Tips from an auto insider: how to buy a new car

A former car salesman offers the best formula for getting a great deal on a new car.

Mike Blake/Reuters/File
A row of new 2010 Toyota Prius hybrid vehicles sit for sale in the car lot at the Toyota dealership in El Cajon, Calif., March 9.

As a former new car salesman, I’ve found many prospects want the “lowest price” confusing it with the “best deal.” Generally, they haven’t done their homework or are in a hurry. You can be in control and get a great deal. To help you obtain the very best deal, I’ve developed the following formula:

C + CD + SB + SD + S + TI + LP + LIR = Great Deal

Buying the Car you really want from a Convenient Dealer with Solid Benefits, excellent Service Department, a Salesman you’re comfortable with, getting a fair “Trade In” combined with a Low Price and Low Interest Rate equals a Great Deal. To make this happen you need to first do your homework!

Here’s the process I’d use to get the best deal on a new car:

1 – Select your new car requirements including price range, dependability, safety, performance, transmission, budget, interior (cloth or leather) etc.

2 – Select the brands that meet your requirements. Research using the Internet, magazines, etc.

3 – Price models online with and/or You’ll get MSRP (Manufacture’s Suggested List Price) and Invoice Price (Actual Sales Department cost minus any manufacturer incentives.) TrueCar also shows average prices in a “bell curve” others have paid.

4 – Next, find the trade-in value on (Kelly Blue Book). Look under “Used Cars,” then select Trade-in Value. Hint: Expect that 99% are classified as “Fair” or “Good” condition.

5 – Can you afford the car you want? Answer the question, does the cost of this car fit into my budget? A rule of thumb is your payment will be about $20 per $1000 for whatever you borrow. So, a $25,000 car will cost about $500 per month.

6 – Giving preference to those closest to you, Call dealerships selling your target vehicle(s) and ask their salesman (besides his sparkling personality and price) why should I purchase from your dealership? Write the reasons down. These may include FREE car washes; FREE 2-year service; fabric protection, on-the-road service, etc. Hint: Choose dealers with the best offers, who are close enough for you to take advantage of these FREE services.

Hint: Salesmen ask many questions. In particular they want your name and contact information. Be firm but pleasant. Give your first name only, then ask his full name and days and hours he works. Tell him you’re interviewing dealerships. Later, if you like the dealership, you can choose to use or avoid this salesman.

7 – If possible make a definite appointment at your target dealerships to see the exact car you want.
Allow a maximum of 1-1/2 hours. If you see a salesman you’d like to do business with, walk directly up to him, avoiding all other salesmen. Dealerships may have an “Up” system giving you no choice. If you immediately don’t like one, ask the receptionist for a different salesman.

Salesmen want to close the deal NOW, so explain you’re not buying today – just getting acquainted with the salesman, dealership and car. NEVER discuss price or payment, but get information on any interest rate special. Note: You may be the salesman’s only customer that day, so give him a good opportunity to earn your business with a thorough demonstration, Service Department “walk through” and test drive (black and red cars drive exactly alike.)

Choose a salesperson and give your contact information to them only. Stick with them, so they get 100% of your commission. (Diminished commission by 50% means poor assistance.) They will or should follow up with you to see if you’re ready to buy the car. Advice: Don’t avoid the call! Answer and be completely honest. He’s just trying to make a living. If you’re going to purchase another car tell him or he’ll keep calling. Otherwise, give him your timeline and when the best time to call.

If the salesman shows you a new feature or accessory you really like, re-contact the other dealerships to make certain it’s available there as well and is included in their price.

8 – From the comfort of your home, get the internet quote from local dealers you’ve disqualified,
including the exact model, color and accessories you want. Warning: If you check the Internet Price at your dealer, the Internet Sales Manager (who has time to give lowest prices – so won’t/can’t take time to troubleshoot or explain all the car’s features – gets the sale and your salesman may get nothing! Hint: To check the validity of the price, go to and

9 – Contact your bank, credit union or financial institution to get their loan rate on the car you’d like to purchase. You are now armed with the approximate cost of the car and trade-in value.

10 – Call the dealer. Armed with copies of the best internet quotes from your area, the expected trade-in value from KBB, all the benefits promised, after the 15th of the month, call the 1st choice dealer/salesman for an appointment for car appraisal and purchase the car. Be very open providing copies of pricing you’ve been quoted. Explain that you expect all fees including the Document Fee to be included in the final price.

11 – Make the deal, getting everything in writing including the interest rate before signing the final contract. (I wouldn’t worry if the price is a couple hundred dollars higher than the Internet price, because you’ve got all the other benefits (demo assistance, prior inspection of the vehicle, lower interest rate, after the sale assistance) that the Internet salesman rarely offers you. Naturally, if the price is not even close to the Internet price, they haven’t earned your business.

Note: All businesses deserve to make a profit, so the owners can give to their favorite charities. You just don’t want to be taken advantage of. If customers take out all the profit, the dealership will close, providing you zero benefits in the future. If the salesman makes no profit, he gets minimum wage of $7 an hour for all the work he did for you. There are places later in the deal so safe unwarranted fees.

12 – Inspect the vehicle thoroughly making certain it’s free of scratches, dents and everything works perfectly. This is you’re last power position in the deal. If the car is not perfect, DO NOT proceed to the Business/Finance Office.

13 – The last place for the dealership to make sneaky profit from you is in the Business Office, sometimes known as Finance. Here, you’ll get pressured with extended warranties, special coatings, insurance products of all types, and on and on. Pretty generally, I’d say don’t buy anything. All these have much less value than the price they ask you to pay.

What you want to know is; what is their interest rate and who is the vendor from whom you are borrowing. If you’re not comfortable from the Loaning Agency or the interest rate, you can fall back on the best price from your bank/credit union/lending institution. Smile. At this point the Business Manager will generally find a way to lower his interest rate.

C + CD + SB + SD + S + TI + LP + LIR = Great Deal

Congratulations! You’ve purchase your new car at a Great Deal, because you’ve done your homework. You’ve bought the Car you really wanted from a Convenient Dealer with Solid Benefits, excellent Service Department, from a Salesman you’re comfortable with, got a fair “Trade In” combined with a Low Price and Low Interest Rate with all the promises in writing.

KEY: This, however, is not the time to quit. After happily driving your car for a week or so with no problems, return to the dealership and give your salesman a nice gift for his work on your behalf, such as several dozen homemade cookies, a nice fruit basket, fancy candies, etc. You are now earning good will from him. He’ll bend over backwards to help you with all other issues in the future.

Jim Edwards, a former car salesman, is familiar with the ins and out of the industry. Jim has spent a majority of his career helping businesses with product planning and strategic marketing. You can read more from him as his website,

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