Auto prices are never set in stone. Learn to negotiate properly and you could save thousands of dollars.

New Car 101 is a consumer guide that takes the guess work out of figuring out auto prices and helps you get a great deal! The fastest and easiest way to determine fair auto pricing is to use a combination of online resources and information you get directly from your local dealership. Ultimately, what you pay for your new car will depend how successful you are at negotiating a purchase price.

Hot Tip - Start a bidding war!

The more auto dealers you have competing for your business the better deal you are going to get! Get auto price quotes from local dealerships through Car Works, Invoice Dealers, Edmunds, Auto Web, and Autos.com Have the dealerships bid against each other. Because they compete, you win! Read our Four Steps to Getting a Great Deal below.

Four Steps to Getting a Great Deal!

1. Contact the dealerships. Go to Car Works, Invoice Dealers, Edmunds, Auto Web, and Autos.com.
   
2. Research rebates and incentives. While you are waiting for your auto price quotes, go to Edmunds to find out if your car has any manufacturer incentives or rebates. If there are any write these down.
   
   
3. Calculating your opening offer. To calculate a good opening offer you have to figure out how much profit you want to give the dealer.
   My suggestion is that you begin by offering 3% above the dealer invoice cost. To figure this out, take dealer invoice price (minus any factory to dealer incentives) and multiply that number by 3% - this is the amount of profit you will pay to the dealership. Now, take the dealer profit figure and add it back onto the invoice price (minus any factory to dealer incentives) and this is your starting offer.
   
   Example
   
   Dealer Invoice = $18,000
   
   Factory to dealer incentive = $500
   
   Dealer profit (17,500 x .03) = $540
   
   Opening offer ($18,000 - $500 + 540) = $18,040
   
   
4. Getting dealers to compete for your business! This is where the fun starts. You are going to be able to negotiate a great purchase price right from behind the comfort of your computer screen. Once the dealer auto price quotes arrive compare them to each other and to your planned opening offer. If the auto price quotes are at or near the MSRP sticker price you are in a hot market. When a car is selling well, dealers will try to get close to or even above the MSRP sticker price for a car. Don't worry you can still get a great deal if you encourage the dealers to compete against each other for your business. The majority of car dealers would choose to take less profit rather than loose a sale to another dealer.

If the auto price quotes you get are well below MSRP sticker price, then you're n a cool market for the model you are interested in. All the cards are stacked in your favor for getting a great deal.

Here's how to negotiate the best auto prices in either a hot or cool market to insure you get a great deal>>>

Negotiating in a Hot Market.

Send a detailed email to all the dealers with a counter offer. List the exact make, model, options and color of the car you want. List the invoice price of the car and any factory to dealer incentives.

Tell them you're willing to pay 3% over their invoice cost minus any factory to dealer incentives. List your offer. Ask them when they respond to your offer to also list any fees they plan on charging you on top of the negotiated auto price.

A favorite trick of some dealers is to slip in bogus fees after you have negotiated an auto price. See our list of Car Dealer Fees to learn which fees you will have to pay and which fees you can refuse to pay.

Send your email and wait for responses. When you get the dealer responses find the offer that is the lowest and compare it with the other offers. Make sure they have listed all the fees that they are going to charge you so you don't have any surprises later. Select the overall lowest offer. Email the other dealers and let them know that you have received a lower offer and tell them the name of the dealership that gave you the offer. This way they will know that you are not bluffing and it should really stir up some competition.

Do not tell the other dealerships the amount of your lowest offer. Send your emails and wait for responses.

If any of the dealers respond with an even lower auto price quote than you currently have, then email the dealer who previous had the best offer letting him know that you have received a lower auto price quote, who gave it to you, and asking if he can beat that offer.

Continue this process until there is no one who will beat your best auto price quote. Don't get into dickering over a few dollars. This whole process should not take more than a few days and a few minutes of your time for each email you send.

If you are trading in a car you are still going to have to do more negotiating over the value of your trade-in. The dealership that is offering you the best auto prices at the end of this round of negotiations may not be the dealership from whom you end up buying your car. To learn about auto prices for used cars see the Sell my Car page.

At this point you should not let the dealers know that you are planning on trading in a car. If you do they may offer you a great price on the new car to get you to come into the dealership (or even worse put down a deposit) and then try to lowball you (offer less than it is worth) on your trade-in.

Negotiating in a cool market.

If the dealer car price quotes are at or near the planned opening offer which you figured out above, then forget your planned opening offer. Choose the lowest auto price quote and start the bidding war (see negotiating in a hot market above for how this works).

Your first trip to the dealership.

Contact the dealer who has given you the best auto price quote and let them know that you would like to come in to talk over the numbers and test drive the car. Click here for new car test drive tips.

Don't buy a car on your first visit to the dealership!

I don't care if your salesman tells you that he will fill your trunk with solid gold bricks - don't buy!!

On your first trip to the dealership you want to confirm your auto pricing information, test drive the car and have your trade-in appraised. That is it. Be up front with your salesperson and let them know what you want to get accomplished on this first trip. Make sure they know that you're not going to buy a car today.

When you get to the dealership I suggest you do things in this order: test drive the car (also copy down the MSRP sticker information), talk with your salesperson to confirm the auto price quotes they sent you by email, and then ask your salesperson to get your trade-in appraised. See the Sell my Car page for more detail.

At this point your salesperson may be foaming at the mouth to sell you a car. Do not sign anything or give them a deposit of any kind. Be courteous, thank them for their time and let them know when you will get back to them to tell them if you are going to purchase the car or not.

Important. Bring a pencil and pad with you when you go to the dealership so you can write down all the necessary auto price information.

Hot Tip!

Before you go to the dealership read our Sell my Car page if you are going to be selling or trading in your current car. To save time and energy you can combine this first fact finding trip to the dealership with your used car shopping trip.

Hot tip!

When you are negotiating the purchase price of your car never let the salesman know that you really like the car. If a salesman knows you are totally in love with a specific car they have the advantage in negotiating the auto price with you.

Hot tip!

If you are going to pay cash or have your own financing you should wait until after you have negotiated the auto price of your new car and trade-in to the tell the dealer about this. If they ask you about financing you can be non-committal about it. Make sure you check out our Auto Loan page before making any final decisions on car financing.

Congratulations!

You have completed your auto pricing research and now you are ready to go in for the kill and purchase your new car. Before you leap out of the nest make sure you have completed the following steps>>>

• You know exactly how much money you have to spend. You have shopped for an auto loan, and found the best financing source possible. If you have not done all of this check out our New Car Financing page. This information could save you thousands of dollars.
  
  
• You have read our Sell my Car page and have a plan for how you're going to get the most money for your used car.
  
  

  OK..Ready, Set, Go...

  Step 4 - New Car Purchase!