Car Buying Advice

• Set a target price
• Getting the best price
• Auto-pricing terms
• No haggle prices
• How dealers make you pay

Set a target price

Your target price is the price you can reasonably hope to attain through negotiating. When you walk into a showroom, you’ll see a window sticker on every new car. It contains the MSRP, including the cost of options and the destination (delivery) charge. Typically, you will be able to negotiate a lower price with little resistance. But don’t even use the sticker price as your starting point. For example, dealer advertising might tout a promotional price like “$1,000 below the MSRP.” Unless the vehicle is in big demand and short supply, you should be able to pay even less than that by doing some homework before you visit the dealership.

Your target price will be a number between what the dealership paid the manufacturer for the car and the figure that appears on the window sticker. By knowing the dealer’s cost, you’ll know how much profit margin he or she has to work with. Your goal, then, is to get him or her to accept the slimmest possible profit. As a buyer, you have more power than you might think. For the purposes of negotiating, assume that they need you more than you need them. But you can’t expect a dealer to make nothing on the sale. Your target price needs to allow some room for a fair profit to the dealer.

To figure out the dealer’s actual cost, you need to find the dealer-invoice price, then subtract any current dealer sales incentives and the holdback amount from this figure.

Many Web sites and pricing guides supply invoice prices. Dealer incentives and holdback figures are a little harder to come by. Consumer Reports New Car Price Reports do this work for you. Each report shows the dealer-invoice price, the amount of any national or regional dealer sales incentives, and the holdback amount. They also provide you with the CR Bottom Line Price, which is a good point from which to begin your negotiations. You can also look up current sales incentives and holdback figures yourself at some auto-pricing Web sites.

A reasonable price for a vehicle is about 1 percent to 5 percent over the dealer’s cost. If a model has been on the market for a while and isn’t selling well—indicated by the automaker offering frequent rebates or special financing—you might be able to buy it for even less. If there’s more demand, you should expect to pay more. Occasionally, a much-anticipated new model comes along that commands full sticker or even more—for a while. If you want a good deal, wait until the gotta-have-it excitement dies down.