Shop Around: Get Three Quotes Before Buying
The first time you meet the seller (whether a dealer or individual), you want to gather information about pricing, and not necessarily buy the car.
When you speak with a car seller, you need to know some pricing terminology so you don’t start negotiating at the high end. In particular, keep these three terms in mind:
- Invoice price: The price the manufacturer charges the dealer for the car. If you know this price before you negotiate for a car, you will know how much the dealer is trying to make on the sale.
- Manufacturer’s suggested retail price (MSRP or sticker price): The price manufacturers suggest that dealers charge for the car. Negotiating down from this is optimal, but may not be possible if the car model is in high demand.
- Market value: The price that others in your area have paid for the car. Tools such as Edmunds True Market Value tool and Kelley Blue Book’s Price Advisor Tool show the “fair market range” for the vehicle you want, including real data on what other customers in your area have paid for that vehicle in recent months.
Ideally, a dealer wants to start with the highest price – the MSRP. But ultimately, your goal is to get as close to the market value as you can, and less if possible. Shop around and get to know the market in your area before you make plans to negotiate.