Everything I Learned About Buying a Car, Part 1: Buying New

by Lindy on April 25, 2012

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Three years ago, my husband needed a new car.

He wanted a crossover for lugging his music gear around and he’s partial to Hondas. So one Sunday afternoon we went down to the Honda dealer and test-drove a new CR-V.

The salesman offered to sell the car to us for $500 over dealer invoice, which sounded like a good deal. So we shrugged and said, “okay.

He offered us a financing rate of 4.99%, which sounded pretty good, and the monthly payment was within our budget so we said, “sure.”

He told us we could buy an extended warranty for $2000 more. We’d heard those were a good idea, so we said, “yes.”

We walked out that day with a brand new Honda CR-V. It was the easiest car-buying experience ever. 

Well, of course it was easy. Saying yes to everything is not very challenging.

Did we get a good deal on a new car by hardly trying? Fortunately, yes.

Could we have gotten a better deal if we’d tried a little harder? I think so.

Flash forward three years, and we found ourselves in the exact same situation. I was the one who needed a new car this time. I wanted a crossover for lugging my children around and I’m partial to Hondas. So we went down to the same Honda dealer on a Sunday afternoon and test-drove the newest CR-V.

The salesman offered to sell it to us for $500 over dealer invoice, with a 2.9% interest rate, and the monthly payment was within our budget.

I could have said yes that day when the salesman asked “do you want to make this CR-V your own?” (After I finished gagging at his cheesy line, of course.)

I could have walked away with a brand new car, easy-peasy, just like last time.

But my gut was saying, No. You can find a better deal if you try a little harder.

So over the next few weeks, I tried harder.

Being one who hates negotiating, and who is historically not a bargain hunter (or finder for that matter), I had my work cut out for me. But I tried none-the-less.

I started by reading everything I could find about buying a car. I learned there are three points of negotiation – the car price, the financing, and the trade-in – and I studied up on haggling tactics for all three.

I spent hours playing with numbers on spreadsheets, and figured out the exact amount I wanted to finance after trade-in and down payment.

Car Buying Spreadsheet

Fun times with spreadsheets

I had my heart set on a five year loan, with the lowest interest rate possible and a monthly payment of $180. This would allow me to snowball $200 of what we were paying on A-Rob’s car loan (recently paid off) towards our other debts.

Then I started hunting for cars. I was open to other makes and models, new or used, whatever would fit into my price range.

I scoured dealer websites for 0% financing offers. I opened up dialogues with car salesmen via email, phone, and in person. I did my best to pretend I was good at playing the negotiating game. I did my homework and tried to prepare for every line they fed me. And boy, there were a lot of lines.

There were times I thought maybe I was chasing an impossible dream. Maybe there’s no such thing as a crossover SUV with black interiors and low mileage for around $18K.

But after two weeks of what seemed like the hardest task and the longest search, sprinkled with that dirty feeling you get after too many interactions with grimy car salesman, I finally found my car.

And what do you know, I learned a whole lot about buying a car during my two weeks of Hell searching. So before I spill the details of what I bought, I’ll share what I discovered, starting with everything I learned about buying a new car. 

1. THE NUMBER ONE THING THAT CAR SALESMEN DON’T WANT YOU TO HEAR: The total price of the car, including taxes and fees.

Why? Because it’s a scary number. They’ll tell you your monthly payment all day long, however, because $260 per month is much more palatable than $25,600. Say you can’t afford $260 per month, well then *poof* by extending your loan by a year, they just magically lowered that payment to $230. Smoke, meet mirrors.

I even had one salesman go so far as to tell me the “total” after deducting my trade-in value.

No, you won’t hear the actual car price until you’re back in the finance department, seconds away from signing the papers. By then you’ve already decided you can’t live without this car, and walking away is basically not an option. When we bought our first CR-V three years ago, the finance guy even said “this is the number that scares everyone.”

So your mission, should you choose to accept it, is to get that salesman to give you a total. It’s the only way you can go in with your eyes wide open, which is pretty much always a good idea.

2. THE BEST ADVICE THAT DIDN’T WORK FOR ME: Negotiate with salesmen by email, and pit multiple dealers against each other.

This is the negotiating method suggested by the Car Negotiation Coach at Find the Best Car Price.com. In theory, negotiating with car dealers by email and getting them to beat the lowest offers of other dealers should work. And with time and effort, it might.

However, I found that car salesmen are just as tricky by email as they are in person. As a result, I lost my patience and didn’t follow this method to the letter.

3. THE MOST LOGICAL ADVICE THAT I DIDN’T USE: Wait to shop until the last week of the month.

Due to time constraints I started my car search at the beginning of the month. But studies show you’re at an advantage if you start shopping near the end of the month, when car salesmen are anxious to meet their sales quotas and more likely to take your low offers.


The tricky thing about negotiating a good deal on a new car is knowing what price to aim for. I know from prior experience that some dealers are willing to go as low as $500 above dealer invoice (dealer invoice = the cost the dealer pays to the manufacturer), but how do you know what that amount is?

Enter TrueCar.com. Just type in the year, make and model for the new car of your choice, and TrueCar will not only tell you the dealer invoice, but also the average price that buyers in your area have been paying.

You can even go a step further and sign up to have three Certified TrueCar dealers contact you. These dealers are supposed to offer you the price shown on the TrueCar website, but they are car salesmen, so they still have their tricks. It is, however, a good way to make contact with dealers if you’re trying to negotiate by email.

Beware though, you must give them your phone number when you sign up for this service. Even if you check the box that says you prefer to communicate by email, that will not stop them from ringing you up every night. Be prepared to screen your calls or use a phony phone number as a trade off.


The purpose of CarWoo is to allow buyers to anonymously negotiate with car dealers through the CarWoo website.

Type in the car you want, and CarWoo guarantees you’ll get offers from at least three dealers within 48 hours. They even have an iPhone app to track your offers.

The only problem, however, is that I only received two offers. The first one came about four days after I signed up for the free service. The second one came 10 days later, after I’d already purchased a car.

CarWoo proved to be a promising service that fell flat in execution.

6. THE MOST SURPRISING FACT ABOUT THE NUMBERS: Zero percent financing is not always the best deal.

Many manufacturers are offering zero percent financing deals right now. It sounds like a no-brainer, right? Can there be anything better than zero interest over the life of a loan?

Well as it turns out, yes, there can.

Go to any dealer website offering 0% financing, and you’ll probably see an either/or offer in effect. Either you take the zero percent financing, OR you take $1000 cash back.

As this article points out, taking the cash back might actually save you more in the long run.

My mind is officially blown.

And this post is officially 1400 words long, so I’ll take a break and let you soak it all in. Tomorrow I’ll be back sharing everything I learned about buying a used car.

Until then, why don’t you tell me about the last car you bought. Did you negotiate? How did it go?

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  • You already linked to our last car bought. :)

    Getting the “Walk-away price” is really important for being able to make side-by-side comparisons.

    Another thing is to negotiate the car purchase and financing separately, although that probably takes more time than the email negotiation.

    With the email, in order to get around the caginess, I would have started with the offer I got from the in person dealership (with the walk-away price) and asked if the other salesman could beat it. Once I got a hard number from one person, the playing around from almost everyone else stopped and we got down to brass tacks. Also give a time-limit for when you are planning on buying the car so they don’t feel like they have time to play games.

    But I do think the email negotiation works best for new cars, not used. There’s too many differences between used cars to be able to do that direct comparison.

    • Lindy

      It may have been part of my problem that I was trying to negotiate used or new via email. I don’t think a new car really existed in my price range anyhow.

  • I hate car buying, negotiating, etc, just like you. When I bought my car I tried to negotiate and they told me they didn’t negotiate at the dealership. they showed me the invoice that showed how much they bought my car for and it was like $200 less than what I was buying it for, so I guess I couldn’t complain!

  • Sounds like you did good Lindy!

    Questions and answers from my last car shopping experience .

    I had really good luck with email communicado. I detest salesman, so it kept me from feeling too dirty and allowed me to steer the conversation where I wanted. If they were too tricksy, I just moved on. No shortage of candidates.

    • Lindy

      That’s good to hear you had luck with the email method. I didn’t have the patience. I sorta just wanted to say, “hey, give me a car in good shape for 18K and we’ll do business.” Maybe I should have.

  • I bought new because 1-2 year old used were nearly expensive as new. I took my dad with me, and fortunately had a pretty nice salesman. It was an easy process. I got quotes from multiple dealers, took the lowest quote to the dealership that actually had the car I wanted in stock and gave it to him and he matched it. Could I have done better? I don’t know, but I’m happy with the result.

    • Lindy

      Being happy with the result is all that matters. And dads definitely help. :)

  • This was a great post! Thank you for sharing your experience. I’m about two years out from buying my next car but it’s already on my mind.

    • Lindy

      It comes up quickly. I’m glad we won’t have to do it for another 5 years or so.

  • Nansuelee

    We purchased our last car 5 1/2 years ago and I am excited to say on Monday April 30, 2012 it will be paid for. We will then be dividing the $380 between debt and savings. I would like to put it all toward debt but having two daughters in college I feel having some extra cash in savings will give me great piece of mind.

    Working as a loan officer in a credit union I come at buying a vehicle from a different stand point. When we bought our current vehicle I went to NADA online and found the value of our trade in. While test driving the vehicle I called a friend and had them get on NADA to find the retail value of the car we liked. The asking price was good and below what the retail value was listed at. The amount they were offering for my trade was well within the range it should have been but I asked for another $1000 anyway. When they countered with another $500 we took it.

    As for the financing we had arranged for that prior to the purchase. We knew what our rate would be and how much we wanted to borrow. I feel this is a good negotiating tool. If the dealer knows up front your financing is in place you can avoid the pressure their finance person completely. I always recommend getting preapproved for financing so you know what your loan will be. The folks at your regular financial institution are going to be more likely to look out for your best interests than someone sell a car and also making money from the purchase with the financing.

    • Lindy

      Great tips as always, Nansuelee! It never hurts to ask for more. The worst they can do is say no, right?

  • So timely with this post! Tomorrow I am going to the local Honda dealer to look at CR-V’s. I’ll assume since you’re looking at them that you’re happy with them? Assuming we buy from this dealer it will be the 3rd car we’ve bought from them. Unfotunately the sales lady we worked with last time is out on medical leave so we have to work with a new salesman. My goal is to get total price up front and not discuss monthly payments. We already have financing secured and know what our monthly payment will be ;).

    • Just wanted to come back and follow up. Prior to going to the dealer we had thought we would buy used so we checked with USAA and got pre-approved. Interest rate was 3.5%. The night before going we called back and were talking to them and they told us if we looked at 2011 – 2013 vehicles we could get a rate of 1.79%. We go to dealer and the guy we were supposed to meet wasn’t there so we meet with Jim. Jim’s a retired cop from up north but has been down south for the past 15+ years. We test drive 2012 CRV and love it. Only problem is they only have models with rear entertainment system in them which we didn’t want. By chance I found a model that didn’t have it. After a 10 minute search Jim finally finds key. We drive, we like, we make the deal. Talk to finance guy and and said we had great rate, but sure you can try to beat it. He does. We drive off with 1.49% rate. We are loving our new CRV though I had to wash and wax my Honda Accord so it wouldn’t feel jealous :).

    • Lindy

      Thanks for reporting back, Zack! Great to hear that everything worked out for you and you got a great rate.

      When we were looking at the 2012 CR-V, 2.9% was the “absolute best” the dealer could do (this was before we had shopped rates with our bank). Funny how that works. :)

      If I were that Accord, I’d feel pretty envious too.

  • I’ve had my car two years and I still want to cry remembering the process. Sounds like you did well, though! I think I’m less afraid to negotiate these days than I was then.

    • Lindy

      I tried to pretend I was someone else throughout the process…someone else who is good at negotiating, that is. I still was not that hot at it though.

      Sorry to hear you had a bad experience. It sounds like you have a few more years to work up the mojo for next time though!

  • Super post, Lindy. We bought our last new car eleven years ago, so I’m a little rusty. That salesman didn’t like us much either. We showed up on the return trip with a cashier’s check, and that was that. Take or leave it.

    • Lindy

      Haha. I’m sure that method worked just fine. Being liked by salesmen is definitely not the goal!

  • Thanks so much for sharing your experience with us and for reviewing some of those resources for us! This will definitely come in handy for the future. :)

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