Between test drives and paperwork — not to mention pressure from a sales rep — it’s hard to know whether you’re paying too much when buying a car. And of course, the worst time to discover you’ve paid too much for your new ride is after you’re already home, keys in hand.
Fortunately, we spoke with Zach Shefska, president and CEO of CarEdge, who shared several savvy tips for honing in your car-buying skills and intuition. With careful research and preparation, he said, you can spot a bad price almost immediately. Here’s what you should pay attention to in order to avoid being taken for a ride.
1. Market Conditions Aren’t Favorable
Knowing whether you’re getting a good deal starts with understanding the market. Because market conditions dictate price and negotiability, high demand and low supply for a particular model can limit your ability to negotiate. If you’re facing the opposite scenario, however, you could drive off with a much better deal.
“So how can someone tell instantly? They need to understand the market conditions first, and then answering the ‘Is this a good deal?’ question becomes easier,” Shefska said. “We obviously recommend our research resources on CarEdge.com, but there are plenty of other options out there, too.”
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2. Car Has Been on the Market Too Long for the Price
When shopping for your next car, Shefska suggested assessing two key metrics: Days on the market and market days supply (MDS). Both can be strong indicators of whether a price is negotiable.
Days on the market refers to how long a specific vehicle has been sitting at a dealership. The longer it’s been listed, the easier it may be to negotiate a lower price. Market days supply — an industry measure of how long it would take to sell all available inventory at current sales rates — can offer additional context.
“The industry wants market days supply to be about 60 days, meaning it would take dealers roughly 60 days to sell out of inventory at current sales rates,” he said. “When MDS goes above 60, the shopper has more leverage because the dealer is oversupplied.”
Shefska acknowledged these terms can feel complex, even “jargony,” but said understanding them gives consumers real car-buying horsepower.
3. Deal Isn’t Rooted in the Out-the-Door Price
While many shoppers focus on monthly payments, Shefska said negotiating based on that number doesn’t benefit buyers in the long run.
“Loan term length and APR can greatly influence the monthly payment without yielding a better selling price,” he explained. “If your payment goal is $500, a dealer can get you there — you just might end up with a 10-year loan. That’s the issue with payment shopping.”
Instead, shoppers should always focus on the out-the-door price — the total cost of the vehicle, including dealer fees, add-ons and taxes. Shefska described it as the price you’d pay if you wrote a check that day. If a dealer repeatedly steers the conversation toward monthly payments, Shefska recommended redirecting it back to the out-the-door figure.
4. Too Many Add-Ons
For many shoppers, no dealership visit is complete without an upsell attempt. Shefska advised reviewing contracts carefully and asking questions about unfamiliar charges. Watch for inconsistencies between what’s listed in the contract and what was discussed during negotiations or advertised online.
The CarEdge website highlights common add-ons that can spike prices without providing meaningful value, including:
- Vehicle prep fee
- Dealer prep for delivery fee
- Pre-delivery service fee
- Pre-delivery inspection fee
- Reconditioning fee
- Additional destination fee
- Cash upcharge
Shefska also encouraged shoppers to push back on add-ons such as nitrogen tire fills, VIN etching and LoJack, which are typically high-margin items for dealers but offer little real benefit to most buyers.
Follow Three Steps To Get the Best Price Possible
In addition to spotting signs you may be overpaying, Shefska shared three ways to secure the best possible deal:
- Get preapproved for financing: “Do not rely solely on the dealer for a car loan. Dealers make a lot of money by marking up interest rates,” he said. “Avoid that by securing your own preapproval.”
- Know your trade-in value: Research it before visiting the dealership “so you have leverage if they lowball you.”
- Do market research: Understanding pricing, inventory levels and comparable vehicles in your area puts you in a stronger negotiating position.
These steps require time and effort, but they’re essential for negotiating with clarity and confidence.
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This article originally appeared on GOBankingRates.com: Buying a Car? 4 Ways To Tell Instantly if You’re Overpaying
