Buying a New Car: Avoid the Hassle


By Carlos Portocarrero

new car interior

Buying a new car is supposed to be exciting. Ask anyone that’s bought a car recently and they’ll probably rave about it and how much they love it.

The process of actually buying the new car? Not so much.

Car salesmen are notorious for being sneaky, manipulative, and making you feel like you’re being ripped off. That kind of takes the fun out of it, don’t you think?

So if you’re thinking of buying a new car, just follow these tips and it will minimize all the aggravation. They helped make my recent car purchase (the car is awesome!) as enjoyable as possible (it could’ve been a lot worse).

#1 Buying a New Car: The Basics

If you’ve never bought a car before, you need to know the basics:

  • You should never pay the MSRP price
  • There’s something called the invoice price. Your goal is to pay less than the invoice price
  • Sites like TrueCar can help with figuring out what the invoice price is
  • Shop for your own financing—going through the dealer limits your options
  • If you’re trading in your current car, find out what value it might have by using Edmunds.com and CarMax
  • Use a payment calculator to see how much you can realistically afford before you fall in love with any car
  • Don’t forget you’ll also need to add taxes, plates, transportation fees, etc. These can add up quickly

#2 Do Your Research

This goes without saying. There is so much information out there and if you don’t take advantage of it, you’re asking for trouble. Start by reading reviews (Consumer Reports is a great resource) and getting a sense of which car is good for you.

A simple search for “[car you want] reviews” will get you started as you try to decide which car you want to buy. Ask your friends on Facebook and you’ll get some honest feedback.

I also highly recommend going to the official site of the cars you’re thinking of buying—that’s usually the best place to view all the different trims and options that are available.

We created a spreadsheet with the features that were important to us and put in the 6-7 cars we thought would be a good match and compared them that way (FYI, our rows were price, trunk space, and leg room).

car comparison spreadsheet

#3 Test Drive First

Be very clear when you show up at a dealership that you aren’t buying a new car on that day—you’re only test driving. We left the door open to potentially buying “if we got a great deal” thinking that would improve the service we got.

Bad idea.

The dealer wouldn’t let us leave and called us several times trying to close a deal we knew would never happen. It ended up becoming a huge hassle.

When we were up front about not buying a car the dealers were very helpful and didn’t pressure us at all.

#4 Pick the Car You Want

What can I say? This could be the hardest part of the whole process. Pick a car you can afford, that meets your needs, and you can get excited about. You’re going to own it for a while (hopefully).

#5 Use the Power of Email

Once you’ve picked the car, it’s time to get down to business. Here’s what you do:

  1. If you’re trading in your old car, take it to CarMax for a quick, 20-minute visit. They’ll give you a number that’s good for 7 days and is great leverage once you show up at the dealership
  2. Find dealers within 100 miles of you that sell the car (use Google Maps or the car maker’s site)
  3. Send them all the same message/e-mail spelling exactly the trim you want with the features you want. Be VERY specific!
  4. Ask them for their best “out the door” quote (includes taxes, fees, etc.)
  5. Punch these quotes into your spreadsheet
  6. Once you hear back from all of them, email them back and ask them to match the lowest number you got, making it very clear that if any new numbers pop up later in the process, you aren’t going to do business with them
  7. Pick the dealer that gave you the best price and print out all the emails you had with them
  8. Got get your new car!

Our dealer tried to pull some funny business at the end, and I just kept pointing at the emails he and I had gone back and forth on. He still tried to interpret his words differently (so it’s important to be VERY clear in them), but inevitably that’s what got me the deal I wanted.

#6 Buy the Car

You’d think that once you do all that work, you would just show up to pick up your new car, right?

Wrong.

Now you have to face the actual dealer. There might be “complications” and meetings to “work out the numbers.” Just point at the emails you brought with you and say “I want the deal you promised me.”

If they resist, walk out the door and tell them you’re going to dealer #2, who also matched the deal you sent out.

They’ll try hard to keep you there, so stick to your guns and you should be OK.

Bonus Tip: Find Underground Sites

One of the best things I did was discover two sites specific to the car we were looking for: the Subaru Outback. One was a forum of Outback owners (Subaru Outback Forum) where owners and potential owners discussed all kinds of really useful things, and the other was run by an Outback dealer in Seattle that ran a “behind the scenes” look at everything you could ever want to know about buying one (Cars 101). Thanks to those two sites, I had a wealth of information specific to the car I wanted to buy:

  • How much others payed for their car, including which features they added
  • How they negotiated with the dealer
  • Different aftermarket vendors they used for things like leather or sound systems
  • Things they would’ve done differently when buying their car
  • Random tips to help you make your decision on which trim is right for you
  • Special deals in effect from the car maker
  • Insight from the dealers themselves on what they’re trying to get out of a deal

Image by NRMA New Cars


13 Responses to “Buying a New Car: Avoid the Hassle”

  • Joel Says:

    We also have a Subaru Outback, and we endured some shenanigans to get it. The dealer did the old “I have to go talk to the manager to clear this” trick, and left us sitting there for what felt like hours. We had a newborn with us, so we didn’t have endless time. In the end, he wore us down and — while we got a good deal — we didn’t get as much as we could have.

    Thanks for the helpful tips!

  • John Cap Says:

    Just a few thoughts on getting to a fair purchase price:

    I was a bit obsessed with finding the true price the dealer paid for the vehicle, which is (as you pointed out) well below “dealer invoice”. Each manufacturer has different arrangements with their dealer network, so I made a spreadsheet in Google docs (so that I would have it handy when I was at dealers, if needed) to calculate it for each vehicle we were interested in and the configuration we were looking for.

    Things to add and subtract to the dealer invoice to get to their bottom line “cost” include:

    Ad Fee (a cost to the dealer from some manufacturers)

    Holdback (an incentive paid to the dealer by the manufacturer, generally based on MSRP, but not always. Here’s a link that shows the calc by manufacturer: http://www.edmunds.com/car-buying/dealer-holdback/)

    Rebates (these are short term incentive rebates paid by the manufacturer to the dealer, google to find them…these can be large, especially towards the end of a model year, and are NOT the same thing as the manufacturer rebate to the customer)

    The “floor” that any dealer would get to on price to the customer (before tax, title, and license) seemed to be around 1% above this calculated dealer price, which I considered a fair price.

    So, my formula for the price I was seeking was:
    Dealer invoice (destination fee inclusive)
    + Ad fees
    – Holdback
    – Dealer Rebate
    = True Dealer Cost
    x 1.01 (markup) = Fair purchase price

    My calculated “fair purchase price” gave me a good goal to seek when weeding through quotes. Of course, I never revealed this number, just endeavored to reach it.

    Negotiating on price via e-mail with what most of the dealers call their “online manager” was easiest to me, and making sure there was a specific car that they had in stock to negotiate on was key as well, so that they don’t end up saying, “well, I don’t have anything in that configuration, but I do have this one with X option added”. This was all after test drives, etc., were done, of course. And I’m with you on the CarMax idea…it was a good place to drive a bunch of cars quickly and to get a baseline quote for your trade in.

    Hope that helps add to your excellent tips. By the way, I am a fellow proud owner of a Subaru Outback…so far, so good! Great family car.

  • Mark Miller Says:

    Great advice for the whole car buying process from soup to nuts. After going through the hassle of buying new, we now buy used. We look for cars about 2 years old with low mileage. No hassle, no depreciation when you drive off the lot, and so far no lemons. We bought a new car for our daughter when she got her license because we took advantage for Clunkers for Cash and got an amazing deal. What we forgot about was how expensive registration and insurance are for brand new cars. In hindsight, we wish we would have bought used.

  • Steve Says:

    In hindsight, we wish we would have bought used.

  • Jon Says:

    Test driving and taking the car to a mechanic is really important. I have a close friend who bought a car after test driving it only once, now he regrets it. The car is at the mechanic most of the time !

  • Thomas | MaADD Finances Says:

    Nice tips! Especially test driving and letting them know up front that you are not buying that day. Also by near the end of the month. They seem to be more willing to give better deal to meet there quota.

  • EL @ Moneywatch101 Says:

    Nice tips, I think negotating in general will always help you get a good deal. Many people are too shy to say, is that the best you can do? Give up the pride and hassle back.

  • cashloansonlinefast Says:

    No doubt that cars are the biggest waste of money, but my top concern isn’t mileage, its age. Wiring & sensors make up an overwhelming majority of car problems even when you maintain them well. Some days I can not have my car fail me, so my rule of thumb is to think about trading it in when it gets to 10 yrs old, and someone who needs a 2nd vehicle or around town driver can use up the other half of its life.

  • John @ Wild AboutFinance Says:

    Especially analyze generating and allowing them to know in advance side that you are not purchasing that day. Also by near the end of the 30 days. They seem to be more willing to provide better cope to fulfill there allowance.

  • Sandra Mercier Says:

    Thank you! What an interesting article! Thanks again for sharing!

  • Mathieu Lebrun Says:

    Thank you for your blog, the information is very relevant

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