No-haggle car dealerships have grown in popularity in the last 15 years. Many people are attracted by the notion of getting a guaranteed lower price. But, in general if you are buying a car from a no-haggle dealership, you're not going to get a screaming deal. You probably aren't going to get ripped off on the purchase price either but as we discussed in 10 Tips for Buying a New Car Cheaply, they can still make a killing off of you on the financing and extras. But places like CarMax have thrived, so there must be something of value. Right?
CarMax: Used Cars
CarMax is the king of no haggle used car dealers. They do well because of the consumer fear of getting ripped off from the used car dealer. They also tend to be lower priced than the "Certified" cars from you regular car dealer. But do they have low prices and should you sell your car to CarMax? Not really. A recent tour of a Car Max facility showed models that were priced about $3,000 higher than a comparable private party sale and about $1,000 higher than what you could negotiate from a regular car dealer. The prices were significantly higher than what you could find on the Internet for similar used cars. If you want to see for yourself, check out Autotrader and search for any vehicle and compare the prices.
That's for used cars, but what about new models?
No Haggle New Cars
In many ways, a buyer today doesn't have to do as much negotiating because Internet prices have gotten very competitive. But be aware that you are likely to be steered to another car once you get to the lot and expect it to have a much higher price. But let's say that you want to get a really good deal on a new car. An experienced and educated buyer can get a car at the dealer's true cost plus $500 (a lot more for models where they are in demand and some luxury ones). The inexperienced and uneducated buyer will pay more like true cost plus $3,000. So maybe the No-Haggle new car dealer is looking to make $1,500 a car. Of course, on specific models, you might find that the No-Haggle guy is asking just as much as the regular dealer, so you have to be careful.
When does it make sense to pay the price for a No-Haggle dealership?
1) If you just don't want to invest the time in researching pricing for the car you want to buy.
2) When you dislike confrontation so much that its worth giving up $1,000 or more.
3) When you have to buy a car today and money is of little importance to you.
So generally speaking, everyone reading this should skip the no haggle dealership.
What's funny about the No-Haggle dealer is that sometimes when you put out an Internet quote as part of your research, the No-Haggle guy will come back with a price that is lower than his normal one. So you might just buy from the No-Haggle dealership after all, but not at his No-Haggle price!
If you want the best price, do your homework, choose your price that will offer a dealer a reasonable profit and negotiate a great deal. It may cause you a little discomfort for a few hours, but your wallet or purse will be better for it.
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