

If you are opting for a midsize three row SUV because you need the seating, before you plunk down your money, sit in the third row. ;) Really. Many folks don't realize how "compact" that area is in many vehicles, including some of the most popular names. If you want the extra space for cargo (which was my motivator in 2019 in going to a three row) then the seat size "back there" doesn't matter as much. Also check the safety ratings.

[Doug Garson]

I don't have a trade in and won't be getting a loan. I'll be paying cash so that makes it easier to get out the door prices.
In my research on car buying, I have been told by experts to never say up front that you will be paying cash. As someone else said, dealers make a big part of their income from financing. Don't lie, tell them you want to negotiate the best out the door price before discussing financing or trade ins. Once you have an out the door price that's acceptable then let them make their best financing offer, then you can decide if cash is your best option. Last car we bought, albeit 5 years ago, came with two years zero interest financing.

[Dave Anderson NH]

I just bought a new Subaru Outback 2 weeks ago. I opted to take the 1.9% factory financing because my credit union is paying me 4% on my high yield account deposits. My last Outback had 0% financing in 2017. I always prefer to use someone elses money.

[Jim Becker]

In my research on car buying, I have been told by experts to never say up front that you will be paying cash. As someone else said, dealers make a big part of their income from financing. Don't lie, tell them you want to negotiate the best out the door price before discussing financing or trade ins. Once you have an out the door price that's acceptable then let them make their best financing offer, then you can decide if cash is your best option. Last car we bought, albeit 5 years ago, came with two years zero interest financing.
Yes, that's sound advice. Price first. How to pay for it last.

[Bill Howatt]

Got the 2017 Grand Caravan at 0% for a whole 7 years! Don't think that is happening now with the higher rates. Paid off this coming May.

[Jim Becker]

Bill, low rate subsidized financing is making its way back at this point, even though market rates are much higher. With the average new vehicle cost in the US being about $49K and given that's an average, a lot of the sales are higher, finance rates can be meaningful marketing tools once again now that supply issues have moderated.

[Bill Howatt]

Jim, I can see the reduced rate being an incentive for sure but it won't be a beautiful 0%.
When I was setting up the purchase the way things were presented to me were always based on the monthly payment amount. I had to keep telling the sales people that I didn't care about the monthly payment, I wanted to know the total price. But I guess for a lot, perhaps most, buyers being able to afford the monthly payment is the principal concern for their budget.

[Jim Becker]

That's true, 0% subsidized rates are going to be very rare unless market interest rates drop down into the gutter again, which is unlikely. Dealers talking about monthly payments is a sales technique that removes the actual price being paid for the vehicle from the conversation...sometimes masking higher prices and expensive but extremely profitable dealer add-ons. The same is true for folks who lease...don't discuss payments. Don't do a down payment. You negotiate the price of the vehicle that the dealer is willing to sell it for (for leasing, they are actually selling it to the leasing company) as well as what the residual will be before the topic of monthly cost comes up. You want the lowest price and the highest residual value. Knowing the money factor (effective interest rate) is also important.

[Myles Moran]

If you're looking at a Hyundai/Kia, I'd make sure you get a quote from insurance using a VIN you'd be interested in buying. Even if it's not affected by the theft issues, some insurance carriers are treating them all the same and you might find it not as good of a deal with insurance costs factored in.

And on the financing side, as long as you keep the loan for 90 days, the dealer gets the incentives from the bank. I haven't seen one that has a pre-payment penalty, but that doesn't mean those don't exist. If you're interested in cash, I'd at least ask if there is a difference in price for cash vs financing. Worst case they tell you the price is the same.

[Brian Elfert]

Sometimes there is a rebate for financing with the manufacturer's financing arm. I didn't have cash to pay for my current vehicle, but I took the more expensive factory financing and then refinanced in a couple of months with my credit union. There is a trick dealers use if they line up financing with a lender that isn't associated with the manufacturer. The dealer will offer the financing at a higher interest rate than the lender's interest rate. The lender then gives the dealer a commission on the increased interest rate.

[Jim Becker]

f you're interested in cash, I'd at least ask if there is a difference in price for cash vs financing. Worst case they tell you the price is the same.
Never discuss how the vehicle will be paid for until a final price is agreed upon. If you ask that question, you are giving the dealer an opportunity to direct the negotiation rather than it being you.

[Andrew Joiner]

Yes, that's sound advice. Price first. How to pay for it last.
Great tip!
Thanks everyone for your all your input on this.

[Brian Elfert]

Payment method and trade-in, if any, should not be discussed until after you reach a price on the new vehicle. If you tell them about the trade-in right away they will use the trade-in as part of their sales pitch. They do things like reduce the value of your trade so they can claim they are giving you a better deal on your new vehicle. Before cars were sold at full MSRP if you wanted more for your trade they would just jack up the price of the new vehicle and give you more for the trade. The bottom line cost of the new vehicle doesn't change when they change the numbers.

[Myles Moran]

Never discuss how the vehicle will be paid for until a final price is agreed upon. If you ask that question, you are giving the dealer an opportunity to direct the negotiation rather than it being you.

So I'm not super well versed in car buying, but my experience in the last few years has been dealers giving a number of "x below MSRP, that's our price". Are there places that are still doing the big production of back and forth to the managers desk on car prices? We've only had to play that game with trade in value.

[Jim Becker]

While some dealers offer "their price", it's always still negotiable if they want to actually sell to a savvy buyer. I frankly don't look at MSRP. I focus on Dealer Invoice because that's the most I'm willing to pay. In some cases, one can get 1-5% below Dealer Invoice, either through certain programs or through negotiation. Remember, dealers have quite a few incentives available that put their actual costs much lower than "Dealer Invoice". But this is also why it's often possible to get better prices from high volume dealers than the smaller dealers. While it's nice to support your local, small town dealer, if price truely is important, then being willing to travel to complete a purchase is a consideration. And to your question, some dealers are still doing the "dastardly dance". You cut that off at the knees by being prepared and informed and as has been noted already, being willing to say "have a nice day" and walk out the door with your money.

One other thing that folks often make the mistake of creating "personal time wasting" is being too focused on that last five dollars of discount. "Well, that dealer in the next town offered it for $100 less..." That's kewel, but is $100 worth the extra time and effort? For a more substantial difference? Yes. But know when to just accept a reasonable offer that gets you what you want and maybe use that to get an accessory added at no cost to you for accepting the deal, even though it's not "the lowest".

[Rick Potter]

If you check You Tube, you will find many short videos by people in the biz who say that times have changed, and dealers are way overstocked on High content (expensive) cars, and few less optioned ones. $70-100K pickups are loading many dealers lots, while it is hard to find a 'work truck'. Some of the 'on-line used car companies are already gone, and Carvana is hurting because they bought so many expensive vehicles thinking the shortage would never end.

One guy shows pics of repo auctions with loads of fancy pickups and Dodge Hellcats, etc., bought by people who had a down payment but couldn't keep up the payments, especially since the interest rate has gone up so much.

No real advice, except do your homework and study the current financial conditions and inventories, for what best suits you.

[Jim Becker]

Rick, "basic work trucks", while still available, are not really being ordered for stock by many dealers because most of the market is the higher trims that are essentially passenger vehicles. Not many folks show up off the street looking for them. IE, the profits are in the non-work-focused vehicles. There are some dealers that are exceptions who have a dedicated sales operation for trucks and vans focused on the trades. If someone wants a basic work truck, order it if it's not readily available in your area. Honestly, I order vehicles the way I want anyway, so if I were needing a "work truck" (not that it's going to happen), I'd likely order that too. BTW, all the contractors that I know buy the nicer trucks anyway.

[Pat Germain]

If you check You Tube, you will find many short videos by people in the biz who say that times have changed, and dealers are way overstocked on High content (expensive) cars, and few less optioned ones. $70-100K pickups are loading many dealers lots, while it is hard to find a 'work truck'. Some of the 'on-line used car companies are already gone, and Carvana is hurting because they bought so many expensive vehicles thinking the shortage would never end.

One guy shows pics of repo auctions with loads of fancy pickups and Dodge Hellcats, etc., bought by people who had a down payment but couldn't keep up the payments, especially since the interest rate has gone up so much.

No real advice, except do your homework and study the current financial conditions and inventories, for what best suits you.

I have seen some of those videos. And yet, I don't see any evidence of dealers lowering their prices to move all that inventory.

I'm a member of a Ford Mustang club. We hold our meetings at a local Ford dealership. During the recent pandemic, that dealer couldn't keep anything on the lot. They had very long waiting lists for trucks, Broncos, the "Mustang" Mach E and the new Maverick. The waiting list for the Maverick got so long, they stopped adding people to the list.

Now that dealership is chock-o-block with inventory. It's mostly full size trucks. And yep, they are all loaded with options. The MSRP on these trucks is typically $80,000 to over $100,000. The interest payments on these trucks has to be killing the dealership. Ford recently cut the price of the new Mach E because demand collapsed after Tesla lowered their prices. I'm not sure what's going on with the new Maverick. People still want those trucks, but I've have seen only two on the road and I've never seen one at the dealer.

So do they lower their prices to move out all that inventory? Absolutely not! Sure, they're not asking $20,000 over MSRP like they were a couple of years ago. But you'll have to fight very hard to get them to come down much below MSRP. Not sure how this is a viable business model. I get the impression the National Automobile Dealers Association is telling them to hold tight lest the bottom fall out of the new vehicle market; which is really what should be happening.

[Jim Becker]

Pat, my good friend just finally took delivery of his Maverick truck and I got to drive it. It's a really nice vehicle. Comfortable and well equipped in the top trim level that he bought. It's also getting him 36 mpg (hybrid) compared to the high teens/low twenties he was getting with the Acura he drove previously. And it has a (small but) usable truck bed that's supportive of what he likes to do. For bigger stuff, he borrows my utility trailer. The one reason I wouldn't buy one is that it's 2WD in the hybrid format. I'm a committed AWD person.

Dealers are not giving away vehicles because they don't need to...people are buying despite the higher prices and interest rates. But at least negotiation is back on the table, unlike when supply was seriously constrained.

[Pat Germain]

Pat, my good friend just finally took delivery of his Maverick truck and I got to drive it. It's a really nice vehicle. Comfortable and well equipped in the top trim level that he bought. It's also getting him 36 mpg (hybrid) compared to the high teens/low twenties he was getting with the Acura he drove previously. And it has a (small but) usable truck bed that's supportive of what he likes to do. For bigger stuff, he borrows my utility trailer. The one reason I wouldn't buy one is that it's 2WD in the hybrid format. I'm a committed AWD person.

Dealers are not giving away vehicles because they don't need to...people are buying despite the higher prices and interest rates. But at least negotiation is back on the table, unlike when supply was seriously constrained.

I've heard those Maverick trucks are indeed great. Did your friend have to order his Maverick and wait months to get it? I'm just confused as to why these trucks just don't seem to be available to buy.

Certainly people are buying vehicles. But they don't appear to be buying the $100,000 pickups at my local Ford dealer.

[Jim Becker]

I've heard those Maverick trucks are indeed great. Did your friend have to order his Maverick and wait months to get it? I'm just confused as to why these trucks just don't seem to be available to buy.
Yes, my friend had to wait a very long time for his order...many months but I forget how many. They reason they are not just available for sale on lots is that Ford cannot produce them fast enough to keep up with existing customer orders yet. The pre-order process was insanely popular and even after that the fervor continued. There are similar waits for other vehicles, like the Toyota RAV Prime.

[Ron Selzer]

Largest local dealer is advertising 133 new F150's, starting just above 40k with 3k discount, 72 month zero financing, 4 Mavericks 28k to 40k. all at MSRP
Ron