Dear Lifehacker,
I'm going car shopping soon, and while I love the idea of a new car, I'm not thrilled about having to deal with the buying process. I thought about going to a no-haggle dealer, but will they really give me better prices, or is it just "you'll pay what we want and like it?" Should I suck it up and negotiate to get a good deal?
Sincerely,
Road Tripper
Dear Road Tripper,
You're right about one thing: No-haggle dealerships definitely take the stress out of car buying. I bought my last car from Carmax, and it was a great experience; like going to the store for a loaf of bread. You walk in, and as long as you know what you want, you test drive it, pay for it, and drive away with it. The end.
However, I did a bout of car shopping not too long ago and discovered that no-haggle doesn't always mean "great deal," and you often pay more for the privilege of a stress-free experience. You have no guarantee you're getting the best price, or even the best price that dealership could offer. Of course, high-pressure haggling may not equal better prices either, especially if you hate negotiating. There are a few factors at play. Let's take a look at them.
Educate Yourself and then Decide If You Feel Like Negotiating
Ask yourself: How comfortable are you as a negotiator? Are you okay haggling, or does the whole thing just make you uncomfortable and stressed out? The more you see negotiating as a game of diligent research and social engineering, the better off you'll be at a dealership where negotiation is at play. If you absolutely abhor the idea of sparring over extras, pressing to see what you can get, or have the constant fear you're being played, haggling may just not be for you, and that's okay.
Regardless of whether you choose to haggle, research is your best weapon. Do your homework and find the base price of the vehicle you want to buy. Then hit up sites like Kelley's Blue Book and previously mentioned TrueCar to find out how much you should actually pay for it. Then check dealership websites and see what prices they have listed for their vehicles, and compare against sites like Carmax, AutoTrader and Cars.com. Then, reach out to those dealerships directly and use this spreadsheet to get as much information as possible from them. It's not a totally fair comparison, since everyone advertises their lowest possible prices, and dealers especially only advertise prices you almost never get in-person (and if you call them, they'll never give their best price on the phone.)
In any case, research in advance gives you an idea of who offers the best deals. If you see a vehicle at a no-haggle dealership at a great price that's in your budget, go for it. If your local traditional dealership is offering the best price you can find and you're okay haggling, spring for that instead. Whatever you do, coming armed with information has been proven to save you money time and time again. If you do negotiate, check out the video above—it's a five minute primer to buying a car without getting screwed.
Where No-Haggle Dealerships Make Money (and Sometimes Haggle Anyway)
Remember, no-haggle dealerships still have to make money. Usually, they do so by offering the convenience of a stress-free buying experience in exchange for more money out of your pocket. Automatch Consulting just did a study on one Toyota dealership that went haggle-free, and revealed that in their case, the haggle-free price was hundreds more than a prospective car buyer could find elsewhere with a little research. Others have found similar, but some no-haggle dealerships are much more competitive and willing to budge on price if presented with lower pricing from other dealers in the area, or pride themselves on offering the lowest possible price.
If you find a no-haggle dealership with competitive pricing, don't assume they're up-front and no-haggle about other things. Carmax, for example, has no-haggle pricing, but they make their money on trade-ins and warranty sales. Those warranties can easily add thousands of dollars to your bottom line. Also, while Carmax is willing to buy just about anything you drive in to them, the last time I shopped my old car around, Carmax was by far the lowest offer—mostly because they were happy to take it and sell me a new car in the process. We don't mean to beat up on Carmax here. Many no-haggle dealerships make their money on extra fees, financing, warranties, and other costs not directly associated with the vehicle itself. Be careful if you're thinking "I found a great price and this will be easy!" You might find yourself in an office getting a high-pressure sales pitch anyway—just not for the car.
Even Shrewd Negotiation Only Gets You So Far Anyway
On the other side of the coin, it's important to remember that even the best negotiators will only get so much off of the listed or retailer's price of the vehicle. They may get other perks, like maintenance, loaner cars, service discounts, and extended warranties, or even perks and packages for free that normally cost money, but no one is going to drive off a lot with a $25,000 vehicle that they paid $10,000 for.
If you love haggling and you'd hate the idea that you missed a few hundred bucks because you didn't push, go for it anyway. Keep in mind however that even traditional dealerships generally only have a certain amount of leeway before they have to back out of the offer. They have tons of tools to make up any lost money, of course—they can get it out of you in any of the perks we mentioned above, not to mention added fees. Still, no dealer is going to sell a car at a loss, and on many vehicles, margins are already slim. Your goal should be a fair, low price near the bottom of your budget—don't expect miracles.
How Much Do You Value Your Time?
There is another factor worth considering before you head to the dealership: Your time. How much is your time worth? After all, if you spend four or five hours at a time for several days at multiple dealerships, it may be worthwhile if you're saving thousands of dollars. If you're spending that much time over a couple hundred, you may have been better off going to a no-haggle dealership, paying a competitive price, and going back to work. Save your sanity and the stress.
Of course, for those of us who enjoy negotiating, it's not really wasted time. However, for the rest of us who can't stand it, there are other options than simply resorting to a higher price. Consider car buying services that will cover both traditional and haggle-free dealerships. USAA, AAA, and many credit unions offer car buying programs. They pick and choose the dealers they work with, but you can almost always tell them where you've found a better price and see if they can match or do better for you. They're no excuse not to do your homework, but they certainly take a lot of the stress and time out of car buying for you.
The Bottom Line: Not Necessarily—but How Much Is Your Sanity Worth?
So bottom line: Do no-haggle dealerships offer better deals? The answer is not necessarily, but don't rule them out. The internet has made car buying easier than it's ever been, car prices more transparent than they've ever been, and empowered buyers in a way they've never been before. As long as you do your homework and shop around—including both no-haggle dealerships and traditional ones in your search, you can find some great starting points, or even a solid price right away. Then, if you're willing to play the game, you can lace up your gloves and get in the ring. If you'd rather save the time and energy and just buy a car and drive off in it, you can do that too. Neither option means you'll get a terrible deal. Choose the option that works best for you, and don't force yourself to do something you're uncomfortable with.
Good luck finding a great deal,
Lifehacker
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Title photo made using C Jones (Shutterstock) and Openclips. Photos by Ildar Sagdejev, David Hilowitz, Dave S, and Tony Harrison .
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