New Car Buying Tips – Lower Price, Don’t Pay MSRP
Recently, my wife and I decided it was finally time to say goodbye to the minivan and get a different family vehicle. I’m happy to say we were successful – my wife and I are very happy with our new vehicle.
Having bought several new and used cars over the past thirty years, I’ve had a range of negative experiences. Each time, I learned a small lesson and promised myself I would never make that particular mistake again. I thought it might be useful to share the step-by-step actions that I found useful.
In my previous post, “New Car Buying Tips – Pick Specific Models and Features,” I discussed the importance of knowing exactly which features were available and which were requirements for you.
Assuming you’ve done that and know which model and features you want – and preferably have some acceptable alternates in mind as well – then, the next step is trimming off as much cost as you can from the manufacturer’s suggested retail price (MSRP).
The least you need to know:
Do not go to a dealership before you have negotiated an acceptable price. If you don't want to negotiate for even more savings, at least go to truecar.com to get their negotiated prices for your local dealers.
Continue reading for all the details and analysis.
The Honda CR-V was recently ranked #1 for affordable compact SUVs, so on the assumption that this makes the CR-V interesting to many people, I will use it in my examples and discussions. I also strongly recommend that you have 2 or 3 alternate models in mind, so that you can negotiate between different manufacturers and leverage potentially better incentives since they are constantly competing with each other. For compact SUVs as ranked in the link above, for example, I like the look of the Honda, Mazda, Ford and Toyota options.
For purposes of this article, when I want to compare a second vehicle, I will use the Ford Escape, simply because I like the styling a bit more than the others.
In my first post, I identified my requirements for all wheel drive, leather seats and heated seats and found models that met them: Honda CR-V EX-L AWD (MSRP $29,950) and Ford Escape models SE 4WD (MSRP $30,295) and Titanium (MSRP$31,255). In a follow up post, I looked at the issue of dealer inventory, so I’ll use the Honda CR-V EX-L AWD and the Ford Escape Titanium as I look to find lower prices.
Truecar.com Guaranteed Savings
Truecar is a great repository of information, plus they develop relationships with your dealerships which enables them to give you a guaranteed savings off the MSRP from dealers near you.
NOTE: Guaranteed Savings represents the amount that a TrueCar Certified Dealer selected by you guarantees that you will save off the Manufacturer's Suggested Retail Price ("MSRP") on any in-stock vehicle that is the same make, model, and trim as your Ideal Vehicle. The Guaranteed Savings is based on a vehicle without factory or dealer installed options and includes generally available manufacturer incentives. Guaranteed Savings currently not available in all states. In these instances, a "Target Price" is presented, which is not an advertised price, but an example of what you can reasonably expect to pay for a vehicle with your preferred options. SOURCE: www.truecar.com
Let’s see how it works for our models. Go to truecar.com and click on “Select a Vehicle.” We’ll pick Honda and then the CR-V and enter the zip code. At this point, we have to work through a wizard to choose the features we want: all wheel drive, no package, then select EX-L to match the build we identified previously. Here is the sales charts for a local area and nationwide sales.
The Truecar price for the CR-V is $28,347 (this varies week to week), which saves you over $1600 off of MSRP and is under factory invoice price.
NOTE: These savings will also vary from area to area. I checked the Seattle area and it was $1200 saving and in Huntingburg, Indiana it was $1600 savings.
If you click one of the several “Next” buttons and register on the site, Truecar will create price “certificates” (click on thumbnail to the right to see a sample) specific to your local dealers and those dealers will be given your contact information and start contacting you almost immediately.
If you are going to negotiate beyond the Truecar price, then I strongly recommend that you get the Truecar certificates for your alternate vehicle as well so you have more prices and dealers to negotiate with.
|truecar certificate sample|
Here are the Truecar charts for the Ford Escape Titanium 4WD.
Interesting that though the Escape MSRP is quite a bit higher than the CR-V, the Truecar price guarantee puts them much closer due to higher savings on the Escape. This is great, especially if you prefer the Escape but didn’t like the higher price.
Looking at the average sales price history for both vehicles (below), I can see that the Truecar prices for the both cars take them from MSRP down to just under factory invoice price. I also note that the average buyer pays about halfway between MSRP and invoice for the CR-V – don’t be that buyer!
|Honda CR-V average price paid and Truecar price||Ford Escape Titanium average price paid|
In summary, do not go to a dealership before you have negotiated an acceptable price. If you don't want to negotiate for even more savings, at least go to truecar.com to get their negotiated prices for your local dealers.
If, on the other hand, you want even more savings, then you may want to watch for my next post, here I describe how I used the Truecar price as a starting point to save even more.