Six Steps to Getting the Lowest Price on a New Car

Assuming you know what make and model new car you want, here is the six-step process we use at Car Hunter LLC to guarantee we get our clients the best possible price on a new car. I don’t worry about disclosing our “secret sauce” because this process is not rocket science. That said, it does take more time and effort than most people are willing to give it. Most folks would be better off paying a service like Car Hunter LLC to implement the process rather than going it alone. However, if you want to do the work, we are happy to share our methodology.

In order for our buying process to work for you, be sure to give yourself five to seven days and a few hours each day. Be patient, follow the six steps below, and let market price competition work its magic. As you pursue our buying process, remember: the sales price of the car is not the total out-of-pocket cost of the deal. The six steps below are just focused on getting the lowest price for the car. Don’t ignore costs for financing, accessories, trade-in allowance, extended warranties, car insurance and dealer fees. These costs can add up in a hurry.

Getting the Lowest Price for a New Car Follows the 80/20 Rule

Getting the lowest price on a new car is 20% inspiration and 80% perspiration. That is, 20% inspired one-on-one price negotiation and 80% perspiration needed to generate price competition among competing dealers. Most of our success comes from getting at least seven to eight price quotes from dealers who know you are price shopping with other dealers. Creating price competition takes work, but it’s not hard work. You just have to put in place the right process steps, at the right time, with the right people. 

Unlike one-of-a-kind collector cars, new cars are commodities – they are just widgets to be moved. So, many dealers will deeply discount their inventory without time-wasting, back and forth negotiation, so long as the dealer knows you are getting bids from multiple dealers, and you work with the right people at the dealership – typically the internet manager, fleet manager, or sales manager. You need to work with the right person by phone or online; don’t waste time by going to the dealership until you have a deal. Once you’ve gotten most of the way to the lowest through creating price competition, some inspired on-one-one negotiation will bring home the final savings, as described below.

 
The more offers you get from dealers, the better chance you have of hitting a home run on price. Don’t short change the process; it just won’t work if you only get a few bids. Dealers count on shoppers who are unwilling to do the work. A shopper cannot replicate our success in buying cars if they don’t have time to implement the process. Instead, save yourself time, money and hassle by using a car-finding firm like Car Hunter LLC. That will save more money on the deal than the cost of our fees – by a wide margin.

And remember, to get at least seven dealer price quotes, you’ll probably have to contact roughly twice that number of dealers. Not every dealer will have a car that meets your specifications, and some won’t respond to your bid solicitation because it doesn’t align with their business model. You’ll have the most luck with dealers who have a high volume, low margin business model. Dealers who do not get large allocations of cars to sell may have to rely unwitting buyers willing to pay too much. They often rely on “sequestering” customers in the dealership and beating them into submission. Life is just too short for that – don’t get sucked in.

Why Casting a Wide Net is Necessary to Get the Lowest Price on New Cars

New Cars Are Commodities. This is especially true for domestic brands and foreign cars with high sales volume. For example, a new Ford Explorer sold in Oregon is the same unit as one sold in Arizona. If you want the lowest price, why buy from the first dealer you contact without knowing the cost of the same exact car at other dealers within your market area? 

Timing is Key. Car dealers often sell their cars below their invoice cost if you catch them at the right time. Dealers are motivated by various factors. They may need to meet a sales quota at month-end, quarter-end, or year-end, or perhaps the car you want has been sitting on their lot too long, or maybe the make and model you want is a slow mover. If you contact a dealer when they are motivated, you will get a fantastic price without having to haggle much, if any. However, because you don’t know which dealers are motivated by what circumstances, or when, you have to cast a wide net and solicit enough price quotes to let the market work its magic. 

The Step-by-Step Process:

Step 1: To Establish a Baseline, Get Automated Price Bids First.

Getting a “fair” price on a new car is easy using automated shopping tools, but in most cases it won’t be the best price. To establish a baseline, however, get a price quote from services like https://www.truecar.com/ which has a large number of participating dealers. There are a few other services from which to get automated price bids, but we suggest starting here.

Step 2: Compile a list of Dealerships in Your Region.

Services like TrueCar represent great steps forward in streamlining the car shopping process. However, many dealers do not participate in those services, so you have to compile a list of all dealers in the market area to ensure you get price quotes from at least seven dealers. Sometimes, the search area has to expand from the local area to the regional area to get at least seven price quotes. This often happens with foreign cars, like Porsche or Genesis, which have relatively few dealers. Expanding the market area is worthwhile, though. In my experience, dealers further away from you offer greater price concessions. To be safe, figure you’ll need a list of 14 to 18 dealers to ensure at least seven bids in a reasonable time frame. Almost always, a list of local or regional dealers can be found on the manufacturer’s web site. If the manufacturer’s web site makes it too difficult to get a regional list, use shopping sites like https://www.truecar.com/ or https://www.autotrader.com/ to find them, or by doing a Google search by state. 

Step 3: Contact Dealers to Get Price Quotes.

Once you have a list of relevant dealers, create an electronic spreadsheet of dealers using Excel, or do in manually. If you don’t use a spreadsheet, you won’t be able to keep all the information organized and easy to reference. Our spreadsheet has a row for each dealer and columns for pertinent information about the car and dealer. Regarding the car, use a column for MSRP, advertised price, deal price and for key features of the car, such as interior and exterior color and key options wanted. Also include columns for dealer information, such as contact name, phone, e-mail, physical address, and website address. 

Note in the spreadsheet the automated price bid prices you got from TrueCar, or similar services. For other dealers on your list, contact as many as needed to get at least seven price quotes. Because distant dealers can mean additional acquisition costs, like shipping, even if they have the best price, start with the closest dealers and those along major freeways, and move out from there. If you have an excess number of dealers in the market area, give priority attention to those with large inventories. They are more likely to align with the high volume, low margin business model that works best with this buying process.

For each dealer on the list, contact the internet manager, who usually is a salaried employee. If none, contact the dealer’s fleet manager. If none, contact the sales manager. Tell your dealership contact that you are getting price quotes from various dealers and let him/her know the make and model for which you are looking. Ask the internet manager for his/her e-mail address and cell phone number so you can then communicate in writing the specifications on the car you want and the information you need from the dealer. Let the dealer know you will follow-up by e-mail within the hour, and do so with an e-mail that reads something like the following: 

Greetings, Tom:

As we discussed by phone a short while ago, we are searching for a white 2024 Toyota Grand Highlander Limited with black leather interior and navigation. If you don’t have a Grand Highlander with those specifications, then please provide a price quote based on the closest match you have. We can be flexible with respect to other options. 

We are getting price quotes from several dealers and plan to go with the lowest overall price. We need to make an apples-to-apples comparison, so for each car you have that meets our basic specifications above, we’d like you to provide a quote based on the amount over or under invoice for which you’d sell the car. If we are able to agree on a deal, we’ll want to see a copy of the invoice.

Please provide the following information in your price quote: amount over or under invoice; all costs or fees not listed on the invoice; required dealer adds, and an itemized out-the-door price. Also, please let us know about any applicable rebates or incentives available on this model. We are ready to purchase now, so we look forward to getting your price quote as quickly as possible.

Thank you, 

 Step 4: Follow-Up with Dealers Slow to Respond

Give dealers 24 hours to respond. If they haven’t, follow-up. There are a variety of reasons dealers why fail to follow-up promptly. Don’t try to figure out why, just make a follow-up request promptly so you can convey that you are a serious buyer. Usually, it’s best just to forward the original e-mail with this new information:

Greeting, Tom:

I spoke to you yesterday by phone and followed-up with the e-mail below requesting a price quote. I did not hear back from you. We are motivated to finalize a purchase, so I am following-up. Can we get your price quote today? If you are not able to provide a quote, please let us know.

If that doesn’t elicit a response by end of day, call the internet manager to confirm receipt of your e-mails, try to get the needed information by phone, or get a promise to send a quote right away.

Even with clear instructions about what information you want, dealers often send just some of the information, like the out-the-door price. For an appropriate comparison about cars that might not be identically equipped, standardized quotes are necessary. So, follow-up with them and ask again for the information you originally requested so you can have an apples-to-apples comparison. You should indicate they provided and the information you still need.

 Step 5: Give Responding Dealers to Chance to Beat Your Lowest Bid

After you have a minimum of seven price quotes, including those from the automated pricing platforms, analyze the deals overall to determine the best one. First, look at who offered the lowest price relative to invoice. Then figure in additional fees and costs, such as administrative or documentation fees, which can vary wildly, especially across different states. Once you know the lowest overall price, contact each internet manager to offer them a chance to improve their price quote. Because dealerships have different fee structures, you have to account for these differences when giving dealers a chance to beat the lowest price quote. For example, if Dealer 1 and Dealer 2 have the same price quote relative to invoice on an identically equipped local car, they are tied for the best price. However, if Dealer 2’s documentation fees are $100 more than Dealer 1, then Dealer 2 would have to lower its sales price by more than $100 to beat Dealer 1’s price and be the best deal overall. 

Start with the highest price quote you received and contact each dealer. This can be done by phone or e-mail, but at this point it’s usually best to make contact by phone because interpersonal rapport matters when price differences get small. Also, consider giving each dealer some additional non-monetary incentive to lower their price quote. For example, virtually all dealers follow-up after the sale with a survey – promise them outstanding ratings. Also, you might promise to use the dealership for all your service requirements. If you need financing, and the dealer’s rates are roughly as good as your bank or credit union, consider offering to finance through the dealership. Or, if you plan to pay cash, offer to finance the vehicle. Financing makes the dealership money. You can pay off the loan virtually immediately, with no pre-payment penalty, as soon as the bank sets up your loan account, which is usually well before the first payment is due.

If the dealership lowers their price quote and becomes the lowest, let them know you still need to close the loop with a few more dealers and will be back in touch shortly. If a dealer says they will lower their price, but only if the deal is struck right then, always have a number in mind that represents a phenomenal deal, usually $500 below where you expect the bidding price to end up. Tell the dealer that if they can lower their quote to that number, then you can strike a deal without additional dealer calls.

Step 6: Last Best Offer

After making all your calls, and you have the lowest overall deal in hand, there is one more one-on-one negotiation step to take. Call the dealer who has offered to the lowest call overall and tell them that you like their dealership and responsiveness, and you would prefer to do a deal with them. Tell them that if they will lower their price by another $300, you won’t make any more dealer calls and are ready to finalize the deal right then. You won’t always get the $300, but you very often will get a good portion of it. Based upon our experience, don’t try to get more than $300 in this last step. You may blow up the deal altogether.

Once you have the best price, get the dealer to send you a signed purchase order that includes ALL of the following information. MSRP, invoice price, sales price, tax, title, license, registration, documentation/administration fees, cost of dealer added items, and the final out-the-door price. Make sure to have this purchase order at the dealership and compare it with the dealer’s final paperwork. Sometimes paperwork mysteriously changes between purchase order the final contract. Review thoroughly while signing final paperwork.

If you follow these six steps, you can be confident of getting the best pricing available in your market on that new car make and model at that particular point in time. 

Happy Hunting!